Why has my borrowing capacity been cut? (Mortgage)

[Edwardandtubbs]

Hi all, trying to move and I've just had some info back from the mortgage broker (independent, very good, used him to buy twice) and my borrowing capacity is now only 3.3x my salary whereas before it has been at around 4.5/5x.

Obviously this massively impacts us as it means we can only move to a cheaper house 🤷🏻‍♀️

Is this a CoL side effect or what?

It's because the interest rates are higher now so less affordable

Same has happened to us. Not worth moving so we're just staying put for now

Risk management.

75,000 mortgages fell through in the final quarter of 2022.

The banks know people are having to stretch themselves so they're reacting across the market.

Have you tried extending the term to see if that can get what you need?

We are currently looking at a ridiculous 35 or 33 year long mortgage term to get our foot on the ladder (actually, it's more like a forever home, but whatevs).

Also, because I'm 6 years older than the OH and don't have the capacity to work, completely removing me from the mortgage process has increased the amount they will lend to the OH (cos they can put the number of years up, I think).

I've had a similiar problem. My issue was as others said above- the actual amount was fine but not the length of time I was taking to pay it back. Apparently when they did the affordability check they felt I couldn't afford this amount every month.

In the end I had to stretch out my mortgage term and pay less per month to get it approved. Not particularly happy as it also means I'll be paying them more in interest over a longer term. I plan to change it when I can

I'm already at the longest term I can get so can't extend. DH isn't on the mortgage (for a number of reasons) so it's just me. We are relocating so don't have the option to stay put...we'll just have to downsize 30 years early 🤣. Thankfully we are moving to a less expensive area so that should help a bit. It's demoralising apart from anything else.

Are you not allowed to overpay? Most allow 10% a year, I've heard some going up to 20%! So just set up a regular payment of the difference between what you wanted to pay (or add it as lump sums as and when) and it will decrease the total interest back in line with what you originally wanted.
As long as you're reasonably disciplined I'd always recommend people take a longer term but overpaying, to give you wiggle room if circumstances change.

Sorry OP this won't help you!