Mortgage stress tests: anyone borrowing more?

[Trytosmilefor2025]

Just this really! Lots of banks are apparently easing their stress tests and households can now borrow more on average. Has anyone used this extra borrowing for home improvements and/or move to the dream home? Just curious! Will you be comfortable borrowing more in case interest rates go up again? I know they're predicted to fall further but you just never know...

We are I'm the conveyancing stage of moving and are borrowing more than I ever imagined we would, and taking the payments right up to retirement.

We decided that given our age (late 30s / early 40s) it's now or never.

We are about to get valuations and then get a mortgage in principle.
I’ve done the calculators and we’re definitely not going to take as much as soem of them say I think we’re definitely tempted to take more than we thought out.

Very interesting! Is that for home renovations @BraOffPjsOn? I can see why, it definitely will help a lot of professionals get into the property ladder and also help families go into bigger homes. I already maxed out my mortgage when I bought 3 years ago and quite tempted to borrow more to make our current home a forever home for us to stay in...not a massive amount though!

Do you mean borrowing a greater multiple of your income? Like 5.5x your income instead of the standard 4.5x?

I'm a firm believer that you should borrow as much as you can as soon as can when it comes to housing.

But I wouldn't borrow for home improvements.

@Magicalbeaver I am not sure how the stress test that banks use works. Maybe someone else can shed more light? Even when I say I maxed my mortgage last time I moved it was less than the 4.5x multiple.

Sooner or later someone is going to figure out the way to get more people into housing is to make housing less expensive. Not allow people to borrow even more money to enable them to buy something they can't afford in the first place.

It will probably take yet another banking crisis to do it though.

No one knows where interest rates are going in the future.

Sounds like the latest house price stimulus to continue strong the fire of property speculation. But prices can't go up forever.

I could borrow more but am focusing on paying down debt for now. My industry is having a bad time and I'm getting older.

I'm happy for them to do whatever they like so long as they pay the price of their failure this time and not the taxpayer.

No not for home renovations but to get a bigger house - we’ve outgrown our 3 bed terrace and now both children are at school, I think it’s the time to move as I’ve increased my hours so before we get used to the increase in income. I’m still wary though after scrimping for so long being so part time and when we had two at nursery it was tight! So I want to make sure we can still save for home improvements or a holiday. We also don’t have a big mortgage here and only 10 years left so we can increase the years too.

Wouldn’t a loan be cheaper than taking out a bigger mortgage because of the years?
When we were thinking about converting the garage, it worked out alot less in interest to take a loan to do it rather than use the equity and add the debt to the mortgage.

You can take a smaller mortgage for 3 years for example and pay the balance once the 2 year fixed rate is up. That's what I am thinking as interest rates on the amount I need will be way cheaper as a second mortgage compared to a loan! I know it's probably unconventional, but just trying to think of the cheapest way to borrow. My worry is that but the time I save the money in 2/3 years the building costs will go up again so might as well pay a little bit of interest now and enjoy the space? 🤔

I think it depends how much you’d borrow and what the work is you want doing?

If it was more decorative I’d probably wait and do it bit by bit but then this house has taken us 10 years to sort and we’ve only just changed the carpet as it was bottom of the list! But we are very careful with money and other than the mortgage we don’t tend to have debt.

You know that's not going to happen.

The taxpayer again will end up paying for the future collapse so the banks can make more money now.

Then when the it all goes tits up it will be the usual platitudes of "no one could have possibly foreseen", "it was a one in one million year event" and "we must save the banks or else society will collapse".

The bankers that caused it all will all be long gone with their bonuses and fat pensions.

That's a good point. If you read my other posts, it's to finance a one storey extension. Not something I can do slowly really. The other option is to move house, but there is hardly anything in the market in my price bracket and in an area as nice as where we are at the moment (plus not too keen on the stress of moving house).

Then if I could afford to increase the mortgage I probably would for that. But also if you maxed out buying the house 3 years ago, are you sure you can afford to increase the mortgage now?

Yes, I can. I was planning on overpaying if I don't take on more debt anyway to reduce the term. The figures add up at least for the next 2 years and hence the extra borrowing won't be spread over a long period. I am just going to look at it the same as a loan.

I've just had a mortgage promise done & they're offering twice what we want to borrow which already feels a huge amount of money.

We've done our calculations & can afford the amount were borrowing and still have a summer holiday etc , but I keep reflecting on how much was offered & wtf the bank is thinking.

Someone will absolutely take an extra 100k to get the work needed done immediately & scrape by month to month... but what happens in 3 years when interest rates have gone up & they come to remortgage? Scary.

I’m on the same position. I need a lot of money for home improvements (new everything and knock down some structural walls). I did a test and the bank would lend me so much money through the mortgage that was actually scary!
Now I am this weird position to decide if I leverage up and make the home of dreams and later on think how on earth I will pay for it as the bank is being absolute bonkers or if I try to keep in the budget now (do only structural work and Ikea kitchen) which will take me few more years to have the whole flat properly decorated.
Big big decision!

I know it's a tricky one...and building work will likely become more expensive as you wait. Did you have a look at second hand/ex-display kitchens? Some are very good quality and will save you loads with a little bit of imagination. I did this in a previous property and only paid £500 for a solid wood in frame kitchen. I can also borrow loads more on the mortgage but just planning to borrow the bare minimum for the work. I will need to remortgage in a couple of years and I don't want to take too much risk since we don't know where house prices/interest rates will be at!

I haven’t looked at kitchens yet. But my kitchen will be U-shaped and relatively small. My dad and brother also volunteered to fit it for me. So think I’m covered there.
I did have a call with the bank last week and decided to keep below the 75%LTV as rates were more attractive and monthly payments would still be manageable if either me or my partner lose out jobs.
That still means most of the works will get done but won’t be able to decorate as I would like to and the garden office will have to wait another time.
So yeah, opted for peace of mind. Just waiting for the appraisal next week to have the check!

@MH0084 very wise thinking! I am an appointment with my bank tomorrow to see how much I can borrow and rates they offer and take it from there. I still want to enjoy the house but I am conscious we live in very uncertain times and I don't want to stretch myself.

Nope. Exactly the opposite. Watching lenders offer obscene amounts of money, or offering folks mortgages that their family and friends are duty bound to guarantee, and into their 70s and up to 80 even (with the right private pension) has made us go in the completely opposite direction, ask, 'why' and 'what are the consequences.'

This year we're probably going to offer on a house that's 25% cheaper than the one we almost bought last year, which still makes it 40% less money than the eye watering amount a broker told us we could borrow last Spring. On a single income household. I actually swore when the broker told me the amount one bank was prepared to lend us.

We want decent retirements and a life, thanks all the same!

In a way I'm glad all this mortgage lending madness has kicked off before we actually bought a house, because it's been a real eye opener of the way things COULD be if you take on a lot of debt just because Computer Says Yes.

Have you noticed, when you look at a property on Rightmove these days, it auto populates it mortgage estimate with a 30 year term instead of the more common 25 years? Yeah, they slipped that sly trick in some time last year.

Yes @KievLoverTwo it's a cruel thing to do to people who are not saavy enough to understand the consequences. I really hope that these financial vultures pay the full price this time when they fail - and not us.

Some people will be cheering the access to more house buying money without understanding that this very same phenomenon is what drove house prices to unsustainable levels in the first place. People will still be paying off mortgages when most of that money should be going into their pension funds. Again, very few people really understand how pensions work and what they need to do to secure their retirement. Less than half of pension savers actually check their funds and switch to more appropriate ones.