The ideal lending decision for brokers is fast, individually tailored to their client and enables them to write more business.
This perfect scenario was revealed by independent research commissioned by Alliance & Leicester Mortgages.
When questioned on the most important elements of an effective lending decision, 82% of brokers cited speed and 73% said it was a bespoke approach based on clients personal circumstances.
Nearly four in 10 agreed that affordability-based lending enabled them to write more business.
The research was commissioned in the wake of more and more lenders moving away from lending based on traditional income multiples to a more practical method which looks at how much people can afford to repay based on their individual circumstances and disposable income.
Overall, 58% of those who said affordability based decisions helped them write more business said it was because it enhances their clients confidence in their ability to afford a mortgage.
Nearly a third of the same group of brokers said it enhances their confidence with lenders.
Online capability is high on the brokers agenda as 75% say getting a lending decision online is one of the most important elements of an effective lending decision.
Two thirds of brokers say it is the ability to offer greater flexibility and higher loans to customers who can genuinely afford them.
Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester, says: The independent research supports our own feedback from brokers that they prefer affordability based lending decisions because they offer greater flexibility for their clients, and in some cases enable them to afford homes that were previously deemed out of their reach.
Lending based on affordability benefits brokers by saving them time and enables them to undertake more business.
“Our online affordability calculator recognises that every client has different financial circumstances and can help enhance confidence in a clients ability to afford a mortgage.
The affordability calculator provides brokers with a fast and reliable indication of the maximum loan amount Alliance & Leicester will lend to their individual clients, without leaving a footprint.
Brokers value this extra facility as according to the research, 58% find it helpful if lenders can give an indication of the maximum loan amount they are prepared to lend, without leaving a footprint.
Yousefi continues: With Alliance & Leicester, brokers will be able to provide their clients with a reliable maximum loan amount that we are likely lend.
“The research indicates that brokers appreciate this type of quick and exact decision on their clients borrowing capability based on their specific financial status.
“This will provide greater confidence and reassurance to clients who can use the new criteria to demonstrate that they have finance in place to prospective sellers.