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Income multiples don’t show true affordability

The news that Lord Turner is weighing up whether to cap LTVs and income multiples is a typical knee-jerk reaction by a government which clearly does not consider or understand the wider ramifications of such a move.

Income multiples are great as a guide but affordability has become more of the norm and should be the future.

What perhaps we should all get back to is obtaining full bank statements and inputting actual average spend over a three-month period as an example to show true affordability, not just what a client thinks they spend on xyz each month.

I know with Abbey that you can export your online bank statement to Excel so if that could then be imported into a lender’s affordability calculation, wouldn’t that ensure those that could afford the mortgage they need, would get it? Even if it was 6 x income.

John Whyte

By email

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