While technically, your clients can make an offer on a property if a borrowing calculator shows that they can, we recommend consulting with a mortgage broker first.
Why your clients should consult a mortgage broker before making an offer
Online borrowing capacity calculators aren’t inaccurate. However, they may not always calculate the same factors lenders use. If they do use the same factors, they may calculate them differently than a bank does. Even if it does use the same method lenders use, it may not take into account your client’s entire financial situation. If they do put in an offer based on a borrowing calculator without consulting a broker or applying for a loan, their loan amount may be lower than the offer they put in, meaning they’ll have to pay out of pocket to make up the difference.
That’s where you come in. You can get a complete picture of your client’s current situation, future plans, and any obstacles they may face when repaying a home loan.
In addition, your clients may be tempted to put in an offer that is equal to how much a calculator says they can borrow. Consulting with a broker allows them to see why borrowing to their limit may be a bad idea.
Should your client borrow to their limit?
If your client is just starting their career, with an income that increases regularly, and doesn’t want to have children right away, they can consider borrowing closer to their limit. Borrowing closer to their limit allows them to buy a house they can grow into. However, they also need to be prepared for potential financial situations that may arise. Therefore, we recommend they borrow a more moderate amount that fits their current position while allowing them to save money for the future.
If your client has used a borrowing calculator and wants to put an offer in on a home quickly, Mortgage Street can help. As a non-bank lender, we can speed up the loan approval process and find your client the right home loan.