Funnily enough, a question that has become quite popular over the past few years: "If I buy too much coffee, will I be able to get a mortgage?"
The short answer is yes, and that's fantastic news for all the coffee lovers out there!
Understanding the Impact of Expenses
Recent changes in the lending environment, notably the amendments brought by the Credit Contracts and Consumer Finance Act (CCCFA), have led to more scrutiny on borrower expenses.
However, there's good news: banks are now adopting a more practical approach when assessing your expenses, particularly when it comes to lifestyle choices like your daily coffee habit (which they consider discretionary)
How Banks Assess Your Expenses
When banks evaluate your mortgage application, they look at your current expenses and project what your expenses are likely to be once you purchase a property.
This projection is key to what you can borrow, especially for first-time homebuyers who might experience significant changes in their spending patterns after buying a home.
Banks understand that buying a home often requires some adjustments in your budget. They take into account that your current discretionary spending (like that daily latte!) might be different once you become a homeowner.
The focus is on whether you can afford the mortgage payments and other essential expenses after making necessary lifestyle adjustments.
Balancing Your Budget and Lifestyle
It's well-known that homeownership often comes with a shift in spending priorities.
Whether it's cutting back on eating out, shopping, or even reducing that beloved coffee habit, everyone needs to budget effectively to ensure they can comfortably meet their mortgage obligations.
Banks are aware of this and are interested in how you plan to manage your budget once you own a home. It's part of what we discuss with you when we work through a mortgage application.
They don't necessarily expect you to completely give up your daily coffee fix but to demonstrate that you can adjust your spending where necessary to maintain financial stability.
Coffee and Mortgages Can Coexist!
So, your love for coffee doesn't have to stand in the way of owning a home.
With banks adopting a more practical approach to assessing expenses and considering future lifestyle adjustments, you can still enjoy your caffeine fix and get approved for a mortgage!
If you have any concerns or questions about how your spending habits might impact your ability to secure a mortgage, don’t hesitate to reach out to us at My Mortgage. We’re here to make the process as easy and stress-free as possible for you.
Until next time, happy house hunting and enjoy your coffee! ☕