Mortgages - How much I can borrow - Internet vs Advisor

As an adviser, I can only echo what most others have said, however I would say in response to Kami that a ballpark figure of £1500 would be too low, and would suggest nearer £4000 would be better to cover all associated costs. Stamp duty would be 1% of the value of the transaction, so your looking at around £1500 just for that.

One question that I do have to ask is why the rush? If you can say the 10% in 6 months, why not wait a little while longer and save maybe 20%?

I have no idea of your current living situation, so I cannot say one way or another whether this would be fesible for you.

Joint applications usually work either one of two ways; either they take your combined salary and multiply it (i.e. x3.5), or they take the higher of the two salaries, multiply it (i.e x4.2) and add the lower of the salaries after the multiplication. Some lenders like Northern Rock allow you to choose either, so you should work out which method would allow you to borrow the amount you would want.


Do you have any idea what sort of credit rating you currently have? Since this can affect just how much the lender will times your salary by to give you what they are prepared to lend.

Dan
 
spending 8-10k on a new car in this situation is madness. buy a run around for £500-£1000 to get you by for a year and then chop it in under the scrappage scheme if it's still going and get one on finance
 
krooton said:
They deduct any outstanding debt from your multiplied salary before giving the final mortgage amount.
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Lufbra-Dan said:
Joint applications usually work either one of two ways; either they take your combined salary and multiply it (i.e. x3.5), or they take the higher of the two salaries, multiply it (i.e x4.2) and add the lower of the salaries after the multiplication. Some lenders like Northern Rock allow you to choose either, so you should work out which method would allow you to borrow the amount you would want.
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Thanks for clearing that up :)
 
To explain the multiples a little easier, this is how Northern Rock work out the maximum they will lend in each case

Code: 
Gross Basic

Income Band 	        High Credit Score 	        Medium Credit Score 	        Low Credit Score
                        Single Income 	Joint Income 	Single Income 	Joint Income 	Single Income 	Joint Income
Over £32,500 	        4.5 	        4.2 	        4.2             4.0          	3.6 	        3.0
£17,501 - £32,500 	4.0 	        3.7 	        3.8 	        3.5 	        3.4 	        2.8
£0 - £17,500 	        3.5 	        3.2 	        3.3 	        2.8 	        2.9 	        2.1

Also as a example:

Joint customers can combine their income and use the joint multiple. For example, two Medium Credit Score borrowers submitting a joint application, with total gross basic income of £120,000 could obtain 4.00x £120,000 = 480,000. However, joint applicants also have the option of taking the single income multiple x the higher income, and adding 1 x the lower income. For example, joint applicants with a Medium Credit Score earning £110,000 and £10,000 respectively, could take £110,000 x 4.2 plus 1 x £10,000 = £472,000.

Dan
 
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Lufbra-Dan said:
As an adviser, I can only echo what most others have said, however I would say in response to Kami that a ballpark figure of £1500 would be too low, and would suggest nearer £4000 would be better to cover all associated costs. Stamp duty would be 1% of the value of the transaction, so your looking at around £1500 just for that.

One question that I do have to ask is why the rush? If you can say the 10% in 6 months, why not wait a little while longer and save maybe 20%?

I have no idea of your current living situation, so I cannot say one way or another whether this would be fesible for you.

Joint applications usually work either one of two ways; either they take your combined salary and multiply it (i.e. x3.5), or they take the higher of the two salaries, multiply it (i.e x4.2) and add the lower of the salaries after the multiplication. Some lenders like Northern Rock allow you to choose either, so you should work out which method would allow you to borrow the amount you would want.


Do you have any idea what sort of credit rating you currently have? Since this can affect just how much the lender will times your salary by to give you what they are prepared to lend.

Dan
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Thanks for that mate.

Really didn't think all the 'extras' would come to £4k!?

  • What is the threshold for stamp duty?
  • Don't need removals, will borrow a van + use car as it will be the other side of town.
  • Solicitors - A mate has just bought a house and he only paid £350 for his fees

Basically sick of living at home, I am 24, ready to move out, have ~£45-£50k joint income so we can afford the living expenses, ideally don't want to rent but as soon as the 10% deposit is hit we would consider for the time being just so the gf and I had our own space!
 
We've decided to over budget for costs, just to be safe:

£1k solicitors fees
£1k mortgage lender fees (survey, arragement fees, etc)
£1.5k stamp duty

If we come in under budget, then the money goes towards the new bed :D
 
krooton said:
We've decided to over budget for costs, just to be safe:

£1k solicitors fees
£1k mortgage lender fees (survey, arragement fees, etc)
£1.5k stamp duty

If we come in under budget, then the money goes towards the new bed :D
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you've under budgeted, stick another 150% on solicitor fees
 
In your financial situation, I would decide on a set of places I would be looking to buy in 6 months time, go visit them all over a weekend or two, and then rent in your favourite place for 6 months to a year. It'll probably take 2 - 3 months to complete on a house purchase anyway. You'll also get the opportunity to live with your GF for an extended time period - it can be amazing how different living with someone all the time can be, the relationship can change a great deal - either for the better or for the worse.

There seems to be this weird stigma still about renting. What makes you personally so reluctant to try it, even for just 6 months ?

Have you priced up how much renting will cost versus buying over the next year say ?
 
GinG said:
Thanks for that mate.

Really didn't think all the 'extras' would come to £4k!?

  • What is the threshold for stamp duty?
  • Don't need removals, will borrow a van + use car as it will be the other side of town.
  • Solicitors - A mate has just bought a house and he only paid £350 for his fees

Basically sick of living at home, I am 24, ready to move out, have ~£45-£50k joint income so we can afford the living expenses, ideally don't want to rent but as soon as the 10% deposit is hit we would consider for the time being just so the gf and I had our own space!
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Thats fine mate.

Easy place to find out about stamp duty is HERE. Its only just changed back to £125,000 for the threshold.

I hope the extras would not come to £4k either, but I'd rather aim on the higher side, because you never know what problems you may run into. I usually advise clients to put aside at least £1k for solictors, but if your friend recommends the ones he dealt with then go, and only came to £350, then go for it! ;)

Dan
 
Was just thinking about this...not sure if it is possible but here is my idea...

Say we buy this house that i owned by the inlaws...we could do everything just through solicitors so they save on the agents fee.

Now...it is up at the moment for £160k...could we say to the bank that we would like a mortgage of £140k to buy this as we would be putting £20k towards the house...

...could we then just say to the parents...here is £140k and this is what we will pay you, solicitors just change the deeds of the house into our names...hey presto we have a house that we didnt need a deposit for and put the cash we have to fixing it up????

Would this work??
 
If we take GinG's figure of roughly £45000, and assume that they each earn £22500, after tax that gives a final figure of £1450 a month, so £2900 together.

Now if they are extremely money conscious, could live on £300 a month (thus saving £2300) each living at home. It's not something that I would like to do myself, but it they are that desperate to move out, then its doable.

I haven't taken into account over fees though, so these also need to be factored in. Having a quick look about, I would say your looking at a monthly mortgage figure of around £900 with a 10% deposit for a fixed mortgage. Also fees alone are just under £1500.

Hope that helps

Dan
 
GinG said:
Hi all,

Looking to buy a house this year with the girlfriend. Looking online we could easily get around 200k according to the online stats.
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We both need new cars..



........where she wants something £8-10k
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Computation Error !!!!!

Why on earth buy new cars just as you are buying a house. Will both your cars fall apart anytime soon, or are totally uneconomical to repair currentyl? Even so, just get a cheap runaround rather than spending nigh on £10k along with a house which is frankly Bonkers!!!

Don't forget (as you will know) all the fees for surveyor, stamp duty, solicitor, then new furniture + fixtures and fittings. Plucking at figures, but £6k for it all should do.

Keep your transport situation as just an A to B thing, focus on getting this roof over your head, then once that is done and you have sorted how much you can actually afford, then look at cars, etc.
 
Yu are correct Lufbra, currently living off £50 - £70 a week which includes petrol...annoying but you get uused to it!
 
HSBC online calc is pretty much spot on on how much we can afford.

Buying now as well. We just got a new 2nd hand car, cost 500£ overall after selling the other one. No need to go silly on the loaan for cars. you would be better off using that to increase the deposit, which is also what we are doing ;)
 
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