General Mortgage Questions.....

[Dan_1981]

Mornign all,

General mortgage type question.....

In the 3 or 4 years or so since we got our first time buyer mortgage things have obviously changed quite a lot and money doesn't seem to be flung around as much as it used to be!

Do lenders still work on salary multiples or is it more based around affordability these days?

And deposits - is it really a minimum of 10% of purchase price now?

For example.... how much roughly would a couple in the following situation be able to borrow?

Earn around 40k joint.
Currently paying a mortgage on a house with about 5k equity in it.
Also have savings of around 6k.
Low outgoings - no other loans / credit cards etc.

Not our actual circumstances but good enough for a an example

[andy400]

I think the obvious answer is 'not a lot and at a high interest rate' I'm sorry to say. A decent IFA (there are still some around) will give you better advice. Personally, in my very recent (remortgaging) research, I didn't see a single worthwhile deal without a minimum 15% deposit.

We didn't exactly struggle, but it was harder than expected, and we're borrowing 70% LTV with no other debts, good rating and good salaries.

[scotal]

Dan_1981 said:

In the 3 or 4 years or so since we got our first time buyer mortgage things have obviously changed quite a lot and money doesn't seem to be flung around as much as it used to be!

That would be correct.

Dan_1981 said:

Do lenders still work on salary multiples or is it more based around affordability these days?

Most work on affordability now. There are a few who work on multiples, but even then they take other debt into acount.

Dan_1981 said:

And deposits - is it really a minimum of 10% of purchase price now?

Yes, however you are going to get screwed on the rates. 15% Deposit is more useful.

Dan_1981 said:

For example.... how much roughly would a couple in the following situation be able to borrow?

Earn around 40k joint.
Currently paying a mortgage on a house with about 5k equity in it.
Also have savings of around 6k.
Low outgoings - no other loans / credit cards etc.

Somewhere between £160-200k maybe a bit more.
However that would include the current mortgage, unless you are looking to let to buy or similar.
However you're going to need to find a bit more cash for the deposit, sales fees and moving costs.

[Dan_1981]

Thanks for that.

Between 160k & 200k is more than I expected to be honest

And yes it would just be a standard mortgage on another house we would move too - no buy to let or anythign out of the ordinary.

Thats quite good news - just now need to find an extra 10 or 12k for a full deposit.

Wonder whats down the back of the sofa!

[Steve UK]

I used this a lot when we were re mortgaging. http://www.guardian.co.uk/money/mortgage-calculato... Pay attention to the interest paid in the first few years. I was shocked at the interest we paid in the first 5 years.

Decide what you can afford then try to get a mortgage, my guess is you will be lucky to get over 140k in the current climate. Which to be honest is quite enough on your combined income, also look into paying it over a shorter term.

Best of luck, I know its hard but try not to overstretch yourselves especially with vat going up again which will probably have a bigger impact than many think.

[Sarnie]

Dan_1981 said:

Mornign all,

General mortgage type question.....

In the 3 or 4 years or so since we got our first time buyer mortgage things have obviously changed quite a lot and money doesn't seem to be flung around as much as it used to be!

Do lenders still work on salary multiples or is it more based around affordability these days?

And deposits - is it really a minimum of 10% of purchase price now?

For example.... how much roughly would a couple in the following situation be able to borrow?

Earn around 40k joint.
Currently paying a mortgage on a house with about 5k equity in it.
Also have savings of around 6k.
Low outgoings - no other loans / credit cards etc.

Not our actual circumstances but good enough for a an example

As a mortgage broker, I can tell you that:

- at 90% LTV you will be paying over 6% and the underwriting is stringent.
- Most, not all, lenders work off affordability now.

Based on the information you have given you would be able to borrow;

- £144k with a low score
- £167k with a medium score
- £177k with a high score

Those figures are from a prime lender, and will vary from company to company slightly.

[aka_kerrly]

With around 10% deposit you will be very limited as not many of the mainstream lenders are doing 90% LTV products anymore. Who is your existing lender, Halifax, BM solutions and The Mortgage works/Nationwide do some pretty good deals on product transfers for existing borrowers.

Also worth giving Scotish Widows a shout as they have a range of mortgages for young professionals.

dave

[Dan_1981]

Current deal is with C&G.

[oOTomOo]

TBH, with 5k equity I think your main problem will be LTV ratio. The max you can get nowdays (just had a quick look on moneysupermarket) is 95% with the majority being 90%

So even if you're a millionaire the most they would lend you would be 95 / 90% of your house value.

Of course if your house is worth 50 or 100k those figures will work out.

ETA: a more detailed look and the 95% one was for first time buyers only. There still seemed to be some around with 90%

Edited by oOTomOo on Thursday 28th October 11:27