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How can anyone afford to get a mortgage when banks supposedly only loan out x3.5 of your yearly salary?

(104 Posts)
TwixBix1 Mon 25-Feb-19 21:59:43

Most people when talking about buying a house always complain about how difficult and long it was to save up enough for the deposit (which is 5% minimum but can be more)..

Yet to me, it seems the deposit isn't too bad and it's finding a mortgage that'll cover the rest which is impossibe.

Say I wanted to buy a £250k flat/house and I pay 20k deposit towards it. That means the mortgage should cover 230k.. if banks only give mortgages up to x3.5 of your salary, surely I''d need to be earning at least £65,000 to get a mortgage for a measly 250k flat or house?

If that's the case, I feel like very few people would be homeowners..

Aside from having a joint mortgage, what's a way to get around this?

TwixBix1 Tue 26-Feb-19 21:02:45

Thank you everyone for your thoughtful and detailed answers - I got a lot more replies than I thought I would smile

Thanks also to @ClaudiaWankleman - you are very correct.

@LordEmsworth I DO live in an expensive area. I felt no need to state this in the original post as you state - the fact I've said it's 250k yet "measly" should indicate that to anyone with an ounce of common sense. I wouldn't default assume everyone's a diva expecting a mansion. In fact, my area is so expensive, it's often in the news as being comparable and sometimes even more expensive than London and was one of the top 5 cities listed to have had the biggest price rises since the 1990s. When I say "measly" 250k flat - I mean just that - literally a 1 bedroom flat for that price around here (I checked the listings before posting). Think you're being very over sensitive and have some sort of inferiority complex that you think me posting about a measly 250k property (in my area) is somehow intended as an insult on you, as a random homeowner off the internet of a property less than 250k, probably in a very different part of the UK to me.. very odd.

Also very strange that you're insulting me for having done no research when the whole point of this thread is for research..! I've not even once claimed to know it all (or else why would I make this thread) and it was in fact a bank mortgage advisor who told me about the x3.5 multiplier - regardless of whether it's correct or not, very weird thing for you to get angry about.

Stompythedinosaur Tue 26-Feb-19 20:43:13

We managed by having a bigger deposit saved and buying a much cheaper house than 250k!

CatchingBabies Tue 26-Feb-19 20:20:22

And my mortgage payment is still £300 a month less than I was paying in rent!

CatchingBabies Tue 26-Feb-19 20:15:28

My mortgage is 5x our joint income so some will go over this.

netflixcrazy Tue 26-Feb-19 20:14:04

Oh and help to buy

netflixcrazy Tue 26-Feb-19 20:13:52

Here’s how my single friends have bought houses/flats

Bought with siblings
Saved a huge deposit over many years
Have perfect credit score and good relationship with the bank
Good jobs
Parental help
Shared ownership
Bought with a friend
Scraped for a shit hole and got a lodger in until the time came to sell up and move
Moved further north away from expensive south housing

The risk goes down when there’s two of you borrowing so banks are better at lending with more than one person.

youngmammy Tue 26-Feb-19 19:16:37

Whatswithtoday I'm from the uk Hartlepool

HotChocolateLover Tue 26-Feb-19 17:48:00

The only way I managed to buy was when I got married. However, when I was single, I had considered purchasing a smaller property in my home city where flats go for about £100k and renting it out. In my city the same is about £300k 😥 At least it would have meant getting on the ladder. Could you consider that for now?

LoubyLou1234 Tue 26-Feb-19 12:17:26

It is not impossible to buy as a single person plenty people do it in less expensive areas. It's usually more like 4.5% and these people don't expect to be buying a mansion to get on the ladder.

wheelygo Tue 26-Feb-19 12:14:23

We’re saving through a combination of my DP working all the hours he can (currently 60+) and me picking up as many shifts as possible in a pub around uni.
Our rent is low because we chose to move to an area which is not so nice but close to our jobs, to reduce travel expenses, and by shopping in Lidl, not eating out much, and we’re not having another foreign holiday til next year.
The way we see it, if we can just save up for a deposit, our mortgage payments would be around the same as our rent payments, so after a year or two of saving our outgoings will be the same and we can then think about holidays in the knowledge that we’re paying our own mortgage rather than someone else’s, and our mortgage could be paid off in 4 years.

YahBasic Tue 26-Feb-19 11:25:03

We’ve recently been offered 5x our combined salaries.

That, combined with a significant deposit which we have had no help with, means that we would be that couple opposite @hidinginthenightgarden.

We’re young and have struggled so far with people not taking us seriously as FTB.

Roomba Tue 26-Feb-19 11:15:10

It's impossible for many people now. Impossible to save a massive deposit when you are renting and paying even more than you would on a mortgage. It's unsustainable long term, but I don't know what the answer is.

I bought my house at the last possible time where it was possible to do so. A year later and house prices had risen so I'd have been unable to buy my small terrace on my own. I'm glad I did it when I did, as I was paying almost twice as much in rent beforehand. If I'd not inherited £8k from a relative and save like hell living on cheap noddles I would never have been able to buy. My finances have worsened since and wages haven't gone up in 10+ years round here (min wage excepted). It's madness that my neighbours bought their house for £42k in 2003 and sold it for £130k ten years later. Every house sold on my street over the last few years hasn't sold to first time buyers but to buy to let landlords instead.

Megan2018 Tue 26-Feb-19 11:05:58

I've always been able to borrow 4-5 times salary.
We moved last year and I borrowed 4.25 x salary without any fuss so this wasn't just pre-crash.

There is a big 2.5 bed (nursery or study as 3rd bed tiny) in my village for £245k aimed at FTB.
With a 10% deposit it's just about affordable to a couple earning around £25k each

notanothernam Tue 26-Feb-19 11:00:50

@Ariela but what is a house when you die? (we've always had life insurance so children were covered in terms of inheritance). We had a house before we bought, yes it was rented but it was a roof over our heads, it's that old line of if we were on our death beds would we say "I'm so glad we bought that house" or would it be "I'm so glad we went to all those places" for me it would be the latter. A house is a financial investment that makes more sense in the long term (and yes nice to live in in the mean time), but actually in the short term we must remember to live first! That's what I mean by balance, yes buying was very important to me and we've done it as quickly as we were able within the lifestyle we wanted to live holidays for me are what life is about, experiencing new things, having fun, we may have bought 3 years earlier if we had of saved harder, but I wouldn't give those years up for anything. We managed to buy at 29, we are able to over pay our mortgage now as the childcare has gone down so we're able to lead the lifestyle we want and have our house, we could not go on holiday for the next 3 years and move to a much bigger house quicker, but as a say a house is just one element of life. For me, I appreciate that's subjective! Sorry for the waffle! (Also I have to admit we paid very minimal rent so we able to "live" and save, I appreciate when rent is much higher there is more of an urgency because once you've stepped on you can potentially live more comfortably anyway with a cheaper mortgage!)

Ariela Tue 26-Feb-19 10:49:57

@notanothernam But if you were to die you would have had your house, and the kids, just not all the other things ticked on your bucket list. You could say the same about anything you wanted to do. I'd like to go on a cruise one day but it's a lot of money and I cannot justify spending that right now, but won't regret not ever going if I don't go because I'll have done other things in the meantime. Nephew & gf are engaged but see no point in wasting ££ on a wedding for now, kids will be one day.

bigKiteFlying Tue 26-Feb-19 10:23:42

20 years a go I left university - the house next door was for sale and went for £46,000 - it's now worth £184,000.

It's in one of the few remaining parts of the UK we can afford to buy.

We got on housing ladder by saving a huge deposit, 26%, and waiting when we'd already started our family and finding work in parts of the UK where prices were still affordable.

DonttouchthatLarry Tue 26-Feb-19 10:16:03

Sadly it is all about location - round here in the Midlands there are plenty of 3 bed semi's for £150k, so affordable for a couple on around £20k each or a single person on £35k. I know plenty of people who are managing to buy alone or as a couple so don't think it's such a struggle here as in the SE.

coffeeforone Tue 26-Feb-19 10:00:13

I think some banks do offer more than 3.5x salary (though I know it's not calculated that way). We got approx 4.5x a few years ago, a broker will help you work out which bank will be best for your circumstances.

But realistically, it's a huge purchase and most would need to go into it with someone else to be able to afford it.

notanothernam Tue 26-Feb-19 09:58:27

@Ariela I completely agree expectations are higher, our own house search has been skewed by that. But I think it's also balance, going on holiday, eating out, fun days out are part of life for me. If I was to have died at 25 having spent 5 years of my life putting it on hold to scrimp and save for a house I'd think that was a life wasted for the sake of a house, I think theres a middle ground. Also for us we had children younger (not planned) so it wouldn't be fair to them to limit their childhoods, I don't think, to scrimp and save. We've managed to buy but it's not as big of a house that I'd like for them, hopefully by the time they're in high school we'll be able to upsize, in the meantime holidays and treats are not off the cards.

Ariela Tue 26-Feb-19 09:51:39

I do think these days that new buyer expectations are so much higher than 30-40 years ago.
When I bought my first house with the then boyfriend, I worked 4 jobs as did he: pub cleaner, home, change go to work 9-5, home change pub job 6-11.30, Saturday nights I worked in a night club as it was longer hours. Did that for 2 years.
When we moved in we had no fridge, no oven (salad anyone?) no sofa, no bed. We acquired them secondhand. Not brand new colour co-ordinated, made to measure.
We did our own DIY and decorating, we didn't get a firm in to tile, to lay garden paths, to paint or hang wall paper.
We didn't have holidays abroad, we went camping. We never ate out (too busy working anyway).
Etc.
Perfectly possible to save 25%+ deposit, when you barely spent any money.
This is exactly what my nephew and girlfriend have done. Their friends used to tease them for not going out, never treating themselves to Costa for lunch etc, but it all adds up. They're only early 20s but now own their own house, their friends are still renting (and going out, going on holiday etc) with no hope of buying a house. Admittedly they live in DUnstable/Luton area so its cheaper than many southern areas, but even so it is do-able.

LordEmsworth Tue 26-Feb-19 09:24:31

@ClaudiaWankleman If you're so obtuse to ignore the very well known fact that property varies substantially in price across the country, and that we aren't all able to move (and might not want to contribute to the terrible BTL market), then there is no hope for you.

OP slags off my home and I am not allowed to be offended? My home is not "measly".

The OP has, at no point, stated they live somewhere expensive - you have made that assumption. The OP has done literally no research into mortgages, or they would know that banks don't use a 3.5 income multiplier for a sole mortgage, so they can't be that bothered about buying.

And what's BTL got to do with the price of fish?

wheelygo Tue 26-Feb-19 09:20:33

Had to admit I had a chuckle at 250k for a measly one bed.
Where I am (Scotland, east coast) that would get a 4 or 5 bed detached house in a nice area! We’re in the process of saving 20k with the view of buying with a 50% mortgage on a one bed.

bsc Tue 26-Feb-19 09:08:48

@hettie Why do first time buyers need a house and a garden? Because the average age of FTB had risen, and many can't buy until they've already begun families!
We were married, mid 30s, and I was 38 weeks pg when we moved into our first bought home.
As it costs so much to move, we didn't want to be having to do it all again in a couple of years if we had another child.

adaline Tue 26-Feb-19 09:04:32

* £250k doesn't get you much around my parts. Bully for you that you've bought a place though.*

That's why people move though! I grew up in the SE and there's no way I could afford to buy there. So I moved somewhere affordable where I could buy a home and afford luxuries like a nice phone, a car etc. at the same time.

If people decide they need or want to stay in the SE or London then they need to accept that their income won't go very far. Though in reality nobody needs to live there - they may want to because their family is there or they grew up there or they work in the city but there are always other options.

You just need to weigh up whether not buying a home is worth it in the long run. To some they want that security, to others it's not that important. To each their own at the end of the day.

ItMustBeBedtimeSurely Tue 26-Feb-19 08:58:24

It's not 3.5x any more.

We have always been offered far larger multiples. Last mortgage application in 2017.

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