Mortgage advise??

[vicki2010]

Can any of you lovely mumsnetters tell me,as a first time buyer,if I had a deposit of £100,000 and only earning £24,000- will a mortgage lender loan me more then the 'normal' x salary amount whatever that may be? Seing as I have a large deposit?

Depends on the price of the house and what % the 100k is in relation to that (the LTV) and also your credit history and outgoings etc. A large deposit will open otherwise closed doors via a good broker

Realise the spelling mistake of advice sorry!

Thanks for the reply,credit rating excellent and property value about 330,000?
Don't know about interest etc I'm just curious if that kind of deposit would mean borrowing more?

So you would need 230K. That is nearly 10x salary so think no

Mmm that's what I thought obviously sounds silly,I was just curious if they lend more considering you are paying off almost a third of the property value. I thought they would lend more knowing they have that large amount of deposit.

But you still need to be able to pay the monthly payment. That's a loan of 230k with around 70% LTV. Using an online calculator

www.bbc.co.uk/homes/property/mortgagecalculator.shtml

For 25 years repayment at 3%, your monthly repayment is already £1100. Can you afford it? FWIW that's our interest rate for a 70% LTV mortgage. And our loan size is £140k when we took it out. And we were given 2-3 times earnings only. They are very safe at the moment. You need to buy a much cheaper place.

Thanks for the reply.

Yes I suppose that's right,obviously we need to be able to afford repayments.
Just one more question,would any of you know from experience if when you are self employed, what figure would they use for mortgage purposes? Gross or net profit?

How various lenders treat self-employed earnings varies a lot. Some just don't count it at all. Others specialise in self-employed mortgagees but charge extra in interest to cover. The numbers they want to see are your declared earnings for tax and it'll be going back a few years.

Self-emlpoyed they tend to use net profit and need proof of the profit in audited accounts over three years. They also need to see your drawings in the accounts.

In 2008 I mortgaged as a self employed sent of three years of accounts rubber stamped all okay. Last year I remortgaged for £70,000 less than in 2008 with net profit £10,000 a year higher than 2006, 2007 and 2008. I still needed 3 years of accounts by this time they wrote to my accountant to confirm authencity and also for another years worth of projected income. It took a lot of wrangling eventually I had to speak directly to the underwriters on no less than 3 ocassion before the mortgage was approved. This was with the same bank as 2008 with whom I have banked with for 12years and in the 4 years I had overpaid to the tune of £18,000. Oh yes in 2008 I wanted 6 times my net income in 2012 I wanted 4.19 times.
It is now really tough to mortgage as self employed, possible, but you need to prepare for it taking a consierable amount of time and effort.

Usually taxable profit for the mainstream lenders I think. Just lately I've seen a couple of self employed clients asking for copies of the actual tax calcs/return for their mortgage providers.

You'll not meet any affordability criteria for a loan of 203k on an income of 24k (net or gross). Thats a good thing imo. It stops people with illegally earned income getting naice houses

Remember that there are lots of unexpected costs to both buying and owning a property that you also have to pay such as stamp duty, legal fees and surveyors fees, buildings insurance and so on. If a flat then there is ground rent and service charges. There are always unexpected costs involved in general maintenance of a property too e.g. fence falls down, shower leaks and so on. Could you afford the mortgage if the rate went up by a couple of percentage points? It easily could in the future and more, much more.

In summary, if it is very tight to pay a large mortgage on your salary then it's probably unwise.

Maybe aim for cheaper "wreck" and aim to do it up over the years when you have more money coming in?

Thanks for the input.
My husband earns 24,000 and I'm self employed earning around 20,000. We have an excellent credit score and will have between 100,000 and 120,000 as a deposit.
We have planned on only using dh income for mortgage so we are not too over stretched on re-payments/living Etc.

We have rented for 12 years so totally get that there will be hidden expenses as when something goes wrong we just called me landlord 'problem solved'!
We may also find a property in a much cheaper area and possibly only want to borrow 100,000 so I think that's do able?
Thanks for the responses through I think we just need to make an appointment with some mortgage lenders and see what happens! Fungers crossed lol!!

That's fingers not fungers!!!!

vicki then your combined income is £42k. To not overstretch, you simply look at the repayment figure and see if you can afford it. The banks would like to see your combined income because they would want to be safe too, in this climate. I'm sure you can see someone earning £24k cannot afford to pay the same amount as a couple with a combined income of £42k. Three times your combined income is £126k. This should be quite affordable for you.