How to increase mortgage affordability?

[TaleOfTheContinents]

DH and I are FTB and will be looking to buy our first home in several months' time. When I use online mortgage calculators to work out how much we can borrow, the highest figure has been 247k but we would need around 260k to get something decent in our area.

Any tips on how to increase the amount we can borrow?

We don't have any debts (credit cards, student loans, etc.) or any children (yet) and we both have Help to Buy ISAs which we pay into each month, so not sure if there are any other ways in which we can bump that figure up. We know that we could afford the 260k mortgage because repayments would be less than we currently pay for rent, and we can afford that quite comfortably and would be able to on one salary if either of us lost our jobs.

Could either or both of you get a second job?
It would give you additional income to be counted

Not sure if it works like so, but have you a way of getting enough deposit to bulk up what you dont have? E.g the extra 16k?

Just means nothing will come of your mortgage so payments would be higher than paying off some of the mortgage straight away, but you can pay the other 16k with the deposit I'm sure. I think that what we did.

Find a good mortgage broker - they are well worth their fee. He got our affordability 20k more than the online calculators. Also we were 3k off being able to buy our house and as our broker had a good relationship with Halifax he persuaded Halifax to let us have that little bit more.

Is the 247k how much you can borrow, and the 260k how much you need to borrow or how much you need to spend?

The mortgage calculators of "how much can I borrow?" Are basically a multiplier of salary - some take into account debt, commitments or other things but not credit history and aren't an agreement to lend that much to you. But to increase the borrow amount realistically means increasing your salary. If you can't do that, work on improving savings to reduce the amount you need to borrow.

Some good tips, thank you! I don't think we'd have the time to take on second jobs, unfortunately. We'll definitely try to save as hard as possible in the final stretch, but we can't wait too long as planning to TTC next year.

Scaredylion I think a good mortgage broker would be a good idea. We were just planning on using London & Country but sounds like your broker made the difference!

Yes, PlanBea, the 247k is how much we can borrow, and the 260k is how much we would ideally like.

Increasing salaries or increasing savings are the only 2 options I can think of too. We can't save much more than we are currently and salary increases aren't a given but maybe we just need to push more in those 2 directions.

The online calculators tend to be quite conservative. They were coming up around the 150 mark for DH and I, while our MIP ended up being more like 190.

Yes, a good mortgage broker might be able to help. Also, if you're only 13k short, you might be able to negotiate that of the asking price of the property you like.

Also, 6 months before you go to the bank for the mortgage quote, get as much overtime in as possible. The more money on your payslio that looks regular the more they will lend.

Remember that whilst rent is higher than the mortgage would be, there's a lot of additional costs of owning you need to keep in mind, things that are done by your landlord. Otherwise just shop around, there is usually other deals

I also recommend a good broker. My husband is the only earner in our house and when we went for our last mortgage, we could only borrow up to £230,000 pretty much everywhere. Our broker got us our house at £260,000 through lots of hard work and a very good relationship with Nationwide. He's worked with a few of our friends recently too and given tips on ways to improve affordability xx

How many years did you get the quote over? If 25 years for example would putting 30 years make the difference?!

I second a broker - an independant whole market one is the best , ours was amazing - took care of all if it , i didnt really even hear much until he called to say it had been accepted & he got us 20kish over what the bank said we could have xxx

I recommend London and Country

Children also bring a lot of additional costs too so you will need to consider that before stretching yourself.

I agree with the others regarding mortgage broker, ours asked us what we ideally needed which was 20k above online calculator and he got it for us, the calculators are really just a rough guide in my experience, good luck!

Thank you everyone - some really great advice. A colleague did also tell me that Barclays has a special mortgage that's 5.5 times your salary but only if you earn over 90k combined salary, which unfortunately we don't. So mortgage broker it is!

Don't buy until after Brexit - house prices will go down further

Have a chat with knight frank finance.
Nearly fell off my chair when I got the offer through.

Second getting a broker, online calculators err very much on the side of caution, you shouldn’t have a problem getting the increase you mention I wouldn’t think.

I’ve had good experiences with London and Country, you can call them and they’ll give an indication there and then, but basically look for someone who is fee free (charge goes to mortgage provider) and whole of market.

Having read properly I see you were considering L&C anyway. I’d just give them a call, they should be able to tell you pretty quickly.

Good luck!

Can't really add any more to what's been said regarding affordability but I'm surprised that only £13k or an extra 5% on your budget can really make that much difference to whether something is ''decent'' or not?

Also in most situations buyers (and even realistic vendors) would consider 5% off asking price perfectly reasonable, you should find that those £260k houses are already well within your reach at £247k

L&C are terrific; they sorted out a residential mortgage for us with letting permission, as we were abroad with HM Forces.