Affording a mortgage

[MyuMe]

Hi

I earn a decent salary but property costs mean a mortgage for anything I want is not likely.

Thing is I am in no debt. Have a decent deposit and I could afford mortgage payments on a bigger mortgage.

Do they ever take into account the fact that you can afford the repayments or just use the rule of thumb 4-5 times your salary and that's it?

Different lenders have different criteria and borrowing amounts. Affordability means you’d still be able to afford repayments if interest rates rose etc so they will perform a stress test (although I’m not too sure what level they test to). Most lenders now do a soft check on your credit report for an AIP so there’s not much harm in checking with a broker or your bank how much they’d lend you. At least you have an idea then of what kind of budget you can have.

5 times the salary sounds ridiculously high even if you’re otherwise frugal.

Maybe just get onto the property ladder with a sensible property you can afford more easily?

In my experience, Halifax offer the highest amount. Try their on-line calculator if you haven't already. However, if you can afford a property, I'd get on the property ladder asap. Look into help to buy and shared ownership.

Try a broker. Or start smaller!

if you have no debt at all you might have a poor credit score despite being relatively well off. lenders only know your are a good customer with low risk if you have documented history of sticking to debt repayment agreements.

If people can afford to pay high rentals then they can afford to pay high mortgages, especially if frugal and if it is something that they want to do. I think banks should look at individuals records of repayment in depth and their outgoings if frugal by nature.

They should absolutely see that if you have paid 1k a month rent then you can pay 1k a month mortgage even when computer says no especially when it has been paid for years. Which is the situation for a lot of people.

@flirtygirl I can see where you’re coming from. However, as a home owner, you will also pay maintenance fees if leasehold and you will need to afford things like repairs neither of which renters pay.

Maybe just get onto the property ladder with a sensible property you can afford more easily?

A one bed flat in outskirts of London is about £300k. Need a £60k salary for that and not quite there in terms of salary but almost

No I can't relocate and leave London my work is not easily moved.

Credit rating is absolutely fine. I checked it on Experian. I have had debts in the past: loans that I have repaid with no default so I am a known entity in terms of borrowing

@flirtygirl quite.

I can pay £1000 a month on mortgage and put £1000 in a savings account. I'm still living just fine on what is left.

I can pay higher monthly mortgage payments but I cant borrow enough

The loan multiple relates to the actual loan - how much of the £300k do you need to borrow if you have a good deposit

£250k

But that leaves nothing for stamp duty, furniture etc.

So I guess around £260k

Or else I could move right away from London to cheaper property but then have to pay £5000 a year on a travel card which is eye watering

I’m buying a one bed flat in zone 3/4 (on the cusp) for 200k with a small deposit so you’re clearly not looking in the right places. I certainly don’t own 60k. It can be done. I viewed plenty of flats under 200k in Woolwich, Plumstead, Norwood as well. Cheapest I saw was on the market for 180k

OP I know the train costs are high, but honestly think about moving out if you want to get on the ladder.

I lived 45 mins out of kings cross until a few years ago. the train was so quick it was only 5 mins longer than the walk/tube I had in London. and £250k will get you a house. if you find a new development there is also help to buy, so minimal deposit required.

if moving out is a no no take a look at new build flats along cross rail routes- until the end of this year it may be a pain to commute, but its really good then. you may have to look at shared ownership closer in to London, but in places like Hayes you should still buy something for your budget.

one of your last comments was a bit confusing- you know you can't use mortgage for stamp and furniture right? you have to have that as savings.

good luck.

Help to buy is terrible. I would never do that. I say that as I'm a lawyer and yes I've looked into the implications of it fully.

one of your last comments was a bit confusing- you know you can't use mortgage for stamp and furniture right? you have to have that as savings.

No it wasn't confusing.

If you look at what I said and the calculations, I said I'd have to hold back £10k of savings for stamp duty, furniture so I'd have to borrow £260k.

Go see a broker as it more based on affordability rather than x salary plus a broker will have access to a large number of companies who all have different rules. You may not end up with a High street bank as there rules tend to be stricter.

I don't have any answers but understand your frustration. Our mortgage repayment are £700 less a month than our rent used to be. Fortunately there were two of us so two salaries which meant we could borrow enough to buy.

NatWest do a 4.8 x salary and it was my understanding that they were one of the highest lenders but a broker is probably the only person who can help with that.

Your options are I suppose move to a 'cheaper' bit of London. Someone at work was looking around Morden area and ex LA flats were on for c£250k. But be careful with service charges. Alternatively try and save more of a deposit.

do you work in the city?

I'm not a mortgage advisor, just a property geek. Could you stretch to a two bed place and borrow a little more by taking in a lodger?
I think you can borrow an additional 10x the lodger's annual rental income.

www.bathbuildingsociety.co.uk/mortgages/mortgage-products-for-individuals/standard-residential-mortgages/rent-a-room-mortgage

Ok. Here are some more affordable options.

www.rightmove.co.uk/property-for-sale/property-64153950.html

Lovely period conversion on a gorgeous, tree lined road.

www.rightmove.co.uk/property-for-sale/property-87788087.html

Another lovely conversion.

www.rightmove.co.uk/property-for-sale/property-88380179.html

Or a ginormous fixer upper in a private block.

The town centre has lots of shops, restaurants, cafes, gyms, cinema with sofas etc. The second one is also within walking distance of Cheam Village which has a fab park with a ParkRun, a premium health club, farmers market etc.
The trains from Sutton go into Victoria, London Bridge and there’s Thameslink to Blackfriars, City, St Pancras etc. If you stay out till 3am, it’s 10-15 mins by bus/Uber from the Northern line.

Look in SE London as £300k will buy you a one bed flat.

kirinm I’m literally buying a one bed flat in SE London that is 200k. One beds categorically do not cost 300k across the board unless you’re looking in zone 2/3 in places like Balham, Wandsworth, Finchley etc. As I said above I’ve viewed loads that cost less than that including the one I’m buying

Op maybe put all your savings into the property (apart from stamp duty= and buy furniture later on.

JoJoSM2 you have definitely converted me to Sutton. Sounds like a great place to live.

I always read on here before joining that Sutton was awful