How much can I afford??

[Syylvia]

I apologise for my apparent stupidity but can someone please explain this to me?
If I am given a mortgage in principle for £270000 with a required 10% deposit..what value of property can I buy??? If the house is say offers over 250k what is the maximum I could offer? Will the mortgage company give us 270k then we add the 27k deposit so really it would be a house at 297k? I am having a hard time getting my brain around this so if anyone could kindly explain then I would be most grateful!!!

Yes, that's right. You would also need to budget for stamp duty (or equivalent if not in England), legal fees and searches.

Not technically... for a house at £297k you’d need £29.7k as deposit plus fees. How much deposit do you have?

As op says: the 10% is 10% of the purchase price, not 10% of the mortgage.

Start with how much deposit you have and work out what you can afford from that – you don’t have to take the maximum mortgage you can afford – and remember stamp duty, solicitor fees, survey, movers, contingency money and try to keep some back for things like white goods, curtains, etc.

Ah OK so the max I can purchase will be mortgage amount plus deposit.Thank you! This is what I though but my brain couldn't quite wrap itself around the concept! Furiously saving as even £1000 will make a difference. Such a competive market the the moment so trying to add to the deposit as much as possible!

Sorry didn't see that last reply there.. yes hoping we won't need to go too near top of our mortgage amount but just trying to confirm what we are working with before wasting time viewing etc!

Remember you'll need to budget for the actual purchase process -

v rough guide - £1.5k for solicitors fees, £1k mortgage arrangement fee (although this can be added to the amount you borrow), £800 for survey, any costs for moving, a slush fund for any (seemingly inevitable) things that need to be fixed/buy in the first few months, enough to cover potentially both rent/mortgage for a month.

Sorry if you've already taken into account, but I remember being quite shocked at how much the process cost when we bought for the first time.

Just want to add in case you're in Scotland. The bank will lend up to the home report value and if you go higher (which you need to just now) anything over comes from you. For example, we've just bought a house with a home report of £143000. We are paying £168000. We need to put up £25000 plus 5% of the home report so £32150 upfront and the bank are lending £137850.

Like I say might not be relevant but I believe (could be wrong) in England the banks also survey it and may not agree with your purchase price. Just to be aware.

Thats awful Onebabyandamadcat. How on earth is anyone supposed to afford to buy with the prices going so high over the Home Report. I can see why people buy new builds, generally they are coming in at a fixed price. Its like the goalposts are constantly being changed! Thanks Andthenanothercupoftea, do we have to pay £800 for a survey, I thought the Home Report replaced that now?

I would keep £10k back for legal fees, stamp duty, moving costs, building survey, broker fees (if you're using a broker).
A homebuyers report is only suitable for newer properties and most surveyors won't do one on an older house. If you're spending £270k, £800 (ish) is good value for peace of mind.
New builds tend to have hidden fees (eg annual maintenance fees for communal spaces).
There are pros and cons.

basically max amount is your cash deposit (whatever that is) plus £270k which must account for a maximum of 90% of the price of the property.

As others have said don't forget to take fees, service charges and decorating etc into account when budgeting

PS if you're in the UK offers over is a load of rubbish. Look at what other similar houses are selling for and offer what you think is right for that property

Which country are you in?

Also beware that your mortgage in principle is exactly that, doesn't mean that's what they will lend you after doing financial evaluation once you start the mortgage application.

Example, my mortgage in principle was £190k (only using my wage as hubby is self employed less than 3yrs) however when actually doing the application they would only lend £160k which was fine for us as house was within that plus deposit.