Mortgage- Big deposit, low income

Here's a question for you... Are there any lenders that calculate a mortgage loan based on previous rent amount? No?

My situation is I have a £40k deposit, but that's useless because of my salary of £16k. Using a mortgage calculator shows I can lend up to £58,000. Plus my deposit, I could buy for £98,000, not mentioning any fees yet! Which gets you nothing in Kent these days.

These mortgage calculators show I would be paying a lot less than my rent (50% at least), so my question is why can't lenders look at rent payments previously made? Lenders could calculate how much to loan you based on your monthly payments you could afford before, against what payments you'd be making to a mortgage. I have never missed a payment of my rent, or any payments at all with council tax, phone contract etc.

Do you think anytime soon mortgages would be calculated differently? Or do you think there will be more help to buy schemes for all others in a situation like myself?

It would be great to hear some debates on this topic.

Comments

  • alchemist.1
    alchemist.1 Posts: 860 Forumite
    Have you tried different banks? Not all have the same criteria.
  • kingstreet
    kingstreet Posts: 38,665
    First Anniversary Name Dropper Photogenic First Post
    Forumite
    What you paid in the past has no significance in what you have to pay in the future.

    When you own your own home you will have several other costs you don't encounter as a tenant - what happens if your CH boiler needs replacing?

    Affordability takes into account all the costs of being a homeowner, not just the mortgage.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • beecher2
    beecher2 Posts: 3,677
    First Post First Anniversary Combo Breaker
    Forumite
    Lenders want to be confident that you can afford the mortgage throughout the course of its term and so stress test using higher interest rates than today's. You also have to factor in paying for the upkeep of the house - new boiler, roof etc.

    How much are the properties you're looking at? How much are 1 bed flats?

    You'd be best to concentrate on upping your wages to be honest.
  • AnotherJoe
    AnotherJoe Posts: 19,622
    First Anniversary Name Dropper First Post Photogenic
    Forumite
    Your "solution" about allowing people to borrow more based on what they paid on rent would not work. It would simply increase house prices lead to a boom in price making them unaffordable again, and then a massive bust when (eventually) interest rates rose and no one could afford it. That happened before, at lest twice from memory. That's what the current rules are meant to try and limit. Tough luck for you better for the economy as a whole.

    Many years ago I was in similar situation. Rent was more than mortage, couldn't get a mortgage. I got a better paid job and moved to where housing was more affordable. And on a salary of only £16k I suggest you do similar.
  • amnblog
    amnblog Posts: 12,404
    First Anniversary Name Dropper Photogenic First Post
    Forumite
    Your Landlord is not lending you a six figure sum of someone else's money with the regulator watching his every move.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • ACG
    ACG Posts: 23,661
    First Anniversary Name Dropper First Post I've helped Parliament
    Forumite
    Lenders have to stress test the mortgage at a rate of around 6-8%. You are looking at repayments for the next 2 years, however interest rates are at an all time low and will only be going in one direction in the future and so they need to be able to ensure you can pay it now and in the future.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • vw100
    vw100 Posts: 306
    First Anniversary First Post
    Forumite
    I can only imagine mortgage lending will get stricter even more so in the future.
  • mrginge
    mrginge Posts: 4,843 Forumite
    buying, fueling and maintaining your own car is very different to getting the bus to work every day.
  • sleepyjones
    sleepyjones Posts: 6,087
    First Anniversary Name Dropper First Post Photogenic
    Forumite
    I agree with your point about taking into consideration rental amounts ... I'm going through a thing with a friend at the moment who is paying £625 a month in rent, every month, on time ... yet he can't get a mortgage, even though he could buy the flat he's currently renting for £625 a month on a £300 mortgage. It's slightly different in that he has bad credit so can't get a mortgage anyway but I get what you're saying.

    Not to sidetrack this post with the bad credit thing I mentioned, I'm just making an observation on the current rent that he's paying and what he could be paying on a mortgage.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 342.2K Banking & Borrowing
  • 249.8K Reduce Debt & Boost Income
  • 449.3K Spending & Discounts
  • 234.4K Work, Benefits & Business
  • 606.7K Mortgages, Homes & Bills
  • 172.7K Life & Family
  • 247.2K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards