A touch of reality...

Colin_Toy

My son and his girlfriend are thinking about buying a house together and I just wanted to get some views on the financial situation so I can help advise.

My son earns about £30,000 a year but about 40% of this is via commission. His girlfriend earns about £26,000. They have managed to gather about £40,000 for a deposit.

The key problem is that I think that they will not get as big a mortgage as they think they will based on their combines salary levels due to the commission side of my son's income.

Can anyone advise me of the sort of amount that they should be able to borrow so I can at least manage their expectations?

Many thanks

Colin

feisty1

Best speaking (taking advice) from an independent mortgage advisor as they are knowledgeable as to what lenders consider commission etc and what % they take into account when adding it to the income mutiples......as this vary's from lender to lender.........

dwsjarcmcd

As a general rule, commision is taken as around 50% of the rate that salary is. So if your sons earns a basic of £18k plus £12k commission, that would equate to around a £24k salary which the lender would consider. They would also need to deduct any loans, credit card debt etc from their salary.

Go to a few lenders websites and see the borrowing calculators they usually have, input the details and you will get a rough figure.

David

dimbo61

First of all Colin well done to your son and his girlfriend for saving £40,000 deposit.
Now I dont know where you and your son live and what the housing market is like but with a good deposit and a combined income of say £50,000 a year I hope your son and girlfriend can find a home to suit there needs.
The stamp duty increases from 1 to 3% over £250,000 so I hope they are looking at properties under £250k on that basis alone as this is also 4X joint income and a £200k mortgage.
GOOD LUCK TO THEM BOTH

zerodefect

Hi Colin,

Provided they have very little debt, they should be sitting pretty. The combined salaries of your son and his gf should give them a good hand.

I recently applied for a mortgage (interest only) and was offered £129,950 (which would exclude my 10% or £12,950). As of this time, I have not accepted the offer because I am still increasing the amount of my deposit which is sitting at 12.5%.

Keep in mind:

My Salary: £24,500
My Debt: £184.15 p/m for 2 yrs

In my experience and as suggested above, it would be in your son's interests to see an independent adviser.

Hope I was of some help...

rstjab

Thank you all very much for taking the time to reply, I will set them up with an IFA as soon as possible.
Happy new year.

Colin

getmore4less

I would start looking but not be in any hurry to buy, prices are dropping and there will be plenty of houses to choose from and they can take their time when they find some they like.

I would also think about keeping back a contingency fund to cover a loss of an income say 12months mortgage payments and look at not stretching to the limit of affordability by going interest only, budget for a repayment.

Also they need to consider the splitting up senario, one easy way to say goodby to that £40k if they have to sell because neither of them can take the place on.