LTV - This whole credit crunch and LTV thing could be a problem...

beckstrous

Thanks again for all the replies. What an eye-opening day it has been. I think we should have looked at things like LTV earlier, so perhaps we were a bit naive, but you do learn. We have a joint income of about £75k, with one of us expecting a pay rise soon, so all we did when doing our working out was look at what we could afford to pay each month. This did actually include things like bills, but we never really considered whether or not lenders would be prepared to lend us any particular figure!

We want a 3 bed house, or a house that could be converted to a 3 bed, and there's still plenty of choice for us. I think maybe it's a blessing in disguise anyway because with a smaller mortage we will be able to save or ovepay more.

So now we're looking at properties up to £350k but only with a view to paying £320k, which is the max we could afford once we pool all of our savings plus equity, which amounts to about £64k. So we would be looking at a mortgage of £256k or thereabouts. Going by the 3.5x salary rule this is well within reach. It means forgetting about that 'forever' house for now but we can still get a great place to live in a nice area, somewhere to bring up family etc.

Edit: in doing these figures I did also take out solicitors fees from our savings (including stamp duty) as well as leaving us an emergency pot of money in savings amounting to £7200. I think this is much more realistic although it has taken me ages to work it all out!