Significant deposit, low income

d9457u

I currently earn about £40k a year and have savings of about £350k. Looking for a mortgage - I want to borrow as much as possible and ideally would like to put down 30% on a £500k mortgage - are there any lenders ot there who can provide this with my income level

koexelek

You should be able to borrow in the region of £160k to £180k, assuming your credit rating is good, and you have no other significant borrowings.

Varies significantly from lender to lender though as to how much you can borrow

benjo

You are looking to borrow 350k that is nearly 9 times your yearly income - I doubt anyone would lend that much.

350k over 25 years at 5.5% is around 2.2k per month, your income is 3.3k per month before deductions - on paper you cant afford that amount, which is why lenders wont stretch to 9 times your salary.

At 12% the monthly payment would be 3.7k per month - £400 over your gross monthly income.

luckyfool

How would you propose to service a loan of that size?

Do you have other income streams that can be used?

Are you employed or self-employed?

_Andy_

Love the way the OP thinks £40 k is a 'low income'.
As has been stated though, the amount you're wanting to borrow is not realistic in the slightest.

d9457u

On a interest only mortgage monthly repayments would be circa £1300 (£350K at 4%). Monthly income after tax is about £2400

Obviosuly my savings produce income which is why I'm keen to keep them where they are and use as little as possible as a deposit.

I would also look to rent out a room for circa £750 pm therfore the monthly repayment would be would be halved.

Therefore it's about affordability and I wondered if lenders looked at this opposed to simply looking at your income which is rather short sighted. I live in london so a mortgage of £160k doesn't go far!!!!

Would using another mortgage free property as collateral increase the amount i could borrow?

Looking like i'm gonna hve to cash in some shares!

luckyfool

Using another Mortgage Free property by renting it out would produce income which the lender might use.

Is your £40,000 income from employment, with the investment income separate and on top of that? If so then some lenders will take the investment income into account as well.

d9457u

Thanks

£40k is my employment income + investmetn income on top (which i currently reinvest)

My father owns a few houses and said he would happily put some in my name to support an aapplication/use as collateral but would not be able to take rent from them
Also think they are cash in hand to avoid income tax.

Like I said simply wanted to know if I could borrow more than the usual 4 or 5 x income

luckyfool

Sorry, so the £40k includes the investment income or not? If it doesn't then you can't afford the type of mortgage size you are talking about. There are options that might even get you to 5.5 times income, but nowhere near what you want.

d9457u

It doesn't include my investment income - this is reinvested. £40k is my salary only.

it just seems foolish to leand someone who earns £100k (and could loose their job tomorrow) more than someone who has £400k in the bank but earns less

Anyone know any loan sharks?

koexelek

d9457u wrote: »

it just seems foolish to leand someone who earns £100k (and could loose their job tomorrow) more than someone who has £400k in the bank but earns less

If I was lending the money, I'd agree.
With the huge deposit lender is not taking any risks and is not going to lose any money..

... where as if the borrower with the small deposit and high salary loses their job, they ( the lender) are more likely to run the risk of a shortfall if they want to repossess.

The lenders will say it is all about affordability, but what sort of mug is going to sink £400k of their own money into a property they know they can't afford the payments on and will get repossessed