Significant deposit, low income

benjo

d9457u wrote: »

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?

I do take your point about people loosing their jobs and that is an uncertainty that lenders face.

But who is to say that you wont go out and blow your 400k savings on the horses the day after you get a mortgage? and to top it all loose your job - there is no law to stop you spending your own savings, then all you are is someone with a 350k mortgage, job seekers allowance and nothing in your bank....The fact that you have alot in the bank is no reassurance to a lender unless you are prepared to convert those savings into a deposit.....

If you put your 400k into the house as a deposit and took out a 100k mortgage then lenders would be falling over themselves to lend to you at a good rate, ok you would loose income on your savings, but you will pay less per month in mortgage payments and I will bet the rate you are charged will be far more favourable - certainly at this moment in time.

Chinkle

You are in a fantastic position with regard to savings and, have a very nice (certainly not low) salary too.

In you position I would look at an offset mortgage - if you are prepared to move your savings into this you could certainly reach the £500K you are looking for.

If you are reluctant to tie up your all your savings in property, then you would need to reconsider your expectations of the type of house you want to buy.

happybroker

Chinkle wrote: »

You are in a fantastic position with regard to savings and, have a very nice (certainly not low) salary too.

In you position I would look at an offset mortgage - if you are prepared to move your savings into this you could certainly reach the £500K you are looking for.

If you are reluctant to tie up your all your savings in property, then you would need to reconsider your expectations of the type of house you want to buy.

unfortunately this isn't how offsetting works, you would still be unable to redraw your savings as the bank would then, effectively, be granting you a facility of over 10x income which is where the problem lies in the first place.

Chinkle

Sure, he won't be able to draw on those savings, which is why I said that if he wasn't prepared to sink all (or a good proportion) of his savings into a property then he would need to lower his expectations.

But as a high rate taxpayer, this would certainly be a tax-efficient way to use his savings as well as buying him the house he desires.

In actual fact the title of his original posting is misleading because he doesn't have a significant deposit because he's only prepared to invest less than a third of his savings in said property.

d9457u

I haven't made a decision yet about % of deposit I want to put down, I just know that financially it makes sense to borrow as much as possible with interest rates being histoically low.

Clearly Im going to have to either put down more or buy a less expensive apartment - probably put down a little extra and look to rebuild my savings via renting out spare room. Will also look into off set.

Thanks for the input all.

I work in commercial property and its much easier to get higher ltv and affordability based lending etc

Trollfever

I work in commercial property and its much easier to get higher ltv and affordability based lending etc

That is news to me.