Is it likely I will get a mortgage for 5 times my salary?

mark432

Hi, my salary is £16,000 and I have a deposit of £30,000. I have been trying to get a mortgage for 5 times by salary. So I am looking to borrow £80,000.

So far I have been to Barclays (Woolwich) and told them my salary, deposit, and that I have no debts, other loans etc. They have offered me 5 times my salary based on that. They said this was an agreement in principle subject to a credit check. They then said I could make an offer on a flat and then go back to them if it was accepted. Then they would do a credit check.

I have little credit history which could be a problem, but since then I have found out my Experian credit score according to creditexpert.co.uk is 951. Is it likely after a credit check I will get the full 5 times my salary?

I am wondering should I make an offer on a flat yet? I have no paper work or anything from Barclays, is this normal? Or should I go back to Barclays and ask them for something more definite, like doing a credit check first?

Cheesedoodles

Barclays/Woolwich have the following lending criteria:

- No more than 2 late payments in the last year
- No more than 2 house moves in the last 3 years
- No CCJ/IVA/Bankrupcy etc
- Experian Credit score of more than 699

As for multiples. If you have more than 850 credit score they give you 5 x salary. If you have between 699 and 850 they give you 4x.

My source is the Woolwich advisor who showed me the lending criteria screen on the internal woolwich network....not sure he's meant to share that screen but he did..

You should be ok, but if I was you I would go to a Barclays Branch and give him the details of your late payments etc...he should then quickly be able to say if you're likely to be accepted for 5x.

westv

Cheesedoodles wrote: »

- No more than 2 house moves in the last 3 years

Not sure i understand the relevance of that condition for a mortgage application. Just another hoop to jump through?

Cheesedoodles

westv wrote: »

Not sure i understand the relevance of that condition for a mortgage application. Just another hoop to jump through?

Neither do I..

I had 2 house moves in the last 4 years and the Woolwich advisor told me that is ok, "as long as it's not more than 2 in the last 3 years".

I suppose it has to do with stability.... I saw that condition written on the lending criteria screen.

mark432

Cheesedoodles wrote: »

- No more than 2 late payments in the last year
- No more than 2 house moves in the last 3 years
- No CCJ/IVA/Bankrupcy etc
- Experian Credit score of more than 699

As for multiples. If you have more than 850 credit score they give you 5 x salary. If you have between 699 and 850 they give you 4x.

You should be ok, but if I was you I would go to a Barclays Branch and give him the details of your late payments etc...he should then quickly be able to say if you're likely to be accepted for 5x.

Ok that sounds good. I am a first time buyer and I have no late payments on anything and I fit all the other criteria above.

donkeyman

Are you really really sure you want to burden yourself with a huge (relative to your salary) mortgage? I assume you're quite young, possibly free and single.

Have you considered the fact that there's a whole world out there which you might never be able to see once you join the rat race and are living with that huge debt?

Yes, we all need places to live, but renting should always be considered, maybe with a few mates for some years. Imagine if your flat drops in value. Every penny of that drop is your money, not the bank's. What about if you lose your job, or if interest rates start to creep up?

How might you pay if rates doubled?

I'm not saying don't buy a place, but paying back that £80k will eventually cost you £160k over 25 years. That's £160k of your taxed income. Put another way, for the 25 years of your mortgage, over 12 of those years will be solely worked to pay for your flat.

maninthestreet

An £80,000 mortage, over 25 years at 4.0% p.a works out at £422 per month.
What is your take home pay?

jamesperrett

I don't know if this applies with the Woolwich but some lenders apply different criteria if your salary is less than a certain amount (£20000 in the case of a friend of mine). You may find that they won't lend as much as you were hoping.

Cheers

James.

kriss_boy

maninthestreet wrote: »

An £80,000 mortage, over 25 years at 4.0% p.a works out at £422 per month.
What is your take home pay?

Yea but we all know historically interest rates have been treble that.. in which case the OP would be screwed.

I think you need to base the affordability of the mortgage at a rate of about 10% incase things get really bad in years to come.

Peelerfart

maninthestreet wrote: »

An £80,000 mortage, over 25 years at 4.0% p.a works out at £422 per month.
What is your take home pay?

The OP should be taking home about £1,080.35 on £16K

mark432

This is correct, each month I get paid about £1080. My other bills will be about £300. I will be able to afford the payments at the moment and still save about £300 a month. After I have saved up some money and if I can afford it, I would like to start overpaying the monthly payments by about 10% each month. (so about £40-£50 extra a month). This will cut down on the total interest I pay over the 25 years.

But I agree it would be difficult for me if interest rates went up to 10% or higher. On the other hand it is very likely my salary will go up to £20,000 over the next few years. I am hoping it will go up to 18,000 in a few months time as I have a salary review.

How likely is it interest rates could go to 10% of above? How soon could this happen?