Advice on amount to borrow

modelreject

Hi,

I am currently looking for a house and have been offered £150,000 by a bank with a 10% deposit. I will be purchasing the house with my partner. Our joint total salary before tax is £35,000.

Borrowing £150,000 is a bit too much. Surprised they offered it in fact. I was thinking of looking at houses around £140,000 with £15,000 deposit. So that's £125,000 loan to pay off.

Do you think our this is feasible or should I be looking at less expensive properties. The reason being that no properties below this value interest me and I want to buy a home, not just an investment.

Many thanks,
C

_Andy_

Really it's something only you can answer.
You need to look at what the potential payments would be, and also what they would be if interest rates were much higher.
Also factor in regular outgoings, plus cost of maintenance of a property etc.

[Deleted User]

modelreject wrote: »

Hi,
I am currently looking for a house and have been offered £150,000 by a bank with a 10% deposit. I will be purchasing the house with my partner. Our joint total salary before tax is £35,000.

Have you found a place to buy yet? If it was me, I would work out what I could afford to borrow using some online calculators, take a look at the types of houses available in that price bracket, and then think about getting a mortgage offer. Just because you've been offered a lot of money now doesn't necessarily mean you should take it..

You should also consider what might happen if one of you is made redundant or is unable to work. Will the other be able to cover the monthly payments on their own? What happens when interest rates go back up (and boy, will they ever)? The repayments on a mortgage that size could be more than £1K a month. To me, that seems like a big old mortgage to be saddled with, and you could live to regret it. Aim for repayments of no more than a third of your joint monthly income. A mortgage of around 120k is probably going to be much more realistic.

modelreject wrote: »

Borrowing £150,000 is a bit too much. Surprised they offered it in fact. I was thinking of looking at houses around £140,000 with £15,000 deposit. So that's £125,000 loan to pay off.

You're right, it is. Don't be tempted to take on more than you can manage just because the bank has made it available to you. Work out what you can afford, and stick to that limit, even if you have to look outside your preferred area.

modelreject wrote: »

The reason being that no properties below this value interest me and I want to buy a home, not just an investment.

Many thanks,
C

ah the eternal dilemma remember, this is your first home, not your forever home. Over the years, your mortgage will be gradually reduced, you'll can save some money, maybe improve your property and then be able to look at moving on. The cheaper houses might not be perfect, but they're the first step. Good luck!

modelreject

Many thanks for that. I will have to do some serious calculations this weekend. £120,000 sounds feasible. With a £15,000 deposit I may start looking at properties on the market for £135,000.

Hopejack

Has the bank actually said they can lend you that - ie you have applied? I ask because a lot of people on here seem to be getting AIP or MIP but then when they actually go to apply properly with the lender, they are being told a different story! Some being told they can't even borrow when they had been accepted in principle! It's madness.

I think you are very wise to look at what you can afford sensibly - wish more people would do that!

modelreject

It's just a mortgage in principal. I probably couldn't get the full £150,000. It's just mad that they actually offered it in the first place. The actual expenditure calculations they use to base the loan on is mad too. They expect two people to live off £200 pound a month after travel expenses, contents insurance etc. So this has to take into account pets, children, holidays and more. Madness!!!