How much can I borrow?

richiethekid

I know there are loads of posts of this type already, but I'd appreciate some advice. I've been renting privately for a couple of years now, hoping property prices would eventually come down. While I still think this will happen in the long term, I don't think it's worth waiting to buy, as rent payments are just dead money.

I'm currently earning just over £16k (plus around £800 a year car allowance) and Mrs The Kid has just gone back to work full time, earning a little over £11k. Realistically I'm expecting both our salaries to increase by at least £2k in the next couple of years, not counting cost of living increases. Most online mortgage calculators are giving me a figure of between £70k and £80k, which is way short of what we'd need to buy something we could actually live in. At present we don't have much in the way of savings (which I'm working to address) and no debts at all. We're currently paying £550 a month in rent, and to buy something which would be viable long-term, I reckon we'd need to spend upwards of £120k.

All I need to know just now is what could we realistically borrow based on salary and/or affordability?

Any help would be much appreciated.

MortgageMamma

Do you get working families tax credit? how much credit do you have outstanding? can you take your monthly credit commitments x by 12 and let me know

cupid_s

We looked at online mortgage calculators who said we could have about 45-50k. When we went to HSBC they said they would lend us96500 or maybe a bit more if I could get proof that i was getting postgraduate funding. Couldn't get this info in time but they gave us 70k no problem. This was based just on hubbys wages and he was earning 13.5k pa.
When we said we thought this was high they said it was for a few reasons. We had 30k deposit, and obviously extra to cover solicitors and anything else. And also we had no debt, no outgoing, and the potential to earn a whole lot more.
But 550 per month is quite cheap, compared to what your mortgage would be anyway. So you should be able to afford to save a bit of a deposit, and that would definately help. As will the fact you have no debt at all. But i'm sure you'll be able to get more than 70-80k.

Andy_L

As an example Smile are offering 3.5x joint income so ca £95k

For a 120k house you'd be looking ap paying aboput £100/month more than your rent just for the mortgage plus all the other costs of home ownership (eg insurance, repairs & maintaince). Do you feel that's affordable.

MortgageMamma

Richie

With all due respect to the above posters, Please understand everybody's financial positions with regards to their mortgage and their individual requirements differ widely, and may not match the mentioned lenders criteria, there is a lot more to mortgages and affordability than rates and income multiples.

richiethekid

Cheers for responding so quickly everybody.

Just had the new tax credits award through the post yesterday; it comes to just over £500 for the 06/07 financial year. Phoned them last night to explain a few changes such as Mrs The Kid's hours increasing, and the chap said that shouldn't affect our award.

At the minute I pay the rent, council tax and all bills out of my wages, but Mrs The Kid will be making a contribution (yet to be calculated) once the full-time wages start coming in. I reckon we could easily afford an extra £200 per month including buildings insurance and any other extras we may need like mortgage protection and life cover. Our current house is in band C for council tax purposes so I think we'd save a few quid there as we'd probably be moving to a lower banded property.