24 yrs old - what mortgage can I get?

Henry_Blofeld

Hello

24 year old male from the north of England here. I'm back living with my parents at the minute and looking to buy. The problem is that I don't know what I'll be able to borrow....

My circumstances:-

-In a month or so's time I will be earning around 23k (currently 20k).

-In a year or so's time this should have jumped to around 33k.

-I currently have 6k student loan and a 3k interest-free works loan.

-My 'luxury' outgoings are quite large (I spend around £200 a month on drinking, around £100 on clothes and £100 going to the match)

-My credit rating should hopefully be good as I pay my phone bill each month by direct debit and have always paid any credit card payments promptly.

-I have about 13k deposit saved up.

Does anyone have any idea what sort of mortgage I could get? I know there is a general '3.5 times your salary' rule of thumb but I wasn't sure if my wage jump would help me get around this....

Any help much appreciated.

Thanks

Joe_Bloggs

How did you save up £13K ? This is a very rare occurence. Projected future earnings are a factor in a few graduate mortgage schemes but for the majority of lenders it is current income minus outgoings that set how much you could borrow.
This is certainly an oversimplification as many underwriters would lose their jobs if it was true. The tank top market would take a dive.

Drink your beer through a straw and you will save thousands.
J_B.

Henry_Blofeld

Joe_Bloggs wrote:

How did you save up £13K ? This is a very rare occurence. Projected future earnings are a factor in a few graduate mortgage schemes but for the majority of lenders it is current income minus outgoings that set how much you could borrow.
This is certainly an oversimplification as many underwriters would lose their jobs if it was true. The tank top market would take a dive.

Drink your beer through a straw and you will save thousands.
J_B.

I have just lived at home paying minimal rent. If I'm being honest I should have saved up more....

tomstickland

The salary multiple has crept up over the last few years, but 3.5-4 x salary plus the deposit is generally about what you can borrow.

Jem8472

Me and my gf went to find out how much we can borrow. We dont have any money saved up but have a high credt rating and we can borrow upto £144K :eek:

We are no way going to borrow that much, but I think it worked out to be about 5 times our earnings.

tomstickland

It's worth sticking to the traditional 3.5-4x rule, since how much you can borrow and how much you can easily afford are two different things, especially after factoring in council tax, utilties, decorating, houseware etc.

JennyB

I can second that you can get very high multiples (5x). It's definitely worth working out what you think you can afford rather than just borrowing the max though. We've borrowed with a VERY high multiple and I couldn't afford to p*ss £200 up the wall every month! :beer: Got to work out your priorities on that front - many of my friends have preferred having money to spend on going out rather than having a bigger house.

I think mortgage companies usually deduct the outstanding amount of any debts of the amount they'll lend you, but I'm not certain of that and don't know whether they treat student loans any differently.

In terms of future pay rises I think mortgage companies would probably want to see hard evidence of that - i.e. letter from your employer. I don't think they'd otherwise take that into account.

You might also want to post this on the mortgages board where you might get more advice from those in the know. Also perhaps head down to and IFA and talk it through with them.

clairehi

Every lender sets their own salary multiples so shop around. Some, such as Alliance and Leicester, have done away with this and use an "affordability" calculation instead. You can do it yourself on their website.

I believe that commercial loan repayments and student loans are generally taken into account by lenders. Howver my OHs interest free season ticket loan from work was not taken into account.

You will need to supply proof of earnings eg last 3 months payslips, so you cant usually take into account future earnings when calculating how much you can borrow. There may be specialist products for young professionals who can show a defined career path eg doctors but Im no expert on this.

Sapphire

OP: forgive me, but at the age of 24 do you actually need to buy a property, especially given your outgoings and salary?

It might be better for you to rent and continue enjoying life, rather than saddling yourself with a huge debt that you will be repaying for decades.

flang

Personally i would rent for a year or so just to get used to paying bills etc
Once you have all your furnature etc.
Get buying!!!

MortgageMamma

I think you have done very well saving that amount of money at your age, and it sounds like you are doing OK job wise as well, what is it that you do? Have you got a degree or recently graduated