Minimum requirements to get a mortgage 2 September 2010 at 7:09PM edited 30 November -1 at 1:00AM in Mortgages & Endowments 19 replies 28.7K views

Dexter101

I currently live with my parents but would really like to move out, ideally by buying my own flat or house.

I currently earn £11,400 gross, £14K net.
I have around £12.5K in savings.

Obviously not enough to buy a house.

I'm crossing my fingers that I'll move up the ladder a bit in my current job in about 6 months where I think I'll have a salary will increase of ~3K. That's a maybe though.

Alternatively if I have to stick with my current wage, how much more should I save before I could qualify for a mortgage.

Is shared ownership worth looking at otherwise?

eschaton

Dexter101 wrote: »

I currently live with my parents but would really like to move out, ideally by buying my own flat or house.

I currently earn £11,400 gross, £14K net.
I have around £12.5K in savings.

Obviously not enough to buy a house.

I'm crossing my fingers that I'll move up the ladder a bit in my current job in about 6 months where I think I'll have a salary will increase of ~3K. That's a maybe though.

Alternatively if I have to stick with my current wage, how much more should I save before I could qualify for a mortgage.

Is shared ownership worth looking at otherwise?

If your earnings don't increase then I would suggest saving enough for a 90% deposit on a rabbit hutch and then borrowing the rest.

Dexter101

Thanks.

Anyone got any sensible answers just so we've got a good mixture?

zx81

Dexter101 wrote: »

Thanks.

Anyone got any sensible answers just so we've got a good mixture?

Nice comeback.

Your chances are slim. How much is a likely property going to cost? Say a lender will give you 3 times salary - which is a lot these days - you're looking at around £42k plus your deposit. Will £54k buy you anything? Or is it £20k short or a £100k short? Then you can start to figure out your options and how long it might take you. An extra £3k salary may get you another £10 mortgage - is that enough?

Don't know much about shared ownership but worth looking into. Or buying with a (long term) partner to increase the salary the mortgage is based on.

If you're massively ambitious, buy a hole for £54k (if they'll still lend it to you), do it up Sarah Beeny style over time to make it nice enough to live in - or sell. But it's not for everyone. Certainly not me.

For better advice than from a bloke on the internet, go and chat to a mortgage advisor. Even just the one at your local bank - you don't need to get the mortgage through him (and I'd recommend you don't) but would give you an idea of where you stand.

Good luck with it.

eschaton

Dexter101 wrote: »

Thanks.

Anyone got any sensible answers just so we've got a good mixture?

You can't really be sensible.

In a job which based on full time hours earns you under £7 per hour and you want to buy a flat and all the associated living costs that go with it.

You haven't really planned this out have you?

If you have saved what you have from earnings then keep doing that.

Dexter101

OK, I now have £16.5K in savings and my take-home salary is now £13K.

Obviously I'm in a better position now but is it good enough?

I've found a flat for £74K which looks suitable. As I now have over 20% to place a deposit, am I in a position to approach a mortgage lender or should I continue saving / try to increase my salary?

HappyMJ

Dexter101 wrote: »

OK, I now have £16.5K in savings and my take-home salary is now £13K.

Obviously I'm in a better position now but is it good enough?

I've found a flat for £74K which looks suitable. As I now have over 20% to place a deposit, am I in a position to approach a mortgage lender or should I continue saving / try to increase my salary?

The absolute most you could borrow is 4 times salary so £13k*4=£52k plus your £16.5k equals £68.5k so it still isn't enough to buy a house worth £74k. Really you should have about 25% of the house price as a deposit so that's about £20k. Don't forget you'll need to spend between 1% and 5% of the purchase price in fees and charges. Being on the limit on lending guidelines you'll be hit with interest rate penalties so it'll probably be more expensive than simply renting.

I'd get a part time job in which you earn at least £200 per week. You'll be able to afford it then.

Blobby8_2

Glad you got your rise !
Have you considered all your other outgoings, council tax, fuel, TV licence, water rates, internet,insurance,communal charge(in a flat),food, shopping (bog rolls,condoms, etc) you are obviously young and I would hate to think your dash for freedom ended up in you living on beans.
And I'd check your use of gross & nett too.

Dexter101

blobby8 wrote: »

Glad you got your rise !
Have you considered all your other outgoings, council tax, fuel, TV licence, water rates, internet,insurance,communal charge(in a flat),food, shopping (bog rolls,condoms, etc)

I've had a look at whether I could afford that if I rented and I just about could so I imagine I would have similar outgoings if I bought.

And I'd check your use of gross & nett too.

Aye, I just noticed I got that the wrong way around in the OP.

**woody123**

Hi Dexter,

I'm in a similar situation you are in, live with parents etc, same wage..

I have a larger deposit 33k..

I think its 3.1/2 or 4 times your gross salary you can lend so thats 68k..

I'm looking to buy a house priced at around 85k and then put my deposit down. Looking at the total outgoings i've got all worked out, it's going to be tight so i've decided to wait a bit and save more and maybe house prices drop a little.

I think you're best advice mate is to wait a while and save more money.

In addition to the outgoings Blobby pointed out don't forget the unexpected repair bill or the holiday you might want.

Blobby8_2

Dexter101 wrote: »

I've had a look at whether I could afford that if I rented and I just about could so I imagine I would have similar outgoings if I bought.

There are costs associated with owning property over and above renting costs. I really dont want to be a wet blanket, but I just think you need to do a lot more research.
Maybe post a list here of what you think you may need to pay out each month.
Dont forget mortgage rates are only going in one direction (IMHO) UP!