Can I get a mortgage on a £29k salary?

K9cuddles

Oddgy wrote:

Bloody hell 29k a year, gees im underpaid!! As if i will ever reach that rate. :-(

Tell me about it! My dream of moving out to buy is many moons away...

Stompa

wonker wrote:

The thing is my friend who will move in with me is going to be paying me ~£450 pound rent a month

I wonder if, strictly speaking, you might be liable for tax on a bit of that:

http://www.direct.gov.uk/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/TaxOnRentalIncomeArticles/fs/en?CONTENT_ID=4017804&chk=mGasop

johnofhertford

Well I suppose some lenders will take the rental income into account, but obviously it's a bit difficult because the income will only start coming in after you've bought. You'll need to think about what will happen if/when your lodger leaves and what the gap would be until you found a replacement, and as Stompa says, you will have to pay tax on some of that 450 per month.

Speak to a Mortgage Advisor who will be familiar with the approach each lender tends to take in assessing affordability.

PoorDave

wonker wrote:

The thing is my friend who will move in with me is going to be paying me ~£450 pound rent a month and I will pay whatevers remaining.

If I move out from where I live, into London, I will be paying about ~£450 pound in rent anyway.

So if I can get a mortgage which is ~£1100 a month repayment then I will be paying the reamining ~£650.

I don't think thats too hard with some budgeting as I can save on travel costs (£240 atm) by walking into work, partying costs (£300 atm) as I drink too much anyway

Will this be an informal rental, where your friend could move out any day they wanted and stop paying?(they find somewhere cheaper/move in with partner etc) If so, i can't see the lender ebing too inclined to take such money into account.

Also might have helped get a better answer if you'd mentioned this part earlier...

jamesd

wonker, your friend makes it easier but it's still worth considering an interest only mortgage that allows overpayments. Then you can make the normal repayment mortgage payments when you have that much money and the lower interest-only payments if you don't. Say if your friend moves out. Saves some hassle setting it up later if you need it. You're still pushing pretty hard against what's sensible - way above what's normally thought of as sensible.

wonker

PoorDave wrote:

Also might have helped get a better answer if you'd mentioned this part earlier...

Apologies, I was rushing the post as needed to head of to watch football.

wonker

jamesd wrote:

wonker, your friend makes it easier but it's still worth considering an interest only mortgage that allows overpayments. Then you can make the normal repayment mortgage payments when you have that much money and the lower interest-only payments if you don't. Say if your friend moves out. Saves some hassle setting it up later if you need it. You're still pushing pretty hard against what's sensible - way above what's normally thought of as sensible.

Intresting, didn't think you were allowed to do that. Will do some digging around.

Merci.

johnofhertford

wonker wrote:

Intresting, didn't think you were allowed to do that. Will do some digging around.

Merci.

It will depend on the lender. Some lenders will let you take out an interest only mortgage and, providing the LTV isn't too high, won't care how you plan to pay back the capital - if you can't pay it back they'll just take your house off you instead. Other lenders will be not be so happy - they'll want you to show how you're going to pay it back, e.g. through regular saving in an ISA, annual bonus payments, sure fire track record on the greyhounds, but something other than "equity from sale of property".