Who offers 5X income

tomstickland

I think I need to add some pub flavoured sound bites to this.
why not buy a BTL as an "investment", it could be "your pension fund"
also, better "get on the ladder" before "it gets out of reach"
"property never goes down"
"renting is dead money"
"self cert is great"
"interest only" to reduce monthly payments

yes, I think the best option is to take a 100% FTB mortgage and also consolidate debts into an unsecured loan. Ideally self cert interest only, or maybe 35 years on repayment.

toonfish

tomstickland wrote:

I think I need to add some pub flavoured sound bites to this.
why not buy a BTL as an "investment", it could be "your pension fund"
also, better "get on the ladder" before "it gets out of reach"
"property never goes down"
"renting is dead money"
"self cert is great"
"interest only" to reduce monthly payments

yes, I think the best option is to take a 100% FTB mortgage and also consolidate debts into an unsecured loan. Ideally self cert interest only, or maybe 35 years on repayment.

you forgot the property in Bulgaria

meanmachine_2

Or "nah, don't sell your gaff, rent it out and buy a new one".

Or "Ouch, looks like you missed the boat."

Or... "I've made a packet on my place. It's gone up 100K in the last month. I'm sorted. Gonna trade up to a new place. OK, so the one I fancy has gone up 200K in the last month, but who cares? I'm minted! Pork scratchings with that?"

etc etc until the market turns and the next flavour of the month (smokey bacon?) becomes the talk of the taverns of Britain.

tomstickland

I've just been down the pub and read "rich dad poor dad" along with "carol voderman's guide to making money the easy way" and I've decided to "release the equity" from my house to buy a new car and a trip to disney world florida. My house has trebled in value in 3 years so I'm actually rich now.

I'm going to read "!!!!!! mum Minger mum" next.

Beer enhanced money making.

kenshaz

Sorry to break up the party,but what about the original post's question.

tomstickland

We'll let the sensible adult deal with that--> over to you.

densol_2

Northern Rock will lend 5.1 times the salary on high credit score earning over about £35?. I had to borrow five times recently :eek: because although I am buying with my partner the house and mortgage are in my name only until he is released from his mortgage when his house sells via divorce. Overall therefore it is only 3 x the salary.

I still feel very nervous about borrowing 5x the salary - payments seem too high to my single net income. As siad with partners salary it is about a third of our income ( I am comfortable with that ) but I would not be comfortable on my own.

toonfish

accord will do 5x, abbey & c&g might, depending on ltv and credit score, first national will but rates are poor, northern rock

AndyWallace

The 5X income is not new. In fact, and I'm not sure if they still do, but First National were advertising up to 7X income based on affordability.

This whole concept has made the headlines simply because of 'who' it is.

Not many lenders will use the traditional method to lend up to 5X ie 5X your salary. And to get anywhere near that you would generally have to take a longer term deal.

Affordability works in a completely different way. The lender considers how much you take home each month and calculates the costs of everyday living based upon number of people in household, number of children etc. After deducting all reasonable living expenses you would have an amount of money left over. The lender will allow a percentage of this leftover money to be used on a mortgage payment. So the more money left over means you can borrow more on a mortgage.

Example 1:

Single Bloke:

Takes home £2,000 per month
No loans
No car
No children
Needs, £200 for food
Needs, £400 for household bills
Needs, £600 for socialising

Which leaves £800 residual every month.

A lender may allow his monthly payment to be say, £600.

They'll then look at how he wishes to repay his mortgage and over what term. So, interest only - term irrelevant in this respect. Interest rate payable say 5.5% will allow him to borrow upto £132,000

(132000 x 5.5% / 12 = £605)

So, his basic gross salary is about £31,000 and he can borrow £132,000 therefore income multiple of 4.25X

Example 2: Same bloke but with a pay rise!

Takes home £3,000 per month. All his living expenses are the same, he's not going to eat more, drink more and spend more on household bills (Urmm ok maybe, but pennies).

He now has £1,800 residual income every month and the lender may be willing to allow his payments to be £1400 per month. Same deal, 5.5% interest only.

(300,000 x 5.5% / 12 = £1375)

This time he can borrow £300,000 on his basic of about £47k per year, which is over 6.3X his salary.

The figures above are completely fictitious and the affordability model differs with each lender. But I hope I've give you the basic idea of how it works.

So, to answer the OP, many lenders who use affordability will allow up to 5X income. Credit score and Loan To Value are also a consideration.

Andy

regularsaver1

This article also states that C&G, RBS and Northern Rock will too:

http://www.thisismoney.co.uk/mortgages/mortgages/article.html?in_article_id=414255&in_page_id=58