Stumped by simple mortgage question!

cooldudecol

Hi,

My sister's been told that she can only get a 95% mortgage for the value of their home, but I always thought that you could get a mortgage for as much as you want based upon your salary.

She's in Scotland and I'm in England.

Is she right? Am I wrong? Or is it different in England and Scotland?

r.mac_2

I am Scottish, but most mortgage lenders operate the same north and south of the border.

It is my understanding that mortgages are based on the VALUE OF THE PROPERTY as they use the property as security. Your income is assessed to enable that you can pay back the mortgage, but ultimately the value of the property is what counts.

cooldudecol

Thanks r.mac - so if the house sells for more than what it's worth, you have to find the extra money between the mortgage based upon the valuation and the actual selling price?

I've only just bought a house, so I'm not clued up on it!

AndrewSmith

You can mortgage in proportiion to the purchase price or valuation of the property whichever is the lower, as long as your income supports the amount involved.

Technically you are both right but also both wrong in a way.

Hope this helps

Andy

toonfish

you can actually borrow up to 125% of the value of the property with certain lenders

r.mac_2

AndrewSmith wrote:

You can mortgage in proportiion to the purchase price or valuation of the property whichever is the lower, as long as your income supports the amount involved.

Technically you are both right but also both wrong in a way.

Hope this helps

Andy

Yes andy is right - you managed to put it more clearly than me - thanks.

_Andy_

toonfish wrote:

you can actually borrow up to 125% of the value of the property with certain lenders

True but that won't all be secured on the property