Income multiples

loverington

Hi,

Am I right in thinking the average income multiple for a mortgage is 4x? Do you think this will ever go up again? I'm in a situation where my husbands and my income is fairly low (19,000 per year) so we are nowhere near the level to buy a house in this area, but we are so very careful with money we rent a house for £800 per month and manage to save as well, but I feel like there is no hope for us. we have saved £8000 in the last 3 years but again in this current climate it means nothing. I just wish they would take things like rent statements into account to show that we can afford repayments. Sorry for the ramble!

My husband is self employed so again that throws another spanner into the works doesnt it? Any suggestions to help us on our quest to maybe one day owning a house?

Thanks

beecher2

Realistically I don't see how you could afford anything more than 4 times salary. How much are properties in your area? Could you move to cheaper rented accommodation to help with building up a deposit?

ViolaLass

Do you mean your joint income is £19k or £38k? Where are you (roughly)? Would it be an option to rent somewhere cheaper so you can save more? What price is the house you're after?

kingstreet

Being self-employed simply means your husband will need to produce three years accounts, or three years tax assessments to provide evidence of his income.

Many lenders have done away with income multiples, using affordability as a more reliable method of establishing how much to lend.

I suggest you have a play with an affordability calculator to see what's possible. You will need at least a 10% deposit to make the purchase viable and have other funds to cover fees.

This is the Halifax Intermediary site's calculator. I suggest you input credit score C as this will give you the lowest, and perhaps most realistic idea of your borrowing power;-

http://www.halifax-intermediaries.co.uk/tools_and_calculators/mortgage_affordability_calculator/default.aspx

loverington

Thanks for your replies, our joint income is around 19k but my youngest is just about to turn 4 so I'm hoping to work another couple of days per week so would boost our joint income to around 23/24k. My son is 7 and very sensitve to change and wouldnt take well to changing schools plus my husbad is a gardener so it would mean losing his customers and starting again which we couldnt afford either, the only other option would be to maye move into a 1 bed flat, but I'm not sure they would let us seeing as there is 4 of us. Currently we are in a 2 bed house in Petworth, West Sussex. The cheapest 3 bedroom house in this area are advertised for around £180,00 - £200,00 but I'm guessing ou would probably get that down a bit? It all just seems a bit hopeless doesn't it.

beecher2

All you can do is keep saving, and see if you can find ways to increase your household income. Once you've got 18k or so saved, have a look at your options. In the meantime make sure your credit files are both spotless as you'll need that for a 90% LTV.

ViolaLass

I think when it's taken you 3 years to save £8k and you need a minimum of £18k for a deposit plus fees etc, I wouldn't get too hung up on owning a place (since you're determined to stay where you are). Not everyone has to own. There's no way a bank is going to lend you 6-7 times income.

DannyboyMidlands

Depends which lender you go to. First Direct will only give me 2.7 times joint income on a 75% LTV mortgage.

Malky

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suisidevw

£19k income and £800 a month rent........ jeepers! That's a heck of your income...... Petworths a lovely area though, my Gparents live in Byworth.

Only thing to suggest is just keep on saving, good luck!

loverington

suisidevw wrote: »

£19k income and £800 a month rent........ jeepers! That's a heck of your income...... Petworths a lovely area though, my Gparents live in Byworth.

Only thing to suggest is just keep on saving, good luck!

I know, hence the reason we never go out or treat ourselves! lol we literally just spend what we need and hang onto every spare penny, I thought it would pay off but seems not for a long time! Just want some security for my children as with renting its only 6 months at a time.

Byworth is a lovely place to, would like to spend the rest of my days in this area.