Whats the Most you can borrow...?

rising_from_the_ashes

villa2010 wrote: »

for example if i wanted to buy a house for 120k

Annual salary = 20k

Savings 20 k

Is the deposit included in the LDV...?

To work out the LTV rate - work out how much you need to borrow against the total cost of the house (your deposit isn't included in this): in this example, the LTV rate would be about 83%.

http://www.mortgages.co.uk/calculator/LTV-calculator.html

I also agree with Peter in that having a £100k mortgage on a £20k salary is a lot (and why many people have got into trouble with the banks letting them borrow such huge multiples on their salaries).

With the housing market so unsettled, the prices may still drop over the next couple of years and you could end up with negative equity.

Currently, it's likey to be around £500/month which is a substantial amount of your salary - and interest rates are likely to rise meaning you'd struggle with any increase.

Even if you have someone (OH, friend etc) living with you/renting a room, you can't guarantee that they'll still be there in a couple of years time and, if paying yourself, it would be very tight IMHO.

kingstreet

What you can borrow will see any income multiple or affordability calculator over-ridden by your credit score and other information. A lender offering five times your income will scale back the mortgage on application for;-

- lower score
- dependents
- credit commitments with more than 6 months to run
- low deposit/high loan to value
- shared equity/shared ownership.

villa - keep the mortgage and the deposit separate in your head. You have a maximum mortgage amount available to you and you add to that the amount you want to use as a deposit to give you a maximum purchase price you cannot exceed.

EG - Maximum mortgage £112,000 + deposit £20,000 = maximum purchase price £132,000. On that basis, you can probably look at properties around the £140,000 mark. Don't go straight to your maximum. You have to be able to afford it in the long term!

villa2010

You guys are legends....!

iheartbristol

Just an side note to all this..... our lenders simple "how much can I borrow calculator" gave us 4.5 x salary. But when it came to the mortgage in principle with the credit check/human being looking at it etc we were only offered 3.8 x salary (this is with spotless credit ratings, no dependants, under 30 and the exact same figures for each calculation).

luciano

The question is not how much you can borrow but how much you are able to pay back monthly. You have to be comfortable with at as house maintenance cost will arrive soon or later! When you know it then go to the any calculator and for a given APR you can worke out your max mortgage.