First time buyer, new job and max mortgage?

Dr_B.

Hi all,

I have quite a few questions, and am totally new to this so would appreciate any advice.

I'm looking to buy a new house asap really with my girlfriend. I am currently working as an airline pilot, not on an actual salary but will be receiving one starting March, on ~£30k. After two years this will go up to ~£38k. My girlfriend is on ~£20k. We both have a student loan to pay off which should be around ~£150 each. Apart from that we both dont have any other debts to pay from our salaries.

First question is how much could we borrow? I'd like to purchase a detached house at about £250k. Is this possible? Whats the possibility of borrowing £275k? We would be able to raise about £5k deposit in 3-4months time if required.

Secondly, my salary will increase fairly rapidly, so I was thinking of taking a fixed mortgage for the first 3 years or so. Is this a sensible option? Then remortgaging for the cheapest option when I could afford any potential rate increases.

Any answers and advice would be brilliant.

Thanks.

herbiesjp

£68k joint income - you can look at somewhere between 4-5 times you income.

These are maximums, but will depend on your whole scenario and you make get less than that.

What you need to do though is look and the monthly cost to you both, and make sure that is affordable to you.

HTH

Rick62

You say you are currently working but not earning a salary? Generally lenders will want you to be past any probabtionary period, ie 3 or 6 months, so if you start in March it will probably be June before they will rely upon your income.

With your combined income of about £50,000 you might be able to borrow up to 5 x earnings, but your student debts will reduce this, so you might be able to borrow about £225,000. Will you also get allowances (overnight etc), if so these could be taken into account as well to increase the borrowing.

Your idea of taking a fixed rate for the first few years is good in principle, as you suggest it would protect you from any potential rises while your affordability is stretched.

herbiesjp

There may be some lenders that could look to agree the mortgage now however for the OP - all depends on circumstances.

Have a read of Martin's guide as a first port of call

Dr_B.

Thanks for the replies. I'd not heard about the fact that a lender would require me to be in the job for a few months to see that my income could be relied upon. Will make sure I check that out.

Also will our student debts reduce potential mortgage amount that much? The total we will owe together is £16k, so could that really reduce a potential max amount by up to £25k? Wasnt expecting that!

UK007BullDog

Every lender has a different multiple calculations. So you cannot compare on that. Also any outstanding loans will be taken into consideration.

Do you have or had any credit cards? If yes, then close them all except for one each to open up borrowing power. If they see too many credit cards they will offer less.

And yes most lenders want to see you in a job for at least 3 months some even 6 months or past any probation periods. Also they might ask your employer about your job security and income and future potential income.

You might take the time to build up a bigger deposit if you are looking for £250K to £275K; a 10% deposit will enhance your borrowing power and give a better rate. £5K deposit is worthless, then you might look at going for a 100% mortgage. Don't forget your stamp duty at those house prices you are looking at of 3% (£260K x 3% = £7,800 stamp duty). And surveyor and solicitor costs roughly another £1500 - £2000 together.

cupid_s

When we took our mortgage (with HSBC) out we were asked about any debts. We had student loans totalling 21k between us and told them this but were told these weren't even counted and wouldn't affect how much we could take out in any way.

Dr_B.

Ok, hadnt counted on our student loans affecting the mortgage that much. I have 4 credit cards atm. I only use two of them, and not very often at all. They were obtained a few years ago to move a balance around for 0% interest offers while at Uni until I paid it all off.

Guess I'll speak to individual lenders about how long they'd need to see me in the job first. Its very secure and Ive basically been working there for 6 months already. Its with Easyjet and as part of the training scheme I was on Ive been working there for 6months but not actually receiving a salary from them but a allowance from the training provider. Job security is good and my potential earnings are very good; in approx 5/6 years I 'should' be on ~£70-80k.

I guess it'll be wise to wait until the summer and save up a more substantial deposit. I'd thought that It'd be better to buy asap as we're surely just wasting money on rent that could be paying off a mortgage, albeit at a slightly higher rate due to a smaller deposit?

Thanks for all the help and comments

brazilianwax

Dr_B. wrote:

Its very secure and Ive basically been working there for 6 months already.

Hmmmmmmmm - haven't seen the stats, but I dread to think how many 'very secure' pilots lost their jobs after 9/11........... My uncle has been a pilot for about 25 years and was extremely lucky to keep his job.

It made him re-assess his life and although he still flies now, he's put money into another business 'just in case'.

Not sure how mortgage companies view pilots as a risk.

Claire

Dr_B.

Hmm im not sure either, would be nice to know. Hopefully the chances of any repetition of that are so small now that it wouldnt affect me.

herbiesjp

They look at a pilot as they would any other job - they do not assess the risk of the job.

They base it purely on affordability grounds.

HTH