Low Income but High Deposit. Can I get a mortgage?

your_blue_room

hello all…

Potential FTBer in the (I suspect!) rare position of being on a low salary ( £11.5K) but fortunate enough to have access to a deposit of around £50K. Through overtime I can take my pay up to around the £14.5K mark if I choose (however Ive only done the odd bit here and there so my past P60's don't reflect this maximum higher wage). I have no other debts and a perfect credit record as far as Im aware.

Looking at the mortgage calculator on MSE suggests my salary should secure a top end loan of £46K which is close to what I would need for the properties Im considering…. Although my LTV of about 50% should put me in reach of the best deals on the market, Im wondering whether my salary being as low as it is serves to exclude me from those or indeed any mortgage? I note for example the HSBC calculator suggests they wont do business with anyone earning less than £15K

I haven't approached any lenders yet as Im not sure they will even give me the time of day due to low salary, and I don't want any rejections showing up on my credit report and cause problems with further applications.

Im guessing that prior to submitting any sort of application info, it would make sense to work as much overtime for the 3 months prior to reflect on my wage slips.

Just wondering if any of the brokers who are kind enough to offer advice have experience of low salary/good deposit scenarios. Are there particular lenders which look more favourably on applicants? Ultimately its my ambition to get a better paid job in the long term but just wondering what is possible in the here and now . Thanks for any help you can offer.

Rafter

Not a broker, but think you will have a problem.

Lenders have to be able to demonstrate that the loan is 'affordable' for you.

This is usually based on a multiple of income with 3-4 being 'normal'

Your problem is that on a low salary a greater percentage of your income will be taken up by food, utility bills, council tax etc. So the amount of mortgage you can afford is limited, particularly if interest rates rise from their current record low levels.

Personally I would be in no rush. House prices aren't going anywhere and the cost of moving is high. You might be better off waiting until your career has developed a bit and you can afford to both buy a house and live comfortably in it.

Good luck

R.

kingstreet

If your credit score is good enough, Halifax and Abbey will probably lend more than most - upto 5 x your gross annual. They don't have a minimum income either.

The big question is whether (or not) the mortgage will be affordable for you and still leave you enough to meet your other living expenses. No point buying if you end up looking at four walls wondering what you've done.

Have a play with the respective lenders' affordability calculators and see what they say.

The_Palmist

make an appointment with someone in a bank. Halifax counter girls will be more than happy to you put down as an appointment and earn some brownie points. Then see there adviser and get all your questions answered. Don't be shy.

handytips

You will be ok with Abbey as long as you are classed on a medium/high credit score. If you are single i would think you will be ok, however make sure you can afford the payments, consider taking a mortgage over a term of 30 or 35 years, then in the future as and when your income increases, you can always reduce the term by remortgaging in the future. Good Luck

your_blue_room

thank you all for your helpful replies.