Can I get a mortgage and on average how much for?

gemmaorange

Hi,

I am 24 year old, single who earns £21k pa, plus probably around £1000 over time pa. I have a car which I pay £200pm & paying back my student loan £30pm for, other than that I don't credit cards or store cards etc. With help from my parents I can put down a 9k deposit and have seen a house for 89k, which I would like to put an offer in for £80, do you think I would be able to get a mortgage and how much would I be able to borrow?

Help would be muchly appreciated

DVardysShadow

You might get 3.5 or 4 times your salary. But the car loan is £2400/yr - probably £3500 before tax, which [ different lenders do different ways] as a rough estimate, takes your effective salary to £17500.

You are scraping a loan of £70000 - more likely £60000 - as lenders will not be so generous to earners below £20000, because the necessities will be a larger fraction of your income.

If any of the money from your parents is a loan, then this will be discounted from the money you put in when the Loan To Value [LTV] is calculated. Normally lender like to see you put in 10%, so £8000 on an £80000 purchase, giving an LTV of 90%. But if £4000 is by way of loan, your effective LTV becomes 95% and you will be rejected.

If you have savings, it is probably best to pay off the loan ASAP and start saving again

kingstreet

Provided the deposit is a gift and the lender is prepared to take your overtime into account, the Halifax affordability calculator gives the following maximum borrowing amounts;-

Credit score pass "C" - £74,615

Credit score pass "B" - £79,945

Credit score pass "A" - £85,275.

These are for a single applicant, 25 year repayment mortgage, for an applicant with no dependents. Your overall application, financial status and profile will determine your credit score pass grade.

I suggest you visit the sites of different lenders to input your details and establish what different lenders will offer.

Establish what will be affordable to you as the cost of a 90% mortgage of £80,000 will be in the region of £513, using a rate of 6% for a 25 year repayment mortgage. Try to get a feel for what your other monthly costs will be and don't forget you need to insure your home and may wish to protect against loss of income due to illness, disability and unemployment.