How much can we borrow?

up-north-eng

Hi, We're hoping to move house either this year or next so I'm just wondering if anyone knows how much we would realistically be able to spend on a new house. From the sale of our house we would hope to make 20k min 30k max profit so lets say 25k. Plus a few thousand in savings. I earn 34k per year plus overtime my partner around 5 or 6k. We have no outstanding debt, cc loans etc but I do have a default that expires nov13. We also have 2 kids.

Any help much appreciated

Dave_Ham

Depends upon how much your overtime is??

Would expect £220k - £240k absolute top end for mortgage + deposit

Default will be an issue, although it will not be a dealbreaker just speak to a broker and not your bank...

up-north-eng

Wow really?? I was hoping 140k as that's the average of the type of house we're after.

Dave_Ham

You will be absolutely fine then, deposit wise unless you are 50+ years of age as term and affordability will be reduced.

Default will be your barrier, so as said speak to a broker and not just your bank

ACG

£140k wont be a problem.
I hate disagreeing with dave as hes a lot more experienced than i am but i think £220k would be quite difficult. I would have said more like £180k plus deposit as a maximum....but i would take more notice of dave as hes been advising for years, ive been doing it less than a year. The only reason im saying that is its quite a high income multiple and a 10% deposit - not the best mix when it comes to lenders.

£140k is more like a 20% + deposit.

Either way, if your not looking for that much then it shouldnt be too much of an issue.

Dave_Ham

ACG wrote: »

£140k wont be a problem.
I hate disagreeing with dave as hes a lot more experienced than i am but i think £220k would be quite difficult. I would have said more like £180k plus deposit as a maximum....but i would take more notice of dave as hes been advising for years, ive been doing it less than a year. The only reason im saying that is its quite a high income multiple and a 10% deposit - not the best mix when it comes to lenders.

£140k is more like a 20% + deposit.

Either way, if your not looking for that much then it shouldnt be too much of an issue.

Its a fair point, as typically I did cite top end and therefore would only be one or two lenders that would do 4-4.5 times joint salaries and had allowed for a little overtime...

£140k is a much more sensible approach and more affordable...

iheartbristol

the high street bank I used to work for you'd be looking at buying a house for £165K

bossymoo

Wow does anywhere really lend 4x joint?

Even if they did, op, I think you would do very well to steer clear of that level of borrowing! Unless your job is very secure, and you are immune from accidents and illnesses, it's wise not to over stretch on lending.

Don't forget to make sure you both have adequate life cover too!

ACG

bossymoo wrote: »

Wow does anywhere really lend 4x joint?

Most if not all do 4x income.

Unless your job is very secure, and you are immune from accidents and illnesses

PHI is usually recommended anyway which can cover around 60-65% of your gross annual income - so sickness shouldnt be an issue. If you in a job where unemployment is a possiblity then unemployment cover can be bought also.