How much could we realistically borrow?

housewanted44

Anyone that has seen my other posts will know that after 2 years of employment and saving a deposit me and my partner both early 20's are ready to buy.

I originally was looking at a very cheap property, but now I am having I am wanting to ask a U-turn of a question.

Realistically how much could we stretch to borrowing.

Joint income 30k.
Deposit 14k soon to be around the 15 mark.

I have looked at different calculators and they all tend to vary significantly.

I would be nice to look at property at the 115k mark? But does anyone have knowledge or experience of this and think its realistic?

Or should we aiming at properties at around the 90k as I thought.

I know this is some what vague, but just want to know what we could achieve and what we definitely could not achieve?

Any help or advise on what we could stretch to and achieve would be greatly appreciated.

ACG

I would say £120k plus your desposit without stretching it too much.

£115k shouldnt be a problem at all.

housewanted44

Thank you for your quick reply! so we could ideally go for 130k house with a 10 percent deposit and should be ok? I know banks are still very specific in who they lend money to. But its good to know what we can aim for. Should I try and get an AIP before putting any offers in??

Thanks

Poppy9

Only you and your partner know if you can afford a £100k mortgage, it's not only about what the bank will loan you.

You have to consider how you would cope if one of you lost your job, became ill, pregnant etc.

Also what about maintaining the house? Can you afford to do so after paying a larger mortgage.

House prices in most areas are not rising so you have to consider how much you would lose if you had to sell - you will lose even if you sell for the price you paid due to EA/legal fees. If you buy a cheaper house that needs work and adds value above what the repair/renovations have cost you then you will of course not lose money if you ever have to sell.

housewanted44

Totally agree with you Poppy, but what I am trying to achieve is a more balanced out look of our discussions before we starting viewing and putting offers in. I have only looked at cheap houses. But I suppose its only fair that I have a top end price as well. At the end of the day as you have mentioned its about being able to support it and manage it even when the unforeseen circumstances hit! I might be working 60 hour weeks now, but I won't be forever.

But I suppose when you are putting everything into your work, and all you have is savings, then striving and pushing for a beautiful house wouldn't be the most disastrous of decisions.

Thanks for the help guys.

ACG

In theory yes a purchase price of £130k is possible.

I dont want to say you can go for it without any problems as i dont know your full circumstances.

Work out how much you can afford, dont stretch yourself. Dont forget to factor in Council tax, gas, electric, water, food, insurance etc etc. Might be worth a chat with a mortgage advisor if your not 100%.

GMS

90% mortgages have higher interest rates than 85% ones.

Why not work backwards. Figure out what you can get together as a deposit and make it 15%. Look at an 85% mortgage and compare the rates with 90% ones.

If you feel you cnanot get the property you want in that circumstance then look again at 90% products.

Lenders vary hugely in what they will lend. You may find 2.5 times income with one and 5 times with another.

Look at your outgoings and be realistic. Although you will not have owned a property before (I assume) you need to get best estimates on bills. Most will be known such as council tax, insurance, water if not metred etc. Over estimate others such as gas and electricity to be on the safe side. Remember to factor in unexpected issues such as repairs. Also look at travel costs, socialising, holidays etc.

Be careful of borrowing what you can rather than what you are comfortable with. Over stretching yourself could mean staring at 4 walls you grow to hate.

May be worth speaking to a broker to compare products and get a feel for what you are happy with.

Good luck

housewanted44

Thanks to you all, very good advise and I think a broker is 100% the way to go. But interesting to know we could certainly venture slightly higher than I thought. I will look at properties from 80k to 120k, work out mortgage prices, fees and how it will affect us month to month!