5 Times Mortgage

mrstinchcombe

As a potential FTB I feel I need to make the plunge and finally leave the comfort of living with the parents!

Looking at how high house prices are in this area I would need to be forking out around £100k (for which I would be getting a 1 bed place in an extemely undesirable area but beggars cant be choosers!).

This would mean around a 5 times salary mortgage so I was just wondering whats lenders would consider this:

Heres me:

Salary - £20k
Deposit - £5k

Thanks in advance

JoeK_3

mrstinchcombe wrote: »

As a potential FTB I feel I need to make the plunge and finally leave the comfort of living with the parents!

Looking at how high house prices are in this area I would need to be forking out around £100k (for which I would be getting a 1 bed place in an extemely undesirable area but beggars cant be choosers!).

This would mean around a 5 times salary mortgage so I was just wondering whats lenders would consider this:

Heres me:

Salary - £20k
Deposit - £5k

Thanks in advance

You could consider a shared ownership property.

If you are unable to buy a property outright on the open market, then shared ownership is the ideal solution for you. Shared Ownership is a part buy, part rent scheme, which enables purchasers to buy a home in stages. Purchasers can buy an initial share between 25% and 75% of the value of the property and pay a subsidised rent on the remaining value of the property. Shared ownership properties can be provided by housing associations, housing trusts and local authorities. These organisations try to be as flexible as possible with regards to the initial share purchased, but this may be as much as 50% of the market value at some of their developments.

A service charge will normally be payable to cover the cost of communal maintenance. The service charges payable can remain the same whatever percentage you own of your home and continues to be payable should you purchase your home outright where possible. You will need to have sufficient savings to cover the initial cost of home ownership: legal fees and stamp duty for example. You will need to be able to meet the costs of rent, mortgage, service charges and other associated outgoings.

As your income increases, you can buy further shares of your home until you could own 100% of the value and no longer share the ownership with the housing association or trust. The greater the percentage you own, the lower the percentage on which you pay rent. However, if you do not wish to buy more shares in the property, you do not have to. Obviously, the more you own, the less you pay in rent. And, if you can buy your home outright in the future, then no rent will be payable.

Hope this helps

JoeK

herbiesjp

You can indeed look at a mortgage of £100k based on a £20k income. Whether it is wise is another matter, and you would need to carefully analyse your finances to make sure it is the right move for you

However, do you have any other debts outstanding at the moment? Are you a graduate? What is your job title?

The answers to those questions will narrow down whether or not you could get the mortgage amount you are looking for.

Alternatively you could look shared owership scheme , or the Homebuy home ownership plans (subject to eligibility)

HTH

shameless-about-money

On the shared ownership properties - does the person wanting to buy have to be a sitting tenant first?

MortgageMamma

Do you get any bonuses, overtime or tax credits?

If you are going to stretch to 5 x salary on repayment I would recommend taking it over the longest term possible to keep it affordable. but I've got to say if you have no other income that is a crippling stretch for you. More to life than paying a mortgage, you won't ever see anyone on their deathbed wishing they could take their house with them.

mrstinchcombe

Thanks for the advice so far.

Im a graduate Overtime is a rare occurance for me so thats a big no no.

I was thinking either 30 years or a 25 year term for the mortgage so Id expect the repayments to be initially around the £650 mark (which I would fix for as long as possible). Plus council tax, bills etc I expect it to be a struggle although possible.


"More to life than paying a mortgage, you won't ever see anyone on their deathbed wishing they could take their house with them"

Very true my friend but I do believe there is more to live than paying someone elses mortgage through rent. I know theres no shame in renting but its not for me, I rather struggle and damage my social life then know Im wasting £400-£500 a month!

herbiesjp

Based on being a graduate there are lenders that will go up to 5 times slary, and there are other lenders (non graduate schemes) that could potentially go that high for you - circumstances permitting

HTH

MortgageMamma

Could you not rent out a room in the house to generate extra income and have someone paying your mortgage?

Having been a student surely that wouldnt be too bad an option for you?
(unless, like I was, you are sick of people invading your space)

ukbondraider

mrstinchcombe wrote: »

"More to life than paying a mortgage, you won't ever see anyone on their deathbed wishing they could take their house with them"

What a bizzare mentality. I for one dont care about whether I take my house with me or not when I die but I would definitely be looking to provide something for my kids when I am gone. If you cant afford a mortgage then fair enough but the attitude of living purely for oneself is abit selfish in my opinion.

MortgageMamma

ukbondraider wrote: »

What a bizzare mentality. I for one dont care about whether I take my house with me or not when I die but I would definitely be looking to provide something for my kids when I am gone. If you cant afford a mortgage then fair enough but the attitude of living purely for oneself is abit selfish in my opinion.

Its a fine line in my opinion, live for oneself and live as best one can on a limited income, or live a life in constant frustration due to financial constraints in order that offspring MAY inherit something one day (house prices rise and fall remember). Quite frankly I would hope any offspring of mine will be self sufficient as that is what I teach them, strong mindedness, wilfullness, confidence and independence and courage to do what feels right. Nobody has a RIGHT to inherit anything. And not everybody has kids to give their assets to.

mrstinchcombe

ukbondraider wrote: »

What a bizzare mentality. I for one dont care about whether I take my house with me or not when I die but I would definitely be looking to provide something for my kids when I am gone. If you cant afford a mortgage then fair enough but the attitude of living purely for oneself is abit selfish in my opinion.

Why did you quote from me quoting from someone else when you wrote that? :rolleyes:

To the question of "Could you not rent out a room in the house to generate extra income and have someone paying your mortgage?"

The answer would be no because the maximum I could borrow would sadly not allow me to purchase a property with more than 1 bedroom