FTB Multiplier single income 4.5 or 5x?

Petree

Hi All,

So i'm looking into mortgages, the online calculators are suggesting for my £41k salary (includes a bonus) I can get around the £200k mark, which is roughly 5x.

I rang L&C today and they suggested 4.5x is pretty much what they would expect, and not to get an Offer/AIP until i've had an offer accepted...

My issue therefore is, what should I be looking for house price wise as I don't know what i'm going to get and don't want to run a load of credit checks for no reason to find out?

Properties I like (surrey, walk to work so no car outgoings etc) are in the £230-235k bracket.
with the 4.5x plus £40k i've got ~£225k
with the 5x plus £40k i've got ~£245k

I've got the £40k deposit plus a bit for legals and some free furniture heading my way, my fixed outgoings are roughly £50 a month with no debt.

My plan is to rent out 2-3 rooms and then overpay the mortgage (3 rooms after tax will give me ~1000 which means no mortgage payments) so while I wouldn't be over stretching myself the bank presumably wouldn't take this into account.

Any advice, or other FTB experience on the multiples likely?

Cheers,

marathonic

I can't tell you about multiples because I borrowed significantly below that max the bank would lend.

However, I can tell you that the £245k level is within £5k of one of the stamp duty thresholds. If you're looking at properties at this level, you're better saving up another £10k deposit.

This would mean you'd have a 20% deposit giving easier access to mortgages and could shoot for a £250k property. You'll probably find that any property below £275k will have offers of £250k accepted because the vendors know that potential buyers are reluctant to exceed this due to stamp duty increases.

kingstreet

I disagree with L&C. They tell people not to have an agreement in principle because they don't want to do work which won't instantly get them an application.

The more "normal" brokers spend more development time with FTBs helping them establish what they can borrow and what the costs will be, arranging an agreement in principle so you know your maximum purchase price before you start viewing.

With lenders varying in maximum mortgage by as much as 1.5x salary, there's a wide range of possibilities.

Lenders won't take income from lodgers into account.

maninthestreet

Where in Surrey can you buy a 4 bedroom property for just £225K??