'How much can I borrow' online calculators - how accurate

Sdkrc

Hi,

I'm looking to be a FTB in roughly 2 yrs and trying to do some homework before we do any proper searching. I've been getting some mixed information and was wondering just how accurate these online calculators are. Has anyone used them and had similar offers from the lenders?

I'm 24 making £27k p/a, other half is 26 making £26.5k p/a. We have no debts besides a single student loan (£80/month), good credit history and will have £35k+ savings and some other savings for fees, stamp duty etc. No dependents and we make bonuses/overtime of circa £5k between us every year.

Several mortgage calculators say we can borrow around £265k, some more, some less. Had a quick meeting with my bank though and using a quick calculation on net pay, they said they would likely do £160k max.
Common rule of thumb is 3x joint which would back up what my bank said.

Is £265k unrealistic on a £54k joint income? I reckon we could afford £1450 mortgage payments but the bank has the final decision

Thanks for reading,
S

kingstreet

The more generous lenders will offer upto 5 x your joint gross annual income, less any credit commitments, childcare costs, cost of dependents etc.

If you accurately input your income and expenditure, the calculators are accurate.

ACG

As Kingstreet says, they can be quite accurate.

It all depends on how indepth the calculator is though, some are 100% accurate in my experience others give a ballpark figure.

£265k is probably on the high side but i think its achievable. The bank give you an indication on what they would lend, you need to decide if that is affordable or to borrow less taking into account your lifestyle, future pay rises (and rate rises - do you want to be mortgages to the hilt when rates rise?) etc.

Some people are happy to basically work for their ideal home, others want somewhere theyre happy but with a more expensive lifestyle - it all comes down to you.

gazter

Sdkrc wrote: »

Hi,

I'm looking to be a FTB in roughly 2 yrs and trying to do some homework before we do any proper searching. I've been getting some mixed information and was wondering just how accurate these online calculators are. Has anyone used them and had similar offers from the lenders?

I'm 24 making £27k p/a, other half is 26 making £26.5k p/a. We have no debts besides a single student loan (£80/month), good credit history and will have £35k+ savings and some other savings for fees, stamp duty etc. No dependents and we make bonuses/overtime of circa £5k between us every year.

Several mortgage calculators say we can borrow around £265k, some more, some less. Had a quick meeting with my bank though and using a quick calculation on net pay, they said they would likely do £160k max.
Common rule of thumb is 3x joint which would back up what my bank said.

Is £265k unrealistic on a £54k joint income? I reckon we could afford £1450 mortgage payments but the bank has the final decision

Thanks for reading,
S

I have done a lot of fishing around in this area. If you have an excellent credit report, then hsbc will do 4.75 x your joint income. They are fussy !!!!!!s though. Remember to deduct your student loan annual payment from your salary. Ie, that 27k comes down to £26k.

kingstreet

Ignoring the bonus, one of the more generous lender's calculators says £262k, which means a purchase price of around £300k if you have a £35k deposit.

Sdkrc

Thanks for the responses.
Amount to repay on the student loan is v.low so might be cleared before we apply.
Good to hear that it's a possibility. £200k doesn't go all that far in the south east...

Gentoo365

Generally they are accurate and will give a good indication of how much a bank would lend to you.

However there are a few caveats:

1) If you apply for a mortgage with the bank you have a current account with they may lend you a bit more. This is because they can often use a 'behavioural' score from your current account usage to give you some extra points. Also they may make extra care not to decline an existing customer who is just slightly out on the calculations.

2) If the application is referred to an underwriter (either automatically, or due to an appeal) then the underwriters will have a more complex 'scorecard' to assess you on. The details are supposed to be confidential, however brokers often get used to how different lenders work.

If you 'pass' the website check easily then you are unlikely to have a problem, the deviations are usually on the borderline cases.

If you are concerned about failing because you are close to the maximum then a mortgage broker should be able to help you by suggesting which lender is more likely to be flexible given your specific situation.

Gentoo365

Sdkrc wrote: »

Thanks for the responses.
Amount to repay on the student loan is v.low so might be cleared before we apply.
Good to hear that it's a possibility. £200k doesn't go all that far in the south east...

You will probably be asked this, but if not, you should clarify in the notes or by a phone call that the student loan will be cleared soon. Often loans that only have a few months left to run can be excluded from the calculations, as long as your credit report shows that you are good at meeting commitments.