First time, just looking for advice for the future

dylanj_2

Hello all,
I'm new to mortgages, and I am only posting this thread to get some ideas for the future. Please do realise that I am NOT applying for a mortgage now or in the next few years. I just have some questions that I want to get my head round.

Ok, so I have been on banks websites etc. and used mortgage borrowing calculators etc. Based on what i've input, the amounts thrown out were quite low! Is this the norm, are these calculators quite inaccurate? or am I just a bit naive?

Mine and my partners combined annual income is around 25k, which is not massive i know, but I am self employed with a fairly new business which has taken off quite well so i expect that figure to rise over the next few years.

We do not plan on having kids, so 2 bed properties are enough for us, and a nice modern flat, or a small house would suffice. I would imagine nothing over 120,000.


Our credit reports are good (I am well aware about ratings meaning nothing), no missed / late payments, ccjs etc. nothing at all, good 5+ years history at bank and address, electoral roll etc. and plan on keeping it that way! Outgoings are just over 900 a month (including all bills and rent, fuel and shopping!).

Saving is going well so far, I am just aiming to have as much deposit as I can, so i guess the main question i have is how much deposit we would need on a property of this price, based on the info i've provided, or if it would even be possible to borrow anywhere near that amount based on our income?

Sorry for the essay haha thanks in advance

bigadaj

Really need 10% minimum plus fees so fifteen grand minimum, if you get up to twenty plus then deals will become better.

Being self employed isn't popular with lenders, but with three years accounts and constant or increasing profits then you should be fine with your returns.

Make sure all bills are paid on time and all should be well in a year or two. Good luck.

ACG

Most lenders will want 2-3 years accounts.
The general rule is they will average them out and use that as your income (providing there has been no dip or reduction in profits without a good explanation - eg buying equipment).

If your combined income is £25k then you would be looking at borrowing of £100k, you would then need atleast 10% on top so purchase price of £110k would be a ballpark starting point, if you want more then your income needs to go up and/or a bigger deposit.

Bufger

As others have mentioned - in your scenario you need 2-3 years of accounts.

The general rule is lenders will lend 4x your combined income (if you're down to the wire we can share the more accurate calculations normally used) so £100k. Your aim should not be the lower limit of deposit but the most you can afford.

If you want a £120k house then go for a 24k+ deposit for 80% LTV and a better mortgage rate. I say more than 24k because the bank could value the property lower than the purchase price so you need a few thousand buffer to make the difference and get the rate you want. If you really wanted to you could go for the 12k+ but it depends on your situation