Two newbie questions

Ultrasonic

Hi all,

I'm a first time buyer hoping to finally buy a house in the near future. I have a couple of no doubt simple questions I'd be interested in any wise answers to. Thanks .

1) My gross salary is £##,### p.a. and I have no debts (credit cards paid off in full each month). Ideally I'd like to be able to buy a house at up to £150k with a £15k deposit, but that would require a mortgage with an income multiple of 4.25. Is this possible at the moment? HSBC's online 'How much can I borrow' thingy suggests it may be but I'm not entirely sure I trust it... (My parents have offered to give me £10k to help with the deposit, but I would like to avoid accepting this offer if I can.)

2) Should I get an AIP before making an offer on a house?

3) This won't have a straightforward answer, but as I'm posing questions I guess I should ask if there is any prevailing view as to whether fixed rate or variable mortgages are the best option at the moment?

Thanks for any help!

Edit: I realise I now have three questions rather than the two in the thread title . It's the first two I really wanted to ask...

Caladan

I'd say your max borrowing power is somewhere between £142-149k with HSBC assuming your credit history is good and you don't live in overdraft.

That's assuming the salary you've quoted is your basic (i.e. not including overtime/bonus as these are assessed differently) and you have no dependents.

There's no harm in getting an agreement in principle (HSBC call it a Decision in Principle) as although it runs a credit search it only leaves a soft footprint (doesn't affect your credit history at all).

Some estate agents prefer you to have an AIP in place anyway.

I wont comment on the third question

Kind regards,
Cal

Ultrasonic

Thanks for the reply.

I don't have an overdraft, the salary is basic (I don't get overtime pay), I have no dependents and will be getting the mortgage on my own. Credit history is good - I've checked Experian and Equifax. I've never missed a payment, have long term history of current account, credit card etc; history of being on electoral roll etc.

Caladan

I'd say you've got a strong case - Probably HSBCs target market, above average income, strong credit history, I'm assuming your account is with HSBC as well - If you've been a customer for a long time it's taken into account on borderline cases (although I doubt yours is borderline).

Keep your credit card balance down, don't take out any loans and I'd say you'll be fine.

Your actual credit score isn't that important, it's missed payments etc that lead to a decline.

Happy house hunting!

Cal

Ultrasonic

I don't have an account with HSBC actually, my current account is with Santander and I have savings elsewhere. I mentioned them purely as they looked like they may offer a higher income multiple than others.

Caladan

HSBC will offer up to 4.7x your salary, for the absolute best applicants (think professionals with no debt and no dependents).

HSBC is also extremely tight on who it will lend to - bunch of pretentious jerks I promise

I'd say if you did apply with them you would be accepted though, based on the information you've given here. No harm in getting an agreement in principle done in branch or over the phone (I think you can do them on-line as well, not sure).

Kind regards,
Cal

Ultrasonic

Caladan wrote: »

HSBC will offer up to 4.7x your salary, for the absolute best applicants (think professionals with no debt and no dependents).

And there was me thinking 4x might be the maximum! Not that I'd be comfortable going as high as 4.7x even if anywhere would let me - I could afford the repayments now but I'd be worried that interest rate rises could put me in trouble.