Mortgage for a FTB with a big deposit, but pitiful pay packet

alberty

Very unusual situation- I have a fairly large deposit of 270k thanks to family help, and my salary is 28k. Ideally am hoping to raise 450k.

As I'm borrowing less than my deposit this should be a no brainer for the bank, but in fact the amount is limited to 5x my salary which doesn't quite get me there!

Is there a particular lender or broker in London I should speak to?

kingstreet

5x gross salary, less any dependents or credit commitments is the best you'll get.

ACG

You could be buying a £1 million pound house with an £800k mortgage... your income is still only going to stretch so far no matter who you speak to.

holly_hobby

No as the lender from a regulatory perspective, has to be able to demonstrate that they assesed your suitable affordability, ie your salary -v- loan, to be manageable in the long term. And at nearly 6.5 x sole income on your current figs, there's a tall order, when also taking into account living costs (esp in London), emergencies etc ...

Solution ... continue saving/and or borrow less is the obvious answer ....

The family deposit you have (from immediate family members only) , will also have to be a true gift - this means it is made without requirement of repayment, reservation or any interest in the property - to which all donors will all have to sign a gift disclaimer form (which essentially means if the property is re-possessed they have no claim on any of the sale proceeds).


Hope this helps

Holly

alberty

Thanks for the replies, good to know the system is 'protecting me from myself'!..

StuC75

If the 270 is all gifted (no repayment) then just buy out right a more modest place and live mortgage free...

As also would imagine be difficult to make ends meet owning such an expensive property on quite modest earnings..

alberty

Difficult but I could rent the house or rooms if anything unexpected happens. I just think Help To Buy and the economic recovery will make it impossible for me to own what costs 450k in a good part of London now..

ACG

Can you not get someone to go on the mortgage with you?

holly_hobby

alberty wrote: »

Thanks for the replies, good to know the system is 'protecting me from myself'!..

The bottom line is that its actually protecting the lender, in that if they are unable to demonstrate responsible lending to the courts (ie they established at outset, that you could afford the commitment longterm), it can predjudice any later possession order they may seek.

Of course, from the individuals point of view, it also helps them avoid biting off more than they can chew - repossession is costly and unpleasant for all parties concerned, and lending practices are there (especially now tightened up), to hopefully ensure that, notwithstanding unforseen finanical issues, the individual will be in a position to service the mortage throughout its term, end result the property belonging to them outright .

Hope this helps

Holly

JimmyTheWig

alberty wrote: »

As I'm borrowing less than my deposit this should be a no brainer for the bank

It's the prospect of lending you an amount of money that is more than they think you can afford to repay which is the no-brainer for the bank.

Question for the experts...
Does the 5x limit apply for loans greater than 25 years?

kingstreet

Yep. 5x for 25+ years.

Less for lower incomes or a shorter term.