How much can I borrow?

Svenena

My salary is £26,260 and I have a deposit of £40,000. I will be a FTB. Are there many lenders that would be likely to lend me £120,000? This is a little over 4.5x my income and would mean an LTV of 75%.

I would like a competitive interest rate, so if borrowing this amount would restrict my choice of lenders much, I will need to rethink.

I'm also wondering how my student loan payments are likely to affect the amount I can borrow? I pay £70 a month (to SLC, straight from salary), so will that have much impact on how much a bank will lend me?

Thanks in advance for your help, and I'm happy to provide more info if necessary.

dgtazzman

Only checked Nationwide and Halifax calculators on their websites (something you could also have done).

With the info you have given, Nationwide comes out best of the 2, possibly willing to give you a mortgage for £118k, if you didn't have the student loan payments going off, that would have been £129k, to give you an indication of it's effect.

Svenena

Thanks. I did try a couple of calculators but they ask for varying levels of detail, and some are so basic I wasn't sure how realistic they are. They also obviously state that they are only an indication, and I have no way to gauge how likely an indication they might be. I guess I was also hoping that having more than a 10% deposit might help (as less risk to lender), but I think I was just being optimistic there!

Amazing how much difference is made by my student loan payments. I wasn't sure whether to include them on the calculators or not, it's obviously not the same as a commercial loan. Do pension contributions have a similar effect? None of the calculators I have seen have asked for this, but that has a bigger affect on my net pay than my student loan.

dgtazzman

Depends on whether the pension contributions come out of that £26260 or not. If they do, that will have an effect as it will lower affordability. I imagine you'd have to add the pension payments to 'other financial commitments', just like the student loan payments, if they come out of the £26260. There was a field to declare these on our Nationwide application a few weeks ago (the pension payments, that is).

The Nationwide calculator is one of the more detailed ones I've found for a quick calculation.

HSBC actually indicated a possible lend of £124k with the student loan payments taken into account, but that's over 30 years instead of 25.

P.S. I'm not an IFA in any shape or form.

Svenena

Thanks, that's helpful. The figure I gave is my gross salary. One of the problems I'd found with online calculators is the lack of guidance of what to include. Because of course they're meant to just give an indication, which is fine, but that's why I thought I'd ask on here to see if anyone had any extra insight to share!

It's particularly interesting to hear that the amount goes up if the number of years is increased. That's not something I'd thought to try on calculators, even though I actually intend to take out a longer term (30-35 years) and then pay as though over 25 years, in order to have increased flexibilty. I'll check that whoever I go with allows overpayments.

Is it possible to get an idea from lenders of a realistic figure based on more information (eg a MIP/AIP) without having a hard credit search? I'm not too worried about the credit history side of things, just what lenders will consider in terms of affordability based on my income and deposit.

Thrugelmir

Svenena wrote: »

Because of course they're meant to just give an indication, which is fine, but that's why I thought I'd ask on here to see if anyone had any extra insight to share!

Not possible to cover every permutation on a simple calculator.

Try building a picture of your personal budget. This will give you an idea as to how much you may wish to borrow. Little point in over extending yourself and regretting your decision for years to come.