How much can I realistically borrow/afford?

newfoundglory · 26 December 2013 at 11:50PM

Hello everyone. I'm a first time buyer. Unfortunately I live in the south where houses are expensive.

I'm trying to work out how much I should borrow for a house purchase. Obviously I would have to consider the monthly repayments etc. and also interest rates at historic lows.

I earn about 38,000 per year, but I take home about 2 thousand per month after all deductions.

5 times salary would make a max loan of about 190 thousand. Not sure I want to borrow that much!!

Im am wondering if 160 to 165 thousand is workable, plus all bills and actually having a life? I have also been considering if I may need to perhaps rent a spare room out as well.

00ec25 · 27 December 2013 at 12:32PM

only you know your own financial position and lifestyle expenditure

use the government's money advice website's budget calculator to work out what you spend then apply what's left over to their mortgage calculator
https://www.moneyadviceservice.org.uk/en/articles/how-much-can-you-afford-to-borrow

mortgage lending amounts are no longer based on income multiples, they are now based on affordability assessments hence the need to use a budget calculator to see how much you have available

dgtazzman · 27 December 2013 at 12:53PM

How much of a deposit do you have? Our repayments on a 150k mortgage are going to be £660 a month. Adding all fixed bills etc we'll be paying out around £1150 a month (this includes Sky and 2 mobile phone contracts, pet insurance, buildings/contents insurance, so could reduce this). That would leave you £850 a month to live off, which for a single person is quite workable IMO.

We're buying a 200k house on combined earnings of around £50k a year, though admittedly our take home is higher due to certain tax exemptions I get with my job.

4 times gross is more realistic, don't think many lenders will still consider 5 times.