Help! Mortgage calculators say we don't earn enough!

Baylee

Hello!

We're in a bit of a pickle in that we are first time buyers wanting to buy in the shockingly high South East housign market (yes a nightmare!). We have inputted our details into online mortgage calculators and most say we won't get more than about £160,000 for a mortgage- which is peanuts compared to the house prices here. We're a bit worried that we'll NEVER be able to afford a house at this rate! Are mortgage calculators just very conservative or will we never get a decent mortgage? Our details are below:

Me: income- 28744
monthly debt payments- 150

Partner: income- 23750
monthly debt payments- 250

We are both clean on credit scoring and are in full time perm. work.

WE are however looking for 100% mortgage as we have no deposit :0( But can prove that we can afford at least £850 a month total as we are paying that in rent and have been for the last 2 yrs, and can probably stretch a good deal more....Ideally we'd like a 200,000 mortgage if possible.

Arhghghgh help!

kingkano

Try and find a mortgage broker for some professional advice.

To help you with your calculations, your debt payments will be annualised (ie add them together then x 12) and then deducted from your salaries. That drops almost 5k off. That leaves you a combined salary around 47k by my calculations.

200k is 4.25x for which there should be lenders willing to do. The 100% will be the trickier bit. Sometimes the online calculators can be a bit modest in their offers. A mortgage broker will be able to recommend which lenders would look at this for you.

pollyanna24

Yeap, it's tough getting onto the ladder down here in the South. Just to let you know though that my mortgage (when I took it out in 2006 and the interest rate was 4.59%) is £885.86 and I only took £185K. Now with the interest rates rising, it is likely to be £1,050 if not more when I refix next year.

Just a thought, as your £200K mortage is likely to cost even more, and just because you can afford £850 a month now, there are more costs involved when you own your own house.

Baylee

Thank you to both of you- it really is a minefield this mortgage business isn't it? Pollyanna24 your situation sounds quite hectic- you're right there is so much expense involved and the looming interest rate rise seems depressing. Does anyone think we are all crazy to be jumping on the property bandwaggon? I just worry we will miss the boat and be renting forever- and with pension prospects looking grim I wonder where I will end up when we retire if we don't own a property by then :0(

Bargain_Rzl

How much would your monthly outgoings be if you remained in rented property?

If they are substantially less than your expenses would be if you bought (and don't forget to factor in maintenance and service costs) then IMHO given the state of the market at the moment you'd be mad to buy. If you can afford to buy NOW but it's a lot cheaper to rent, I think you should seriously consider whether you would be better off in rented accommodation while you invest the difference to provide for your retirement (or for a house purchase in the event that the market does crash )

chelseablue

Did you try Nationwide?

I put your figures into the affordability calculator (hope u dont mind!), including the monthly debt payments.

The result said they'd lend you just over £202,000 subject to a credit check. Also I put in a term of 30 years

Hope that helps you in some way
x

Dead_Eye_Jones

0% deposit? - soz but I have to call on your expectations!
I wouldnt expect to buy a toaster if I had no money!
100% mortgages are more expensive - higher fees and higher IRs !

With your earnings you really should have been saving hundreds a month, and as you are now finding out the reality is that this is what you really need to do. If you have 10-20k deposit then suddenly you are looking at a nicer class of house.

I was a smiliar earner to you and bought a nice house in London, I simply saved hard straight out of Uni, at first a few thousand a year and later I was able to put aside some quite nice sums! I then bought a 200k property, but kept my payments down allowing me to overpay and save on future interest!

Remember a 200k mortgage will cost maybe 1200? or so to pay back, IRs may increase and the value of property may go down. A 100% mortgage is a big risk. Especially if you have not left yourself any breathing space. Things do go pear shaped from time to time and you could lose everything.

Go and seek professional advice tbh. But Id be concerned that you should really be thinking 'hold on I cant quite afford this yet, lets put away our extra cash and in a couple of years we'll have higher earnings and a big deposit'. But really you should have done this already (unless you are only 20 in which case - whats the rush?!).

Anyways, best of luck - buying a house is possible, but it takes time and sacrifice. And why wouldnt it? Its the hardest purchase you will ever make .

Parallel_Universe

Can I just add that 100% mortgages are not all bad? We took out a 100% mortgage as first time buyers 3 1/2 years ago and it got us on the ladder - we are just about to buy our second place now. We also live in thr SE and there is no way we could have bought our first house if it hadn't of been for 100% mortgages! I think as long as you can afford the repayments and factor in them going up quite a bit over the next few years as well they might then you should be fine. Good luck!

fistfullofdollars

I've just bought in the SE. Go and see a good broker and they will sort you out.

There is plenty around sub £200k in the SE atm. Just keep an eye out and hassle estate agents.

andrewbrydon

Hi

Based on quick sums £200k on 100% is possible
Talk to a broker for some options

or

why not try new-build
Lots of deals avaiable with 5% deposit paid,legal fees and stamp duty
Check out the "homes and property" in evening standard tonight for deals(near the back of supplement)

Good Luck

herbiesjp

There should be plenty of options available to you

If you are a graduate or classed as in a professional occupation, then lenders may even give high income multiples

As I just wrote in another post, look at the figures carefully, as just because you can get the mortgage agreed does not make it the right thing to do.

Have a word with a fee free whole of market adviser and let them show you some figures/rates so that way you can get a more realistic feel of how it will hit you in the pocket each month. Then you can start filtering down your options

I would suggest getting the mortgage agreed first before putting in offers on properties though

HTH