Low income but have savings - what are my chances of getting a mortgage?

cupid07

I'm in my mid 20s and currently take home £9000 after tax, however I have saved a fair amount over the past few years and can put down a deposit of approx £10,000.......possibly £15,000 but i don't want to wipe out my savings completely. I have seen a property I like and its £70,000 so going on that figure.....I have used a mortgage calculator of less than 5% interest and the repayments would be less than £400 per month. I could potentially get my mom to also be a mortgage guarantor, she is retired but owns her own house outright. I would probably be taking out a 25 year mortgage. I have a 3 year contract at work and this gets renewed every three years. What are my chances?

redcard

A mortgage worth almost 7 times your salary?

If I was you I'd just stay and home and keep saving hard as you can.

cupid07

If I put the 15k down as a deposit then i'd need a 55k loan which is x6 amount.....I heard most are x4/x5 amount of your wage. I have a regular income and its long term, also should mention i'm a keyworker so i don't know if that would help me acquire a mortgage?

redcard

Remember you're going to need money for lawyers and moving expenses, as well as furniture and decoration.

You need to work out what costs you will incur, then see how much of your £15K is left

[Deleted User]

So you've got a take home of £750, repayments would be £310 on a 3.79% mortgage (Looking at First Direct), leaving you with £440 to pay for ...
gas, electric, council tax, water, phone, TV license + building and/or contents insurance

I'd call that lot at least £150, so you've now got £290 a month to pay for food and living.

That's all very tight and should rates go up, you could be in a real pickle

Anyway, no sane bank would lend you money with your loan to earnings ratio

cupid07

Do you think its worth making an appointment with a mortgage lender? I just don't want to go to an appointment and they laugh at me because its ridiculous. My rent alone around here would cost about £400 ...yet a mortgage would be slightly less.

PS - read on this forum that Abbey will lend up to x6 a wage?

Idiophreak

In theory you could look at help to buy

If they leant you 20%, and you pitched in 15k, you'd be looking at getting a 41k mortgage, which is getting closer to doable. But, of course, that relies on their being eligible new builds in your area for the right price.

Being blunt, the issue here is really your low wages. Even minimum wage for 40 hours per week works out taking home a bit more than you're on, doesn't it?

If you could up your wages to, say, 15k you'd be looking at borrowing 55k on 15k - under 4x wages, which is much more doable.

ETA: By the way, I meant to say "WELL DONE" on managing to save that much - you must be really dedicated. I earn rather more than you, yet have saved rather less

ACG

Im not one for beating around the bush, if you find it offensive I apologise but I would rather be completely honest to save you wasting your time...

This is a non starter.
£15k with all respect is not a massive amount of savings... its not bad by any means but its not massive.

Your income is not enough to support the sort of mortgage you want, it may be affordable now, but in 1, 2, 3-5 years time WHEN rates rise your going to be going from treading water to sinking. Lenders can only go off your income now, so to say your income will be higher unless you have guarantees in writing its going to fall on death ears.

HTB is for people with a small deposit (yours is not a small deposit) putting that to one side, affordability is more stringently tested on HTB than non HTB so thats never going to work either.

At best your looking at a mortgage of £40-45k, although I suspect that is probably pushing it and it could well be less than that.

StuC75

Mortgage amounts would be based on your Gross Earnings PA - whereas you've quoted 9k as your take home pay - which most posts seem to be over looking here..

it does seem quite a stretch on those repayments and other living expenses though.. Any scope that you could rent out a room to help with that??

What scope is there for you to increase your earnings in that time?

[Deleted User]

StuC75 - don't get too exited - to earn £9k after tax, you have to earn £9142.36 before tax

I would expect lenders give higher multiples to those on high salaries, not low - since the gap between mortgage payment and income allows for a more wiggle room the higher you earn.

redcard

StuC75 wrote: »

Mortgage amounts would be based on your Gross Earnings PA - whereas you've quoted 9k as your take home pay - which most posts seem to be over looking here..

There's not going to be a much of a difference between gross and net at that salary level.

I calculate annual salary to be about £9,150