How much deposit do I need?

lisyloo

Can anyone give me an idea of what size deposit I'd need for a property worth £475K.
DH is self-employed with 1 years books.
I am PAYE with a permanent job but we'd need his income.

I guess initial costs are:

mortgage fees
legal fees
removals
stamp duty
furnishings, appliances & furniture

Also do lenders ask when you are planning to retire? or do they use state pension age?
I'm not intending to lie about anything but this could make a massive difference.

kingstreet

The minimum deposit is 5%, but if affordability for the 95% mortgage can't be proven, you'll have to increase that so the proposition works with your chosen lender.

Lenders tend to use state pension age, requesting evidence of income in retirement for those wanting a longer term.

ACG

We have no idea of your income or expenditure or age so its impossible to say.

Most lenders will lend between 4-5x your income subject to the finer details. Anything in addition to that would need to be your deposit witha minimum deposit of 5% (although I cant think of many lenders who will lend at 95% LTV with 1 years accounts).

It would be worth going though lenders affordability calculators and checking criteria with regards to self employed or speaking to a broker.

amnblog

With one year's books you are looking at a 15% deposit.

kingstreet

Sorry - missed one year's accounts.

Not very well and brain not fully functional today.

lisyloo

Lenders tend to use state pension age

So if our state pension age is 67 but we'd like to retire earlier (even as early as 55) then we can still use 67 as an assumption and that's all above board?

We have no idea of your income or expenditure or age so its impossible to say.

We're 46.5 & 48.5.
We know we won't qualify for a 25 year term.
There is an issue at the moment in that we both pay ourselves the minimum we need and put the rest into pensions which is tax efficient. That doesn't look good for mortgage afffordability.
If we wanted to change our strategy so that it's right for getting a mortgage then how long would we need - 6 months?
I'm not after doing anything that isn't above board.

It would be worth going though lenders affordability calculators

Good idea.
That shows me we currently don't have enough income (out of choice because we're sacrificing it voluntarilty).
At the present time though I'm just after what we'd need to save for a deposit as that would probably take longer than changing our income.
I do believe it's afforable although we'd both have to take more income.

amnblog

It depends how your other half is trading and what the figures look like.


You wont get a definitive answer with getting advice from a suitably qualified and experienced broker.

lisyloo

Thanks much.
I'd still like to know the policy on this question though.

So if our state pension age is 67 but we'd like to retire earlier (even as early as 55) then we can still use 67 as an assumption and that's all above board?

because if we can only get a mortgage with a 6.5 year term (55-48.5) then it's dead in the water.

amnblog

You've lost me here.

Are you saying you will not work beyond age 55?

If you take a mortgage to run beyond that point how will you find the income to make the payments?

lisyloo

Are you saying you will not work beyond age 55?

Thanks for your help.
Our optimum planned retirement age is 55.
I cannot say "will not". It depends on health, career, investments etc. but if a mortgage lender asked "when are you planning to retire" - we'd answer 55.

My question is
Is post#2 literally correct that lenders tend to use state pension age? or do they ask your planned retirement date?

If you take a mortgage to run beyond that point how will you find the income to make the payments?

Ideally sell it and pay off the mortgage.
Otherwise rent it out (easy in central London) and take a profit in retirement.
I'm very aware there's a number of risks here and arguably massive ones.
At the moment I'd just like to know if we could get an 18 year term or would we be restricted to a totally unaffordable 6.

dimbo61

I HOPE! to take retirement at 55 but have recently taken a mortgage out which is due to finish when I am 67.
They did not ask when I wanted to retire they stated the mortgage would only RUN until I reached state retirement age which for me is 67.
You really need a good mortgage broker to sort this if you are self employed