Finding out how much we can borrow?

Cheetah

I've never owned a property before and I am trying to figure out how much money I can borrow but the three online calculators I have used are giving wildly different figures.

Given that I may not actually have a full deposit yet, I'm guessing mortgage brokers won't talk to me so how do I find out how much I can borrow?

As an aside, alot of the calculators are asking for outstanding balances on credit cards and any debts I have. I have two credit cards which will have reasonable figures on them every month but get paid off in full every month (and always have). I also have a large student loan (through student finance)...how are these taken into account by mortgage providers?

gazter

Theres a lot of advice out there, different lenders will borrow against different multiples of your income, thats the top line, but then they start to put against that your monthly commitments. They need to make sure you can afford the repayments with a change of interest rates.

Stevlar

We're going through the process of buying our first home, so was in your position not too long ago.

From my experience the calculators online only give a very basic idea of what you might be able to get. We only got a better idea once we had spoken to an independent mortgage broker.

You say you don't have the full deposit yet, do you have an idea of how much deposit you'll have and a time frame for when it will be available? We were in a position where our deposit was gifted to us, so we knew a ballpark figure of what would be available and the broker worked with that.

The credit cards and student loan I'm not sure on, although if the cards are payed off in full every month I should imagine they will be no problem.

I would call a broker and see if it's worth a sit down chat. I am so glad we did, it's made the entire process a lot easier as we had no idea what we were doing (and mostly still don't!)

Good luck

Cheetah

gazter wrote: »

They need to make sure you can afford the repayments with a change of interest rates.

Yeah I understand that. I am pretty sure what I KNOW to be affordable will be alot higher than what banks will lend me and I am doing my calcs as if interest rates are 8%.

Hence, what I trying to get a decent ballpark.

Cheetah

Stevlar wrote: »

You say you don't have the full deposit yet, do you have an idea of how much deposit you'll have and a time frame for when it will be available? We were in a position where our deposit was gifted to us

I have x amount right now. But since I don't know what I can borrow, I have no idea whether that is 1%, 5%, 10% etc...I am assuming because of interest rate variation, that the percentage of deposit you have will directly relate to what the banks will lend.

littlemiss_pretty

Hi Cheetah

You can still talk to lenders even if you don't have a full deposit amount. I did that over the weekend with my husband and went to H$bc. They requested our last 3 months payslips, our monthly outgoings(including any loans, credit card balances etc). They then ran a soft credit search and told us how much we can borrow. We are currentlt saving for the deposit and no where near the ideal amount.
So it's worth making an appointment with as many lenders as you like to get an idea. The quote given to us is valid for 3 months.
Good Luck

BlaEm

Your credit card balance won't make a difference if it's paid off in full each month (I did the same with mine) - although you may, when it comes to it, wish to complete your application during the point in the month when the balance is low.

Your student loan balance also won't make a difference - what they'll be interested in is your net take home pay, which will already take in to consideration your SL repayments.

You can absolutely speak to a broker even if you're not in a position to complete a full application - they will ask what your deposit amount is, just tell them your current amount as this won't affect what you can borrow (just the rate you can borrow on, due to Loan-to-value percentage).

Try e.g. London and Country, or give your current bank account a call as they can all do a 'soft' search without needing a three hour appointment and bank statements!

samba

littlemiss_pretty wrote: »

Hi Cheetah

You can still talk to lenders even if you don't have a full deposit amount. I did that over the weekend with my husband and went to H$bc. They requested our last 3 months payslips, our monthly outgoings(including any loans, credit card balances etc). They then ran a soft credit search and told us how much we can borrow. We are currentlt saving for the deposit and no where near the ideal amount.
So it's worth making an appointment with as many lenders as you like to get an idea. The quote given to us is valid for 3 months.
Good Luck

I would take the DIP with a pinch of salt tho. When my wife and I make our mortgage application recently, the online calculator said we could borrow around £140,000, while the DIP came back as £190,000.

At that point we could have gone out and found a more expensive property based on our DIP, but I doubt it would have been honoured.

A colleague I work with also recently had a DIP for a much larger amount than he could ever have afforded.

David1984_2

I was in the same boat as you. I had saved for a couple of years but was unsure what that money would give me. After a couple of years of saving I arranged an appointment with a financial advisor at my bank to get a rough ball park figure of how much they would lend to me. This was much more than what the online calculators were saying to my surprise. It gave me a rough idea though of how much I needed to continue saving until I had enough for a property that was within my means.

Speak to your bank. They will give free advice. In the end I paid for a mortgage advisor who showed me many deals and held my hand along the way when applying for the mortgage and finding a good solicitor. He even contacted the EA a couple of times on my behalf. Its worth the money IMO.