Low Mortgage Offer

zuzuspetals

I've just been in contact with First Direct about a remortage. My one bedroom flat is worth £72K and I have £59K outstanding over 17 years (NRAM). I earn £36K per year and have no credit cards or loans. I have no children or dependants. I was surprised that the maximum amount they will lend me is £64K.


I realise that for a remortgage that would be enough money but I've been thinking about buying a bigger property and would need to borrow in the region of £85k. I genuinely thought it wouldn't be a problem for me to get a mortgage that size.


Is this typical of the way things are now? I'm just a bit shocked because I wanted to get somewhere bigger in the next year or two.

pathtofreedom

There is a difference between the max a bank would lend you, and what they would lend you on a 72k property with 13k equity.

Say you sold tomorrow and did have 13k just for a new deposit, and fees / moving costs etc are seperate. On a £85k propertly you'd need a mortgage of £72k which is a 84% ltv so if you have a look on some comparision sites that would give you an idea of deals you could get.

Any mortgage acceptance comes down to do the bank agree with the valuation of the property, and your credit worthiness / affordabilty critera. The bigger deposit you have and the lower ltv you need is always going to help you. That and how much you can save each month currently as if you're only left with £100 at the end of the month say, that isn't going to work as when the interest rates go up you won't be able to afford the payments. They work out your affordabilty based on a higher rate than the one you're applying for to help protect you from yourself.

zuzuspetals

Thanks for explaining that to me! I was just a bit worried that if I wanted to buy somewhere bigger in a years time and wanted to port the mortgage there would be problems. I'm really hoping I won't be on my own and childless forever in which case I'll need an extra room : )