How much can I borrow?

JM92UK

Hi,

Just have tried searching this and found a few threads but it appears every case is different so here goes.

I am looking to purchase a house (first time buyer) and have the deposit saved up. The house in question is in a good area but it appears an old couple have lived there so it needs decorating throughout, new kitchen & bathroom etc.

I dont mind doing this as I know it will be beneficial in the long run for my self when I either come to sell it and move one.

Anyway is there generally a rule of thumb as to how much you can borrow based on your wage and outgoings?

I am self employed and have virtually no out going other than my car (lease) and phone bill. The company stared in Nov 2012 and has always made a profit with increase of about 70% per year.


Thanks in advance

ACG

General rule of thumb is around 4 to 4.5x your income.

But income, expenditure, term, kids etc can affect that.

Also where your self employed, how your accounts are viewed will vary. Some will average the last 2 or 3 years, some will just use the latest years figures. Generally speaking you will get the better rates from a lender who averages the last 2 or 3 years. So its a bit of a trade off, better rates or increased lending.

Far too many variables to give an accurate answer.

Tarragondragon

JM92UK wrote: »

Hi,

Just have tried searching this and found a few threads but it appears every case is different so here goes.

I am looking to purchase a house (first time buyer) and have the deposit saved up. The house in question is in a good area but it appears an old couple have lived there so it needs decorating throughout, new kitchen & bathroom etc.

I dont mind doing this as I know it will be beneficial in the long run for my self when I either come to sell it and move one.

Anyway is there generally a rule of thumb as to how much you can borrow based on your wage and outgoings?

I am self employed and have virtually no out going other than my car (lease) and phone bill. The company stared in Nov 2012 and has always made a profit with increase of about 70% per year.


Thanks in advance

Have you tried doing some "how much can I borrow" calculators on a few lenders sites? Should give you a vague idea of affordability.

betmunch

There is no rule of thumb anymore, you need to check each lenders affordability calculators for how much they will lend you.


If you are not comfortable doing this yourself instruct a broker to work for you.

JM92UK

Thanks for the response.

I am hoping they take it on the last years profit and projection for next year as this will put me in a much better position.

My best bet maybe to speak with a mortgage broker and see what they suggest.

One more question is that if I modernise this property and then decide to sell in a couple of years would there be a fee for ending the mortgage within XX months/years?

JM92UK

Yes I have tried some. They vary from £58,000 to £94,000 so quite a difference!

I think a broker maybe the best bet?

ACG

I dont think any lenders use projections anymore, not to evidence an increasing income anyway.

Re fees for leaving - if that is something you are thinking of doing then its important not to tie yourself in longer than you think it will take OR tofind a product with no ERCs.

This has broker written all over it.

JM92UK

Thanks yet again.

I did not think it would be too easy, this afternoon I will contact a broker and see what they say and keep everyone updated.

kingstreet

If you haven't already done so, make sure your 14/15 SA online return is filed quickly, then you can download an SA302 to evidence your income up to date.

Some lenders still want the postal version with the covering letter, so keep that in mind.

Lenders will take an average of the last two years' net profits from the SA302s, only taking a later year alone if the income is lower than the earlier year.

JM92UK

Yes I already have the SA302 with in from the past two years.
I had them sent out to me about 4 weeks a go.

kingstreet

But that won't include 14/15 as the earliest that could have been filed is 6 April 2015?