Mortgage noob, need an idea!

KHewitt

Ok, so next year im getting a pay rise and im looking in to buying my own home. All i need is a rough estimation of how much i would be able to borrow. Im completely clueless about the whole thing a the moment but before i get in to it all as it is a still a long while away i want to 'window shop' around for the price range i would be allowed, rather than being let down after having my hopes on something a lot more!

So basically, by next year ill be earning £1600 after tax, my cars paid off, ive currently lived in a council house for 4 year (£78 a week i think) with my partner who has a disability which prevents her from work and is on higher rate DLA.

I live up north east so believe it or not that's classed as an OK wage and an average house where im looking (Co. Durham) is around 65-85k depending on location. My main reason for posting on this forum is because there are a lot of new houses being built in the area with the Help To Buy scheme, going for min 93k. could I be even considered for a mortgage that much or should i be looking a lot lower?

Thanks in advance, if you need any more information please ask, as i said i am clueless at the moment, just need a guiding hand!

edit: I'm 24 and partner is 21, if this makes a difference!

Cornucopia

£1600 a month? So about £21000-£22000 gross per year?

You should be able to borrow 4-5 times that, if you have good credit and minimal other commitments. You'll also need a lump sum as a deposit - the more you have, the better the rate you'll get on the mortgage.

KHewitt

thats right yes, and my partner gets about 500 a month.

Ahh so thats a good go to rule. then it is definitely around what im after!

how much would a rough monthly payment be? I normally do the amount divided by 25 and again by 12 plus a bit extra, but how much is all the extra usually?

R_P_W

KHewitt wrote: »

thats right yes, and my partner gets about 500 a month.

Ahh so thats a good go to rule. then it is definitely around what im after!

how much would a rough monthly payment be? I normally do the amount divided by 25 and again by 12 plus a bit extra, but how much is all the extra usually?

You need to put the numbers into a mortgage payment calculator. Most if the main banks that offer mortgages have one on their websites.

The bit extra you mention.....over 25-30 year term you could end up paying back double what you borrow

Malmo

Most if not all lenders would not take the DLA as allowable income into affordability calculations.

ACG

It depends on which DLA it is.
If you have a letter guaranteeing it then some lenders may. I placed a mortgage where the applicants sole income was DLA but he was never going to go back to work - he actually passed away earlier in the year (2-3 years after doing the mortgage) but with his condition that was always on the cards.

audigex

KHewitt wrote: »

how much would a rough monthly payment be? I normally do the amount divided by 25 and again by 12 plus a bit extra, but how much is all the extra usually?

Around 50% extra on a 25 year term at current rates, as far as I can tell.

Eg I've just borrowed £70k over 25 years at 2.7%

£70,000 / 25 / 12 = £233

My actual minimum monthly payment will be £320, so around 40% higher. That's with a fairly good rate though, for a first time buyer, as I have quite a good deposit (25%). So yeah, I'd reckon on 1% higher rates than that, which would likely mean you need to add 50% to your figure

1.5 * <original loan amount> / <term in years> / 12 months

Which in my case would be around £350, which is what I expect to pay if interest rates rise

KHewitt

Thanks guys, this is just the stuff i was after. I know roughly where im at for now until i build up a deposit and start going deeper in to things!

But yes she should be on higher for both for the long term. She isn't expected to leave us anytime soon but with heart problems its hard to say!

Im going to look in to the mortgage calculators now, thanks again.