Low salary - any chance

Tennyten

Hi all,

I've been looking at the possibility of buying a house. I've found one at £90k in the exact area I want to be in, which would be ideal. However, my salary is low - £16k, with the promise of increases up to £20k within a year - and I would only be able to raise a deposit of £13k at the most. Would this make getting a mortgage impossible?

I've had a look on a few calculators and been told I would be offered between £64k (Natwest) and £80k (HSBC). Am I just dreaming?

andrewmp

Tennyten wrote: »

Hi all,

I've been looking at the possibility of buying a house. I've found one at £90k in the exact area I want to be in, which would be ideal. However, my salary is low - £16k, with the promise of increases up to £20k within a year - and I would only be able to raise a deposit of £13k at the most. Would this make getting a mortgage impossible?

I've had a look on a few calculators and been told I would be offered between £64k (Natwest) and £80k (HSBC). Am I just dreaming?

Why can't you go with HSBC? You'll only need £77k?

kingstreet

I'd be very surprised if HSBC will lend anything like 5 x income to someone on £16k a year.

4 x is about as much as I'd expect any lender to offer.

Tennyten

This is exactly what I wondered about. Even though I have no debts, dependants or any outgoings such as childcare I just couldn't believe that I would really be offered that much. So I could realistically only expect to be offered around £64k?

HappyMJ

kingstreet wrote: »

I'd be very surprised if HSBC will lend anything like 5 x income to someone on £16k a year.

4 x is about as much as I'd expect any lender to offer.

With no existing debt and the mortgage term extended to 30 years then £80,000 becomes affordable to someone on £16,000.

The Lifetime Tracker Standard mortgage product would cost only £337 per month with a £499 fee for existing customers. (£999 if you're not but it's easy enough to become a customer and save £500).

If the OP is renting I could pretty much bet they are paying more than that on rent.

kingstreet

As more of your net income is taken up with subsistence expenses at that level, your borrowing power will always be lower pro-rata to someone who earns more.

Off the top of my head, the Halifax calculator starts offering 5 x income at about £21k, but the mortgage term does have a bearing.

On £16k, you can borrow £71,275 over 25 years, but it does stretch to £80,000 over 40 years.

Have a play and see what you get;-

http://www.halifax-intermediaries.co.uk/tools_and_calculators/mortgage_affordability_calculator/default.aspx

It's reliable enough for us to trust it, but you have to remember to ensure any appropriate outgoings are entered - ground rent & service charges if a flat, or change to leasehold.

Tennyten

This is exactly why I want to look at buying. I'm paying more in rent than I would in mortgage repayments. And I can't afford to save anything yet because of my low salary so it's a bit of a vicious circle.

andrewmp

Remember if you take a longer term mortgage you can always overpay (product permitting).

Brock_and_Roll

Tennyten wrote: »

This is exactly why I want to look at buying. I'm paying more in rent than I would in mortgage repayments. And I can't afford to save anything yet because of my low salary so it's a bit of a vicious circle.

Albeit there are additional costs of being a homeowner (eg repairs and renewals, buildings insurance etc) to rent v mortgage comparison needs to be viewed in this context.

amnblog

Wait until you have seen your salary increases. You are then in the ballpark.

pinkteapot

If you're really keen to buy now, get a long mortgage term as others above have said. It'll make the repayments easier while your salary is low and you can start overpaying in a few years when you're earning more.

Remember that you'll need to pay all the fees associated with buying up front, as well as the deposit.