4x salary?

rec0286

Hi

I am a first time buyer and currently have a mortgage in principle with HSBC, although the amount they have said they would in theory lend me is around 5 times my salary - I don't trust they would lend me this and I wouldn't want to borrow an amount this large! This means I have no real idea of what they really would lend me.

My question is what sort of salary multiple is realistic (I am a sole applicant with no dependents, on around £30.7k a year, good credit history, LTV would I guess be a bit over 70%, looking at 30 year mortgage and 5 yr fixed term)? I am viewing a house tomorrow and if I want to stay just under 4 times my salary I would have to cap my offer at £3-4k below asking price, whereas asking price would take me to around 4.1 times my salary. I could afford these repayments as far as I'm concerned but generally will applying for 4 times your salary get you rejected? Has anyone else had a mortgage approved that was 4 times your salary? I don't know whether the extra couple of thousand is too risky to offer, or if it just doesn't really work like that!

Sorry if this is a stupid question!

Thanks all

rec0286

I am also wondering if, since I've read HSBC are really difficult to get a mortgage with, it would be better applying for the actual mortgage with someone else instead even though I don't have an agreement in principle with them (a financial advisor showed me coventry were similar in terms of the deal I may get)?

I have heard about HSBCs strict lending criteria but I don't actually know what that criteria is

Thrugelmir

rec0286 wrote: »

I have heard about HSBCs strict lending criteria but I don't actually know what that criteria is

Rather than strict view it as conservative. HSBC even in the credit boom years didn't change it's policies. Only came to the fore as it continued to lend at the same pre crash levels while others fell away.

rec0286

Thanks for your reply.

Does anyone have any experience then with applying for a mortgage of 4x salary? I'm reading mixed things about whether it's okay or not!

amnblog

A bit baffled what you are stressing about.

If you choose to select your own Lender there is always the possibility they won't lend you what you want. If they don't you can try another.

To remove the stress have a broker manage the situation and you won't be applying to unsuitable lenders.

M5captainmac

I'd strongly recommend you find a decent broker - ask family, friends etc for a good recommendation. Its essential to have decent broker at the best of times but when you are trying to borrow at the upper scales of affordability having one is the difference between having sleepless nights and not. Last year I was fortunate enough to have such a great broker during the buying process. Nat West did lend me 4.1 x salary - but as said above there is more to it than just a simple salary multiplier.

Good Luck though.

alchemist.1

I have been offered more than 4 x salary with Nationwide (i.e. an actual offer). It's not about multiples but affordability.

kinger101

You really need to sit down and think;

(a) what will the repayments be?
(b) can I afford that?
(c) what will the repayments be if the interest rates went to 6 %?
(d) could I still afford it?

Of course, they're unlikely to go to 6 percent overnight, and affording it in this scenario might taking on more work.

cadon

Well, my mortgage was for more than 5 x my salary at the time and the bank would have let me borrow even more than that. Like you, I didn't want to overstretch myself and had a point that I wouldn't go over, even though technically it would have been affordable.

Have you put together a projected budget yet? I did this in preparation for my mortgage interview. I worked out what I was currently spending (this included looking at all costs over the year and accruing for them each month, so budgeting for, say, Christmas on a monthly basis) and which costs would change (different rate of council tax, no rent but mortgage instead, service charge, ground rent, etc).

I then stress tested these numbers by several factors and calculated the minimum I would have to earn to pay everything, and the likelihood of getting a job paying that much in a hurry should I lose my current job.

Yes, you have the to satisfy the lender's affordability criteria. But it's such a big financial commitment, it's worth spending some time with the figures so you personally can get comfortable with whether you're taking on too much.

rec0286

Thank you all for your replies. I viewed the house and offered asking price as it seemed fair. Following everyone's advice I have gotten in touch with London and Country to speak to a broker. I had previously spoken to one at an estate agents but only just found out that L&C do also deal with HSBC so I wouldn't have to rule them out as an option by going with a broker.

Cadon, I had put together a spreadsheet of my spending but hadn't stress tested it - that sounds like a good idea.

As far as changes in interest rates go I am applying for a 5 yr fixed term for security reasons and plan to (hopefully!) remortgage with my boyfriend at the end of the term (currently going solo for the time being due to his credit history) so I anticipate this helping with increases in interest (although I believe I would still be okay on my own at 6%).

Thanks for all your help. I shall see what the broker says now!

poppy1010

We got x4.1 our salaries