Applying for a mortgage - lots of questions

Jumpyjo

Hello - I hope someone can help me please? And also apologies if I'm misinformed - things have changed a lot it seems since I took out a mortgage last.

I've had a small mortgage for 13 years, due to interest rates since our fixed rate ended its always been pretty much the same amount.

The equity in our home is between £30k (worse case scenario) and £50k (best scenario) based on recent house sales in our area. Bought for £50k - could be worth anything between £80k and £100k

We have savings from my redundancy 2 years ago of £26k and would be willing to use at least £15k up to £20k for a deposit for a new place.

We're not on a massive salary - around £33k between 2 - but on looking at a mortgage sites our lending potential is next to nothing. Even though we have a deposit of at least £45k (nearly what our original mortgage was!) up to £70k they are barely willing to lend us anything.

What I was hoping was to rent our house out as rent in our area is about £650 - £750 pm and get another mortgage but it looks like we couldn't even get a mortgage if we sold. The houses we are looking st are £170k to £200k.

Is not being able to lend common now or is it due to the current economic situation? Sorry if I'm naive - but like I said things seem so very different now to 13 years ago.

All I can see is renting out our home and renting somewhere else, which I really didn't want to do

Any advice is most appreciated

Thrugelmir

How much are you hoping to borrow?

AnotherJoe

We're not on a massive salary - around £33k between 2 - but on looking at a mortgage sites our lending potential is next to nothing. Even though we have a deposit of at least £45k (nearly what our original mortgage was!) up to £70k they are barely willing to lend us anything.

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What they will lend you has very little to do with your deposit. Because you have to be able to afford to repay the loan, so it's about affordability which is not connected to your deposit at all. Once you take off everyday expenses there isn't much left from £33k to pay a mortgage.

Bottom line you must be looking to borrow around £120k minimum, which is about 4x salary and pretty much no lenders will go above 4.5x, and I don't know but I'd guess that at lower salaries the multiples are lower because there is always a certain minimum amount you need to spend to live so there is less "spare" after everyday expenses on a low salary than a higher one.

On the upside for you the current panicked mood after Brexit looks as if it may lower house prices which benefits people like you buying more expensive houses so sit tight and wait a few months. And in the meantime look at what you can do to earn more which is your main restriction on how much you can borrow.

cahillg81

Speak to a broker Jumpy they will go through various options with you.