Am I calculating affordability correctly?

idkwhattosay

So 32k is my salary, I get 2k bonus. I understand lenders only take 50% of that into account. The last column is 35% of my monthly salary with and without bonus.



According to that, this is what I can afford. I think. I know there isn't 4xannual salary anymore, so lenders apparently require your mortgage payment to be <= 35% of your monthly salary, roughly. Based on that, is it realistic thinking I can get 140k mortgage based on 30k deposit?



Even with £750/m payment I could still save about £600/m - so I can afford interests to rise even above 5.5%.

lee111s

Depends on the lender, different lenders have differing levels of stress testing.

getmore4less

£2k month net income
£750pm mortgage
£600 savings

£650pm left can you really live off and run a house and maybe a car on that.

do a SOA, that is the route to true affordability not some arbitrary calculation.

ACG

Instead of doing your own calculations and applying a general rule across the board, jump on lenders affordability calculators and see what they come back with.

There is typically a limit of around 4 - 4.5x income lender dependent.

The_Real_Cheddar_Bob

I'd speak to a few mortgage brokers. I didn't have to answer any affordability questions, although i expect my broker did that on my behalf. I provided all the data to her.

jezzer_72

I do not know how you've managed to get to 750/m lol i must be spending my money wrong. Im at a similar salary a little less in fact and i wouldn't be able to afford 750/m. I can get to 700 max and i was refused recently.

idkwhattosay

ACG wrote: »

Instead of doing your own calculations and applying a general rule across the board, jump on lenders affordability calculators and see what they come back with.

There is typically a limit of around 4 - 4.5x income lender dependent.

These affordability calculators are useless and mostly tell me that I can afford more than I actually can. On my bank's website HSBC it tells me that I can borrow £177k which is ridiculous.

idkwhattosay

jezzer_72 wrote: »

I do not know how you've managed to get to 750/m lol i must be spending my money wrong. Im at a similar salary a little less in fact and i wouldn't be able to afford 750/m. I can get to 700 max and i was refused recently.

I live quite modest and don't spend much.

idkwhattosay

rjwr wrote: »

I'd speak to a few mortgage brokers. I didn't have to answer any affordability questions, although i expect my broker did that on my behalf. I provided all the data to her.

I thought I'd have to fill out an application form before finding that out. I'm not ready to buy yet, it's hard to look for properties when you don't know how much you can borrow.

cahillg81

idkwhattosay wrote: »

These affordability calculators are useless and mostly tell me that I can afford more than I actually can. On my bank's website HSBC it tells me that I can borrow £177k which is ridiculous.

Lol, affordability calculators are only as good as the data you put in. If what you are putting in is accurate then the affordabiliy is correct it may mean a lender is giving you more than you can afford but at that point you need to take responsibility.

One of the most annoying conversations I have almost daily with customers is to not over extend themselves yet, the vast majority want the max they can get despit having an indepth conversation as to why that is not the best move.

amnblog

One of the few occasions where a poster has a problem because affordability calculations are coming in too high.