worst possible interest rate

wantahouse

i've been playing around with a few calculators to see what our repayments will be like for a mortgage. What percentage do the banks stress test at?? and what would be the absolute worst rate i could expect on a mortgage with a 5 year old satisfied default??
thank you

ACG

Depends on the details. Worse case scenario would be around 5% but if you have a 10% deposit, I would like to think there may be a couple of high street lenders who would accept you.

wantahouse

yes - hopefully we will have the 10%, i'm aiming for £16,000 with a view to look for houses around the £145,000 mark. So if i stress test myself and can comfortably manage (in my opinion) 6-7% i should be ok??
What do lenders class as comfortable as well???

obay

wantahouse wrote: »

yes - hopefully we will have the 10%, i'm aiming for £16,000 with a view to look for houses around the £145,000 mark. So if i stress test myself and can comfortably manage (in my opinion) 6-7% i should be ok??
What do lenders class as comfortable as well???

This might help you out that we got stressed to 12.45% interest rise... if we can afford it or not...

amnblog

Have you had some Professional advice? You may secure lending on mainstream rates.

ACG

Are you sure you were stress tested on 12.45%? Most illustrations now quote a rate of around 12% as they have to quote the highest it has been in the last 15(?) years. Most lenders stress test on around 7-9%.

I would just speak to a broker if I were you. I know that comes across as biased, but your looking at worst case scenario, I think there is a decent enough chance normal rates are open to you.

Without knowing your income and expenditure its impossible to say what you can get, but assuming you have no major credit commitments and/or a football team worth of kids you can lend around 4 to 4.5x your income.

obay

ACG wrote: »

Are you sure you were stress tested on 12.45%? Most illustrations now quote a rate of around 12% as they have to quote the highest it has been in the last 15(?) years. Most lenders stress test on around 7-9%.

I would just speak to a broker if I were you. I know that comes across as biased, but your looking at worst case scenario, I think there is a decent enough chance normal rates are open to you.

Without knowing your income and expenditure its impossible to say what you can get, but assuming you have no major credit commitments and/or a football team worth of kids you can lend around 4 to 4.5x your income.

On the paper work it says this;

The interest rate on this loan can change. This means the amount of your instalments could increase or decrease. For example, if the interest rate rose to 12.58%, your payments could increase to £1,636.96.

amnblog

That is nothing to do a with stress test. It is nonsense text that the regulator insists is included in the new ESIS style illustrations under the MCD rules.

They have to quote the figures if base rates rose back to their highest level in the past 25 years.

obay

amnblog wrote: »

That is nothing to do with stress test. It is nonsense text that the regulator insists lured in the new ESIS style illustrations under the MCD rules.

They have the quote the figures if base rates rose back to their highest level in the past 25 years.

Oh I see! I thought that was stress test! My bad, thanks for your clarification!

amnblog

If you want an explanation of the ESIS document I can send you a link.

obay

amnblog wrote: »

If you want an explanation of the ESIS document I can send you a link.

Nah, don't waste your time, I'll run a google search!