Does the amount you can borrow change?

Louise1234

We went to see a mortgage broker the other day and told us we can borrown 4.75 times our salary. Which is ok but we live in an expensive area so can't get much for the £320k plus deposit we can borrow.

He said last year he was lending 5.5 times peoples salary but it had just changed.

Does this happen often? Is it worth holding on and saving more in the hope the amount goes up again? Obviously hoping it will not go down.

Just an extra 30k roughly would mean the difference between a home we could live in for a few years and a home we wouldn't have to move out of / could extend.

Does anyone have any experience?

Thank you

Thrugelmir

The key to your question is affordability. Don't assume that interest rates will remain at such low levels indefinately. Lenders are advised under regulatory guidance to use 7%.

Many people move to a cheaper area when they buy their first property. Alternatively cut your outgoings to build a larger deposit. No lender is going to advance you an amount which could cause you severe financial difficulties in certain circumstances.

Louise1234

If we can borrow the 5 or 5.5 times it would be less than we have been paying in rent for the last 3 years.

I could add more deposit but I wanted to have an emergency fund (one for 6 months mortgage payments and another with around 10k for general household emergencies) So think probably would be better to have that than a larger deposit?

We could over pay £300 a month too relatively easily and my wages increase around £2500 a year so financially it feels like we would be ok (maybe wishful thinking! haha)

I would love to move to a cheaper area, there is a really nice town around 30 mins away but we have 50/50 shared custody of my step son and swap mid week so would be really hard for his schooling and things. If it wasn't for that we definitely would. We can get the ideal house for £70k less than our town easily.

I have even looked at trying to find a 2 bed that you can extend but it isnt much cheaper

glosoli

I can't really see the application passing the affordability checks at 5.5x income, as stated above your application will be tested at 7% rates of interest and I cannot see how you could have a positive surplus after that.

amnblog

How lenders calculate affordability changes all the time.

Do not confuse a ball park income multiple figure with actual affordability which is a formal calculation likely to be much tighter.

The Lender you approach is key. Guide figures on our website show that the more generous lenders may offer nearly a third more than the more conservative lenders.