First time buyer - high deposit but income low for area prices

superbez

Hi

We live in the south east (probably in the most expensive area outside London) and currently rent (£1135pm for medium 3 bed)

We have just discovered we are due to inherit as much as £130k which is quite literally life changing. We are planning on clearing our debt, waiting a while so our credit scores improve and buying a property using 100k as the deposit. The problem we have is because house prices are so high down here and our joint wage is approx 35k (wife works part time) that we are not going to be able to borrow enough for a 'decent' property, only run down, dirty or in need of modernisation houses.

A quick check on the various mortgage comparison sites shows me that the mortgage payments on a 300k new build would be almost half (maybe slight exaggeration) of what I currently pay in rent each month so I clearly can afford it and be a LOT better off each month.
Do lenders take into account the fact that I am able and have been paying such high rent when making an offer?

Like I said we are not quite ready to apply yet, we need to clear our debt and let our credit history settle before that but as new to this just beginning to make enquiries!

Many thanks

csgohan4

maximum now a days is x4.5 of your combined income minus any debt, so unfortunately you cannot borrow 200k to make up the 300k with 100k deposit. Keep saving or find some where cheaper


Lenders do not take into account of current rent payments.


Whether you can afford the mortgage payments is irrelevant, it's what you can afford to borrow is what matters.


Bare in mind lender do stress tests and raise interest rates by 5%+ to see if you can afford the payments too.

glosoli

Unfortunately no they won't care what you are paying in rent just now, either need to save more, get more income, or look at cheaper alternatives, perhaps £230,000 to £250,000 is more realistic

superbez

That's a shame. It's a shoebox or a move up north then.

NOVAMET21

superbez wrote: »

Hi

We live in the south east (probably in the most expensive area outside London) and currently rent (£1135pm for medium 3 bed)

We have just discovered we are due to inherit as much as £130k which is quite literally life changing. We are planning on clearing our debt, waiting a while so our credit scores improve and buying a property using 100k as the deposit. The problem we have is because house prices are so high down here and our joint wage is approx 35k (wife works part time) that we are not going to be able to borrow enough for a 'decent' property, only run down, dirty or in need of modernisation houses.

A quick check on the various mortgage comparison sites shows me that the mortgage payments on a 300k new build would be almost half (maybe slight exaggeration) of what I currently pay in rent each month so I clearly can afford it and be a LOT better off each month.
Do lenders take into account the fact that I am able and have been paying such high rent when making an offer?

Like I said we are not quite ready to apply yet, we need to clear our debt and let our credit history settle before that but as new to this just beginning to make enquiries!

Many thanks

Where in south east do you live?

Thrugelmir

superbez wrote: »

we are not going to be able to borrow enough for a 'decent' property, only run down, dirty or in need of modernisation houses.

We all start somewhere on the ladder. May not be ideal but it'll be somewhere you can call home. You've got the break. Make the most of it.

Verix

You mention looking at new builds. Depending on when you are looking to buy you could utilise the government help to buy scheme and therefore only need a mortgage of £140,000 which might be more feasible.

ap1985

I agree unfortunately lenders will not take into account your rental income...I was rejected for a mortgage first time round even though my rent in London was £1,350 and my mortgage in the midlands would have been £700. If only it was that simple. I would say that you are definitely going about it in the right way by clearing off your debts first but in addition to that I would try to save a bit more deposit or look to move to a cheaper area. Hope that helps.