FTB £480k mortgage - too big?

demontfort

Agreed there were some quirks with my mortgage which made it trickier than it should have been, all sorted now hopefully (probation completed, 2 years self employed tax returns provided and mortgage on first property almost paid off). Regardless I was told the max they would have lent us would have been £406k, so I definitely think the OP is best going hrough a broker.

slapmatt

I've been out of the mortgage loop for a while, but do banks really loan 4.7x joint income?

astal

GirlInKent wrote: »

However our big concern is what if we struggle to get a cheaper re-mortgage and potentially get stuck with an extortionate SVR, which surely will be much higher than it is now.
...
However if we buy this house at £570k, in 5 years if it goes up to at least £600k (similar properties have sold at 600k in past 6 months in same area/lane), so should have access to the best 75-80% LTV mortgage deals, which is some comfort.
...
Although I 'think' we can do this as we have planned it meticulously part of me thinks we may be over-stretching ourselves as there is a lot of if's and but's to make this work. But it is definitely 'better value' to buy that dream house now rather than later, as the mortgage would be much smaller, and prices are low at the moment and may rocket in the next 5-10 years. On the downside, property market may see correction and the value of the house may go down.

1. you won't "get stuck" with SVR. At the end of the fixed period, you will have exactly the same options as today: fixed, tracker or SVR.

2. five years is a very long time. Houses of such value, in the last five years went up by 50%. Better LTV would mean better rates compared to other deals at the time.

3. The big picture is this: when interest rates are low, you are in better position to borrow and get a high mortgage, rather than saving.

Overall, it sounds as a well-thought plan. I did the same and went for a highly priced house 5 years ago. Very glad now.

Candyapple

slapmatt wrote: »

I've been out of the mortgage loop for a while, but do banks really loan 4.7x joint income?

Yes - our lender has given us 4.9 multiple of joint income.

SouthLondonUser

GirlInKent wrote: »

. We both work for big multinationals so there is little risk of the company going under in the medium and long term, so job security is decent.

That's the wrong way to look at it. High-paying jobs in well-established and financially sound multinationals may easily mean little job security, not because the multinational in question risks going bust, but maybe because it replaces its workforce periodically, or because it has few people older than 40-45 in certain jobs, or because it changes strategy all the time, or because Brexit is a huge risk in the financial sector, etc. I don't mean to jinx you, but associating big multinational employer with job security is wrong.

Back to your question, it's not clear to me if you have budgeted for childcare costs, which can be very high the first 4 years, before primary school starts; even if you send your child to state schools, chances are you'll still need a childminder or someone to look after him/her in primary school, unless one of you can have a 9-3 kind of job (who can these days?). How much would banks lend you taking childcare costs into account?

getmore4less

£90k in the bank in 2 years should cover childcare or the mortgage for a while.
Child care both working, mortgage one working.

SouthLondonUser

OP, your disposable income will plummet when you are on maternity pay and before your child starts primary school (childcare costs). Applying for a mortgage before and after these events will maximise your chances of being approved. Eg take out a mortgage now, with no early repayment charges, then, when you're expecting, refinance it with a 5-year mortgage. This way, at the end of the 5 years, your child will be close to starting primary school and you'll be able to argue with the bank that childcare costs will reduce substantially.

This is one possibility, but clearly not the only one. It's up to you whether you want to do this or refinance every 2 years hoping for better rates.

Of course, the burden is still on YOU to make sure you can afford the mortgage payments, childcare costs and everything else!

getmore4less

Retention deals avoid the refinance issues.