how to know how much I can borrow

JeffMason

Thanks for all the replies. It's very helpful to talk this through a little!

JeffMason

litepay wrote: »

To check how much you can get: you could use the calculators that the brokers use, they are very detailed.

https://resources.barclays.co.uk/mortgage-calculators/residential-affordability
https://www.nationwide-intermediary.co.uk/calculators/aff_calc
https://www.santanderforintermediaries.co.uk/calculators-and-forms/affordability/

You could also get an agreement in principle from Barclays (there might be others) without impacting your credit history/score:

https://www.barclays.co.uk/mortgages/agreement-in-principle/

I'd use a broker to get the actual mortgage if I were you.

And this is where I get confused. I just tried out those three links and got three completely different results. Santander offered a solid amount, Nationwide half that, and Barclays nothing at all. It doesn't give me much sense of what I would actually get, which is what I am after...

Plus the calculators mostly ask for information I don't yet have, for example "How much is the house you want to buy worth?" I don't know, I haven't looked yet. I want to know how much I can borrow, what the interest rate will be and what I'll have to pay back per month first. Then I can decide what I can afford and how much I am able to borrow within that.

How does anyone know how much they can afford to spend on a house without having this info in advance of looking at houses?

ACG

I deleted my last post as it was in reply to someones post who then deleted theirs.

JeffMason wrote: »

I want to go with more than a 25% deposit, more like 50%.

And yes, the interest I currently earn will reduce with the deposit but I would only add in the interest I would get from the amount remaining after I've taken out the deposit.

That's a shame. My proper job pay will go up in 12 months time. Perhaps I'll have to wait until closer to then before buying? I'd rather not, but... I'll have a look at calculators and see what difference my pay now and pay in year makes...

I'm not against talking to lenders. I just wanted to know if I could have those conversations before I have a property I want to buy. I want to know how much I can borrow before I look at houses and not get set on one and then realise I can't afford it, OR stick with cheaper properties only to then find out I could have been looking in a nicer area or at a slightly bigger space.

I appreciate the hard work a broker puts in. I'm not looking for specifics of rates etc at this point, but just a sense of the most I could borrow. I might not want to take it all, but it's good to have an absolute maximum in mind when looking at property.

A lot of the income sources you are asking about are going to be lender specific in what they will accept and how much of it they will accept.

Affordability calculators do change over time, Natwest as an example used to ignore childcare costs. So had someone checked their calculator and then tried to buy say 3-4 months later, they would have been in for a nasty surprise. Also after the recent rate rise, I had some customers who I told they could lend £x, by the time they had found a property, the amount they could lend had come down by around £10k.

So if you are looking now but plan on buying in 10 months, then I would just take the figures as a guide.

But without making the phone calls, I think you are going to struggle to get anything accurate.

litepay

@JeffMason: lenders' criteria are different, some of them are more "generous", some stricter, some are very picky with who they take on as a client.

No one knows upfront how much their future house will be and exactly how much they need. Pick an area you like, check average houses sold prices, use the calculators, then get an AIP and/or speak with a broker, compare figures etc. There's no single magic ££... That will give you a good idea of what you can afford. If you are that cautious, take the lowest figure you were quoted for affordability...

In your case I'd definitely speak with a broker...

ACG

JeffMason wrote: »

And this is where I get confused. I just tried out those three links and got three completely different results. Santander offered a solid amount, Nationwide half that, and Barclays nothing at all. It doesn't give me much sense of what I would actually get, which is what I am after...

Plus the calculators mostly ask for information I don't yet have, for example "How much is the house you want to buy worth?" I don't know, I haven't looked yet. I want to know how much I can borrow, what the interest rate will be and what I'll have to pay back per month first. Then I can decide what I can afford and how much I am able to borrow within that.

How does anyone know how much they can afford to spend on a house without having this info in advance of looking at houses?

You presumably have a a rough idea of what you want to buy. So put that down as the purchase price. If it comes back as unaffordable then reduce it down. I quite like the natwest affordability calcualtor. There are around 10 questions and you get an answer as to how much it will lend. I tend to use that as a starting point. But obviously you need to know which of your income sources they will accept.

Natwest will not necessarily lend the most but it will usually get you in the right ball park.

JeffMason

At the moment I'm just going with my current PAYE permanent job pay. I'm not putting any other earnings in as they do and will continue to fluctuate.

I don't mind getting rough lending amounts that might change up or down by 10k but from those three calculators I've got one saying they'll give me zero, another saying they'll give me 100k and the third saying they'll give me 50k.

100k I can work with in the area I'm looking at, but 50k would mean I'd have to rethink the plan. Are these online calculators just not good enough? Will talking to Nationwide for example, give me a different figure? And will they or a broker be happy to talk to me even though I dont have a property in mind yet?

I can possibly buy a flat for 160k or a nice house for up to 280k. It's somewhere inbetween that I'm thinking of as the best options.

JeffMason

Natwest incredibly simple, and they estimate roughly the same as Santander, which is what I guessed I might be able to get at best without including any other earnings beyond my PAYE pay.

litepay

You should be able to get a mortgage 3x your income - that's a conservative estimate. But, you could also get 4.5x your income. You might have made a mistake in entering your data, which suggests you could use some help.. or read more.

How much mortgage are you looking to get, how much deposit do you have, what's your PAYE income, do you have any debt or loans, do you have any dependants, etc? If you post all that info here some of the nicer brokers on here might be able to tell you if it looks doable or you should lower the expectations. Or you could call a broker or your bank, it's free

litepay

JeffMason wrote: »

Natwest incredibly simple, and they estimate roughly the same as Santander, which is what I guessed I might be able to get at best without including any other earnings beyond my PAYE pay.

This doesn't look that simple to me

https://rbsintermediaries.hdddirectsolutions.co.uk/Natwest

JeffMason

i'd rather not post all those details online for everyone to see. But if the banks and brokers will talk to me without a house in mind that I want to buy then that seems like a good option.