Borrowing capabilities for buying in London

MaMoneyMaMoney

Hi all,

What are the borrowing capabilities of a couple whose yearly combined salary are in the region of 100k/150k?

By reading this thread (the initial posts, no the last ones where they go quite OT), it made my think it would NOT be possible to get a mortgage/buy a property in London falling within the 500k/650k (top) range. Is that correct?

By speaking to one - and only one, for now - mortgage adviser, they said that given the yearly salary amounts + deposit sum available (10% of the property, assuming a range above), there should be no problems in getting accepted for a sum like that.

But that thread got me thinking.

What do you think?

Thank you

agrinnall

I don't see why you should disbelieve the advisor, their advice doesn't appear to contradict the figures in the other thread, which refer to 4.5 times salary, which even if you take £100K would give you £450K mortgage plus £50K deposit for a £500K property.


Personally I think borrowing that much is madness, but if you want to buy in London there may not be much alternative.

lookstraightahead

I wouldn't touch buying in London anyway at the moment.

MaMoneyMaMoney

That's the thing. Buying in London is madness indeed. And I personally think thing got too inflated over the years.

I mean, according to Rightmove historical prices, there are houses whose price more than doubled in the last few years. And I'm talking about houses in zone 3 and beyond.

agrinnall

If that's what you think, then why are you even considering buying there?

hazyjo

Try YBS's calculator https://online.ybs.co.uk/public/mortgages/quick_enquiry.do


Looks feasible to me.


Mine nearly doubled in E4 over 3-4 years. Chances are, even if there is a dip, it will pick up again. If you're buying for a long term home and not an investment, go ahead.


You're obviously on good salaries which are likely to increase substantially over the next few years. Those borrowing figures would scare me, but only because I don't earn money like that. For you, it's your max, so doable. I have borrowed my max many times over before.

SmashedAvacado

It is a good time to buy when people have to sell. People with property on the market may be under some pressure to sell. Buying the right property at the right price could be done right now, but you need to study the market in the area you are keen to buy for long enough / have good contacts with the agents to pick up a bargain (ie buying from someone who is a reluctant seller).

steampowered

MSE has a great calculator for this: https://www.moneysavingexpert.com/mortgages/how-much-mortgage-borrowing

You can then put figures into https://www.moneysavingexpert.com/mortgages/best-buys/ to see which lenders are offering the best deal for your circumstances.

I don't agree with the "buying in London is madness" idea. If you know what the property market is going to do you could be making millions as a trader or broker. Nobody knows which way the market will go.

You also have to take into account the equity you are building up by making mortgage payments. If prices fall, you could still end up ahead due to building up equity by mortgage repayments.

MaMoneyMaMoney

Thanks all. It's a tricky business. And no we're not talking about buying to invest here.

Thing is, whatever the sum, with the mortgage is going to be much higher in the end due to mortgage interests, etc. That is to say, an imaginary monthly repayment of £2400 over 30 years amounts to £864.000. That's crazy money (for me)!

Why London?

Business reason's. And no, living outside the M25 is not an option. I don't want to do like many over here which spend 3h every day to commute to London, pay who knows how much for a travel card l, etc. Life's too short.

agrinnall

steampowered wrote: »

I don't agree with the "buying in London is madness" idea. If you know what the property market is going to do you could be making millions as a trader or broker. Nobody knows which way the market will go.

You seem to have argued successfully against yourself.

airandwater

MaMoneyMaMoney wrote: »

Thanks all. It's a tricky business. And no we're not talking about buying to invest here.

Thing is, whatever the sum, with the mortgage is going to be much higher in the end due to mortgage interests, etc. That is to say, an imaginary monthly repayment of £2400 over 30 years amounts to £864.000. That's crazy money (for me)!

Why London?

Business reason's. And no, living outside the M25 is not an option. I don't want to do like many over here which spend 3h every day to commute to London, pay who knows how much for a travel card l, etc. Life's too short.

Commuting is relative and depends on where you live and work. Some trains from the outskirts of London get you into Victoria, Paddington or London Bridge in 20-30min. So if you work near those hubs then commuting is less tedious than it is for someone who lives in Queens Park but work in Canary Wharf.

However I perfectly understand why you want to live in London. It's good that you are researching but I wouldn't buy until after Brexit as house prices are still correcting from the epic bubble we had.