First time buyers - how much to borrow

robbiebd

In the past we've been told that we should stretch ourselves when obtaining our first mortgage to get us further up the housing ladder.

My girlfriend and I are looking to buy our first house. and with the increasing interest rates we are wondering what the sensible amount to borrow would be. we were thinking that 2.5 to 3 times our combined would be easily manageable as neither of us have debts or kids etc.

Should we be looking to borrow more or less that this amount? What is the general feeling about this?

Would it be better in these times to borrow less for a smaller property, and maybe put savings away, or stretch ourselves to pay off a larger mortgage.

Any advice would be great!

Thanks

Running_Horse

We borrowed nearly 4 times my income and disregarged hers, but with a baby and childminder it is a stretch. For us it was worth the house we got. At the risk of stating the obvious, do a detailed and honest budget, then borrow what you can afford, leaving a cushion for rate rises and the unexpected.

SquatNow

It all depends on how much you want to lose.

If you feeling really adventurous, allow the bank to talk your parents into acting as guarantor, then they'll be having a lifetime holiday in a hostel too.

annie123

start with 2.5 times joint then ask your lender how much it would cost if interest rates were 8%.
can you still afford it?
Play around with figures at higher and lower levels.
owning your own home has costs that you have yet to experience, maintenance, repairs, etc as well as the usual bills.

You may have children sooner than expected!! could you cope on one income if needed?

Working just to put a roof over your head is no fun and will put a stress on your relationship.

Do your sums first and you should be able to make an informed decision thats right for you.

Good luck

Biggie

all depends how much you earn ?


if your higher earners I believe you can afford more muliplies as you have more disposeable income. If your a very low earner then even 2.5 can be a stretch if very high income you may even be able to afford 5x.

sarkin

I am based down south no one buys at 2.5 X joint try 4or 5 X joint, plus good deposit. Where are you thinking of buying?

firsttimetom

II would need to borrow about 5 x my income to get on the ladder, although my partner is currently at uni and not earning.

If I didn't have a large deposit, my multiple would be much higher.

robbiebd

In response to the questions, we are looking to buy in North Wales.
We are both above average earners for the area, and were thinking of putting a small-ish deposit down, but leaving a rainy day fund for the unforeseen problems, such as maintenance.

Working out some figures, it does seem that 3x (plus rates etc) would be a manageable stretch, however I'm just a bit concerned that the more we borrow, the less amount of capital we will be paying off, as we will be paying a lot more in interest.

4 or 5 times just seems like a big amount of debt to take on with our first venture into home owning.

sarkin

4 or 5 x joint thats nothing, my mate is a broker for a local estate agent and he's seen people do 7 x joint on interest only. I sh*t you not. I believe house prices are lower in North Wales. 1 bed flats no garden start around £125,000 in my area and if you want something half decent you need to go above £200,000 for a good 2 bed semi