mortgage on low income

confusedftb

hi all,

thank you in advance for the help.

looking to get a mortgage but the problem is that my income is low and not the same every month. but i have been in the same job since 2015 and the income comes every month and it is always more than £1500 + after tax.

i have saved £45k.

firstly i wanted to get a house and was looking for something in the range of £280-300k but it seems that it is not possible.

So now a more doable approach, i have decided to look for a 2 bed flat. there are some flats costing £200-220.

after the deposit i will be needing a mortgage of £180k

what do you guys think? is it doable? and will i be able to get a mortgage?

Thanks

ACG

General rule of thumb is 4.5x income.
So if we say your gross annual income is £19,000 that gives you a mortgage of around £90,000 plus your deposit. The absolute most you are going to get is £100,000 plus your deposit.

What you want is not feasible despite your deposit.

BakingC

Ok lets say you were looking at a property for £220K (45K deposit, 175K mortgage) ignoring stamp duty and other fees / costs.

At 3% interest rate across 35 years your payments would be nearly £700 a month, once council tax, utilities and house insurance is paid will likely be total of £1k. You have £500 left to pay for all your food, travel, savings, repairs

Do you see why a mortgage company wouldn't lend you such a large amount of money on your income? It is already a stretch as soon as interest rates rise you won't be able to pay your mortgage and live.

csgohan4

OP lower your budget or get a better job

confusedftb

thank you for all your replies. i understand that i will either have to get a new job or lower my budget.

i need some help. if i were to reverse calculate it.

recently received my p60 total earning are 30k

this is low because i have not worked as many hours, if i were to work like full time this figure should have been atleast 40k.

now my question is.

- how can i convince the lenders that i will be able to pay the mortgage, if i were given one
- i have atleast 20-25% deposit on 200k property

i am trying to get to a better job but that will take a bit of time.

thank you in advance for all your help

BoGoF

It's not a matter of convincing them, you either pass their criteria and affordabilty tests or you don't.

As things stand you won't.

BoGoF

And you asked very similar questions back in November when you had a £50k deposit.

https://forums.moneysavingexpert.com/discussion/5929599/first-time-buyer-so-confused

How has it managed to down to £45k

csgohan4

confusedftb wrote: »

thank you for all your replies. i understand that i will either have to get a new job or lower my budget.

i need some help. if i were to reverse calculate it.

recently received my p60 total earning are 30k

this is low because i have not worked as many hours, if i were to work like full time this figure should have been atleast 40k.

now my question is.

- how can i convince the lenders that i will be able to pay the mortgage, if i were given one
- i have atleast 20-25% deposit on 200k property

i am trying to get to a better job but that will take a bit of time.

thank you in advance for all your help

As above it's about criteria, they don't go on what if's but the facts at present, I could say I will work 100 hours a week to afford a mortgage, but the lender will say no and quite rightly as there is no evidence of this.

Self certification of mortgages are no longer offered, it's why mortgages are regulated, due to the housing crash as result

ACG

confusedftb wrote: »

now my question is.

- how can i convince the lenders that i will be able to pay the mortgage, if i were given one.

As has been said, it either passes affordability or it does not.

If you are looking at say 5x income, there might be options. If you are looking at 6x income there is probably not.

The issue is that you are assessing your affordability based on what the rate will be now. The lenders are assessing your affordability on a higher rate to account for the inevitable rate rises.

cjv

My monthly income after tax is similar to yours and with only a £12000 deposit saved there were no suitable properties in my area, in my price range.

I decided to go the shared ownership route and am close to completing on a 40% share of a 1 bedroom flat FMV £187,500.

Take a look at shared ownership, it may not be right for you but it is worth considering if you can not get a big enough Mortgage to buy via the normal route.

If you can afford to buy a cheaper property outright that suits your needs, I would suggest it is better to do that and then move up the ladder later, rather than choose shared ownership.