How much can I borrow for a mortgage?

s34rle

Above reply is directed at Lokolo. I can’t seem to get the quotes to work.

@Quantumlobster

I see your point but not sure I agree with it. Joint income is nearer to £3500 and if half of that was lost because of 1 not working it would be a struggle. But you could also argue that point for single applicant mortgages. If that’s the risk then no single person should get a mortgage in case of ill health of job losses.

I thought the whole point of a deposit was the banks security. 100k is a lot of money. That’s a decent security. Should anything like that happen then the original 100k is there as a deposit.
The way the prices have risen over the last 5 years in London means the calculator isn’t going to work for a lot of people anymore.

macman

The £100K deposit is not there as security, because it's gone to the vendor! If the buyer can no longer pay the mortgage, then the only recourse the lender has is to repossess the property. That applies whether the borrower has equity in the property or not.
Repossession is time-consuming, expensive, and results in a low price when the property is sold. No lender wants to lend when the risk of default is above a certain level.

letitbe90

macman wrote: »

The £100K deposit is not there as security, because it's gone to the vendor! If the buyer can no longer pay the mortgage, then the only recourse the lender has is to repossess the property. That applies whether the borrower has equity in the property or not.
Repossession is time-consuming, expensive, and results in a low price when the property is sold. No lender wants to lend when the risk of default is above a certain level.

The deposit does act as some security risk/aversion for the lender as, in the case of repossession, it is far more likely for them to receive close to the outstanding loan amount then say if they had 100% equity of the property. The higher the deposit, the lower the risk of the lender losing money (or losing a lot of money).


This is why for example, many lenders have a sliding scale for income/debt ratio and even credit rating leniency if LTV is lower. For example, my partners missed payments meant Halifax would allow a 90% LTV but not a 95% LTV with her (I got around that by doing a sole application in the end). This is also the reason banks offer better rates for lower LTV, as it reduces their risk.

Candyapple

If you are looking to buy in London, I presume you both work there too? In which case, £25k salary each, on London wages, is extremely low. It's not even the national average (£26k).

Is there any opportunity for either of you to increase your salaries?

Are there any flats for less than £350k? As in the £325-£335k bracket? That would be your upper limit really.