DIPs and lending calculator discrepancies

Istinne

Hi everyone,


My partner and I have had an offer accepted on a house at £180,000 and will be putting down a 10% deposit, leaving us with a mortgage of £162,000.

When we began our search we got a Decision in Principle from Halifax to fend off estate agents trying to shill their own brokers, with a view to working with the independent broker at my work once we found a house we like. We're now just waiting to hear back from her once the bank holiday is over.

My worry is whether or not we'll actually be able to get the mortgage we require. I was very honest about income and expenditure when applying for the DIP and it came back at a value of £215,000 however in my nervous state I looked on the MSE 'how much could I borrow?' calculator again and it is saying the maximum we could borrow is around £164,000. This is way too close to the value of mortgage we would require for my liking. Our combined income is just shy of £47,000 so this would work out at around 3.5x our income.


My worry is that when we get our mortgage offer back it might be lower than the £162,000 we need. Is 3.5x really the right multiplier? I was under the impression that 4x or 4.5x was typical and for that reason was looking for houses well under the £215,000 mark so we weren't going to be mortgaged to the hilt but now I don't feel so sensible after all!

csgohan4

X4.5 is the standard not including debts or loans of course


I would trust an AIP over a calculator, however I tend not to do an AIP unless I am going for a full application anyways. I used a broker to prove to the EA for affordability.

ACG

I would trust halifax over MSE, however the key thing is not necessarily being honest, but answering the questions as the lender expects.

2 examples which cropped up with our trainee recently (we picked up on the mistake before it happened as we check everything she does at the minute)...
Self employed, the lenders website asked for annual income and she put down the latest years figures. If you answer the question as it is asked, that makes sense, however the lender actually wants you to put the average of the last 2 years in there - It just does not tell you anywhere.

Bonus income, what figures do you use? Last months annualised? What was on your P60? Average of the last 3 months, 6 months? All lenders vary and their answers can vary depending on how often it gets paid (monthly or annually for example).

That being said, assuming not too much debt/monthly commitments, I would expect you get what you want quite comfortable. Why have you not spoken to the broker before your offer gets accepted? Now it will be a case of offer gets accepted and trying to rush through everything.

Istinne

Honestly we didn't expect everything to move as quickly as it did when we put the offer in. We were in contact with our broker a day or so before as we planning on offering but honestly we weren't expecting the vendors to accept our offer as readily as they did. We're hoping that everything should be sorted by the middle of next week.



Thankfully we're both on full-time permanent contracts with very very rare overtime so our income is pretty straightforward and we've got relatively low debts too. It's definitely comforting to know that you think what we're after doesn't seem unreasonable!