95% LTV 5x salary possible?

Geography_rox

Hi,

Short version:

Is it possible to get a 95%LTV mortgage at 5x joint income? If so who should I be looking at?

Longer version:

In the summer I will be getting a substantial pay rise (to just over 70k) and my wife will be returning from maternity (Statutory :mad::mad:) leave to work as a part time teacher (probably around 15k but yet to be agreed). We have had an expensive last couple of years what with paying for the wedding, having a baby (and a dog!) and buying a new car, so don’t have as much saved up as we probably should. Now that we have just paid off the car (:D:D:D) We can live off my salary and can save just over £2k a month, which means by the time the pay rise and return to work kick in we should have around 25k saved (currently have 12k).

We are looking at buying a house, and the ones we are looking at cost Around 400k. With 5k stamp duty (we might have to get a bit of help from family for other fees I realise, or wait another couple of months) that means we would need a 95% LTV mortgage. But equally, to borrow 380k we would need a 5x salary (I know its 4.5 x our joint income, but im guessing once they deduct likely childcare costs from my wife’s salary it will be more like 5x) . Is that something that would be achievable or am I asking too much? I realise we could save another year and get 90%, but we’re keen to get on with it, and if we have another kid I can’t be sure my wife would continue to work, so the sooner the better really.

Thanks a lot

[Deleted User]

At that level of income its quite possible that childcare costs wouldn't change the amount you could borrow.
Someone doing 4.49x at 95% is more likely than someone doing 5x

Its not quite as simple as just deducting costs from salary, certain lenders have higher tolerances for certain outgoings than others. (as an example, santander can have quite a lot of loans before affordability starts to reduce, natwest are OK with loans but generally not as good if credit cards have higher balances)

Get a broker to do the legwork for you because you have also got to factor that a lot of lenders will not go as high as £380k on a 95% deal regardless of finances (Leeds have £350k limit for instance).

Also, some lenders aren't great when a joint applicant has incomes that are massively different from each other.

A lot more factors to consider than you might realise

haras_nosirrah

I agree with Deleted_User. It may be doable even with childcare. Some lenders will include a payrise as long as your employer confirms it in writing and it is due to start within 3 months. Maternity can be sorted with a return to work income confirmation and confirmation of expected childcare. Speak to a broker and see what your options are.

If you don't have a broker then read through the boards and pm a broker from here who you feel gives good advice.

ACG

I think you are looking at it the wrong way round (and making it harder for yourself), once you go above 4.5x income, your options start to reduce.

It appears you want 4.5x income but have commitments in the background, that is potentially easier to overcome. It would just be a case of having a play around on affordability calcultors or speaking to a broker to do the donkey work for you.

Windofchange

Going through something similar at the moment, although no baby or dog to consider. We've had an offer accepted, and just off the phone to our broker to start the formal application this week. Doing my own research to the n'th degree over the past few weeks, I've had very varied results between lenders. HSBC my current bank funnily enough will only go to just shy of 4.5 x joint salary for us, but both Halifax at about 4.75 x and Yorkshire Building Society at nearly 5 x will. I suspect this is due to the amount of overtime they count - I earn a about 10k less than you basic, but get about 20% ontop as unsociable hours or overtime. This I suspect is the diference between quotes, and the broker I've just spoken with concurs.

I've looked at a 95% LTV, and the broker is going to get back to us early next week with whether that will push costs up significantly, or be possible at all even - some banks I know won't allow it fullstop over certain amounts. I too will be getting a modest 5k or so pay rise in April, and he said that some lenders will take this into account, but a lot won't. I think this is where the broker comes into his or her own. They know the market, and they know which lenders are most likely to fit with your specific risk profile. I have spent since the new year extensively playing with affordability calculators, got a DIP that has shown three different results (Soft credit check), and I just got in a muddle.

I think given your questions you would probably get a lot of benefit out of talking to a professional.

Geography_rox

Thank you so much for all your advice, I will definitely book myself in to see a mortgage advisor! It’s good to hear that it’s not obviously an impossibility, even if there may be a few hurdles to overcome.

Thanks again