First Time Buyer - £240k property and only 70k deposit

Bucki

Dear Finance Advisors/Brokers

I am on £28080 salary with a £70 savings.

Looked at a property of £240K ....

What is the chance having a loan/mortgage?
Can somebody let me know what is most I can borrow?

Would be great to speak to somebody by Zoom Meeting, or live in South Yorkshire between Leeds and Sheffield.

K_S

@bucki Property of 240k, deposit of 70k, you are looking to borrow 170k which is more than 6 times your basic income of 28k, which is very very unlikely to be possible on a standard mortgage.

The most is likely to be around potentially 4.75x (133k) or perhaps 5x (140k) if you were to bring down the LTV to around 60-65%.

Bucki

K_S said:

@bucki Property of 240k, deposit of 70k, you are looking to borrow 170k which is more than 6 times your basic income of 28k, which is very very unlikely to be possible on a standard mortgage.

The most is likely to be around potentially 4.75x (133k) or perhaps 5x (140k) if you were to bring down the LTV to around 60-65%.

So it is not true that the more deposit, the more you can borrow?

Are you a broker? If so, can we have a Zoom Meeting?

cymruchris

Bucki said:

K_S said:

@bucki Property of 240k, deposit of 70k, you are looking to borrow 170k which is more than 6 times your basic income of 28k, which is very very unlikely to be possible on a standard mortgage.

The most is likely to be around potentially 4.75x (133k) or perhaps 5x (140k) if you were to bring down the LTV to around 60-65%.

So it is not true that the more deposit, the more you can borrow?

Are you a broker? If so, can we have a Zoom Meeting?

I'm not a mortgage broker - but it's my understanding that it's not true the more you have as a deposit in £ notes the more you get in a mortgage in simple terms - as you still have to fund the loan part of the mortgage, and if your salary doesn't square up to the salary side - you can't get the mortgage.

It is true that the higher your percentage of deposit against your property will mean you might benefit from better rates and more deals.

So someone with a 5 percent deposit will have a lot less choice of deals than someone with a 50 percent deposit - but how you fund the mortgage itself depends on your income - and as has been pointed out with the standard multipliers that the industry tend to use, you currently don't have enough salary/deposit to get that £240k place. You either need to up the salary or the deposit until you reach the minimum criteria. 

As you increase your percentage deposit - from K_S's reply it would seem that the multiplier can increase slightly - but you still need the base salary to meet that multiplier for the loan part of your mortgage. Those figures he's quoted I'm sure are a decent guide to current practices (I'm not sure if he's a broker - but there are a few on here)

So your 28k x 5 if you had a big enough percentage deposit would give you £140k - you're looking at a property of £240k - you have £70k - you still need to find £30k (and of course have money in the bank for all the fees/costs that come with buying your property)

Bucki

Right, makes sense.

Either I need a higher paid job or get a second job.

Moving on... how would I find a broker who would sit down for free and go through all the figures and find the figure I can borrow and see how much it would cost and breakdown the costs etc etc. including clarifying any questions and be advised.

I am a total newbie.

cymruchris

Bucki said:

Right, makes sense.

Either I need a higher paid job or get a second job.

Moving on... how would I find a broker who would sit down for free and go through all the figures and find the figure I can borrow and see how much it would cost and breakdown the costs etc etc. including clarifying any questions and be advised.

I am a total newbie.

I edited my answer slightly - and that's from my understanding - I'm not a broker - but there are some here. From what I understand they can't directly message you, but you can message them for advice. Hopefully one will come along and say 'I'm a broker' and then you can send them a message.

lonibra

That's right, they're not allowed to contact or PM you. All the posters with "I am a Mortgage Adviser" in their signatures are MBs so you will need to PM one (or more) of them to get their advice. I did the same when I needed a seasoned MB.

Or else you could also use one of the MBs recommended on the MSE page, though they are not likely to have the time to handhold you.

Redwino222

Before you speak to a mortgage advisor get your credit report and plug your salary and dependents into a few calculators.  This will give you a good idea of what you will be offered.

Yiu have had fantastic advice on the various threads today. 

K_S

Bucki said:

K_S said:

@bucki Property of 240k, deposit of 70k, you are looking to borrow 170k which is more than 6 times your basic income of 28k, which is very very unlikely to be possible on a standard mortgage.

The most is likely to be around potentially 4.75x (133k) or perhaps 5x (140k) if you were to bring down the LTV to around 60-65%.

So it is not true that the more deposit, the more you can borrow?

@bucki Not in the way that you perhaps think it is. For example, the same lender may cap LTI (loan to income) at different levels at different LTVs and income. Here's one lender's LTI matrix to illustrate what I'm trying to say

theoretica

Bucki said:

So it is not true that the more deposit, the more you can borrow?

There is a cap of the most the mortgage company will lend - eg 4.5 x salary - but if you don't have a big enough deposit they won't lend up to the cap.  So too small a deposit and you can't borrow as much, but above a certain level a bigger deposit won't get you a bigger mortgage.

MovingForwards

Really helps if you provide all the relevant information:

https://forums.moneysavingexpert.com/discussion/6258643/need-advise-first-time-buyer-a-total-newbie-confused-and-wanting-to-buy-a-property/p1