How to Buy Bigger

Nick87

Hello,
I currently own my house outright and I'm looking to up size, but I'm struggling to borrow enough.

The house I want to buy is £600k and I should have about 40% for a deposit. However, I'm only being offered £140k on an online mortgage calculator. So about £200k short.

I have no loans, credit cards or debt. I will be applying on my own. My salary is 35k and I'm 33. So can get a long mortgage. The mortgage repayments I get in the calculator are well below what I could afford a month. 

My questions are: how would I ever be able to afford £600k? Does anyone know how good the mortgage calculators are? Am I likely to be offered any more when I talk to the bank directly?
Thank you

davilown

You can’t - 4.5 x salary I think is Max.
Downsize your ideas or earn more I’m afraid!

amyr

You're trying to borrow 10x your salary, and there lies the issue. For one person, that's an awful lot of risk for any bank.

SpiderLegs

So you are currently looking for a 10x income mortgage?
yeah I think it’s time to drop this particular idea, unless you can either get a 50k pay rise or a husband/wife who earns that much.

RelievedSheff

Lottery win?

GDB2222

Nick87 said:

Hello,
I currently own my house outright and I'm looking to up size, but I'm struggling to borrow enough.

The house I want to buy is £600k and I should have about 40% for a deposit. However, I'm only being offered £140k on an online mortgage calculator. So about £200k short.

I have no loans, credit cards or debt. I will be applying on my own. My salary is 35k and I'm 33. So can get a long mortgage. The mortgage repayments I get in the calculator are well below what I could afford a month. 

My questions are: how would I ever be able to afford £600k? Does anyone know how good the mortgage calculators are? Am I likely to be offered any more when I talk to the bank directly?
Thank you

The mortgage repayments I get in the calculator are well below what I could afford a month. 

Indeed, the payments are meant to be well below what you can afford. The banks are meant to test affordability against a substantial increase in interest rates - I think 5% or 6%. 

Do you get a larger loan offered if you go for a mortgage with a very long fixed interest rate (say fixed for 25 years)?

Justonemorecupoftea

@GDB2222 we had our mortgage through yesterday and it included a worked example of if rates went up to 9.19%! I took a big gulp!

OP - I think you'll need to think smaller, maybe a couple of moves up the ladder. Get a shorter mortgage to pay off more capital or a longer mortgage and make overpayments for the same effect.

[Deleted User]

You are simply trying to afford something that you can't. 

I would love a 600k house. Can I afford one? No. 

You will need to earn more, or lower your expectations. 

Or win the lottery 

yksi

The bank doesn't actually care how you see the affordability of the repayments. The fact that you think they're easily affordable doesn't mean the bank agrees. They apply both a general "what life costs for people on average" plus a stress test of "what if the interest rates went way up". You'll probably find they don't allow the repayments to go over 30% of average take-home pay.

The bank feels you can afford repayments that equate to a mortgage of four times your salary. You will be pushing it to find many lenders who'll go very much higher, regardless of your deposit. You're a solo borrower so a job loss could mean you can't cover repayments - joint applicants spread the risk and might get them a 5x. A 10x is laughable and just not realistic.

I think you need to step back and think about what you're doing. You're trying to double things from a 240k home to 600k. That's not a rung up the property ladder, that's a pole vault, and it's just not happening. If you "need" a massive house and that's why it costs 600k, then move further away and buy a £380k house. If you just "want" a massive house then buy a smaller or less-nice one in the same area for £380k.

Mickey666

Nick87 said:

Hello,
I currently own my house outright and I'm looking to up size, but I'm struggling to borrow enough.

The house I want to buy is £600k and I should have about 40% for a deposit. However, I'm only being offered £140k on an online mortgage calculator. So about £200k short.

I have no loans, credit cards or debt. I will be applying on my own. My salary is 35k and I'm 33. So can get a long mortgage. The mortgage repayments I get in the calculator are well below what I could afford a month. 

My questions are: how would I ever be able to afford £600k? Does anyone know how good the mortgage calculators are? Am I likely to be offered any more when I talk to the bank directly?
Thank you

I had a similar issue when I bought my previous house in the early 90s.  I wanted to borrow £200k and had a very detailed spreadsheet with all my finances showing that I could easily afford the repayments.  I could also show that this modelling was not pie-in-the-sky as I had paid off my previous mortgage within just 9 years.  I met with my own bank manager and they agreed I could afford the repayments but based on their lending criteria they wouldn't lend me the amount I wanted.  I visited a few other banks but got the same basic reply.  The most I could borrow was £165k.

In the end I was fortunate to be able to borrow the additional £35k for a family member, which was win-win really - I paid them a higher interest rate than they were receiving at the time and also saved a little on the interest rate I would have had to pay the bank.  Needless to say, I repaid that particular loan before the mortgage loan and it all worked out very well in the end.

So unfortunately, simple affordability is not always the main factor in obtaining a bank mortgage.

AdrianC

Mickey666 said:

Nick87 said:

Hello,
I currently own my house outright and I'm looking to up size, but I'm struggling to borrow enough.

The house I want to buy is £600k and I should have about 40% for a deposit. However, I'm only being offered £140k on an online mortgage calculator. So about £200k short.

I have no loans, credit cards or debt. I will be applying on my own. My salary is 35k and I'm 33. So can get a long mortgage. The mortgage repayments I get in the calculator are well below what I could afford a month. 

My questions are: how would I ever be able to afford £600k? Does anyone know how good the mortgage calculators are? Am I likely to be offered any more when I talk to the bank directly?
Thank you

I had a similar issue when I bought my previous house in the early 90s.  I wanted to borrow £200k and had a very detailed spreadsheet with all my finances showing that I could easily afford the repayments.  I could also show that this modelling was not pie-in-the-sky as I had paid off my previous mortgage within just 9 years.  I met with my own bank manager and they agreed I could afford the repayments but based on their lending criteria they wouldn't lend me the amount I wanted.  I visited a few other banks but got the same basic reply.  The most I could borrow was £165k.

In the end I was fortunate to be able to borrow the additional £35k for a family member, which was win-win really - I paid them a higher interest rate than they were receiving at the time and also saved a little on the interest rate I would have had to pay the bank.  Needless to say, I repaid that particular loan before the mortgage loan and it all worked out very well in the end.

So unfortunately, simple affordability is not always the main factor in obtaining a bank mortgage.

...and it got a LOT stricter in 2008...

Before then, the OP might have had a chance with a self-cert mortgage. Now? Nope.

The affordability criteria and the income multiples aren't just plucked from thin air - they're imposed on lenders by the regulators, to try to help prevent 2008 Mk II.

Somebody on £35k is pulling in about £2,300/mo after tax.
A 25yr mortgage, 60% of a £600k place so £360k borrowed, is going to be about £1,600/mo at 2.5%.
But if rates go to 5%, it's £2,100...