Mortgage affordability / equity question

jk1122

Hi all.

I'm considering moving house next year. Like many people, I'll mainly be WFH in future and would like a bigger house.

Looking at the figures and what's on the market, I think I might be £10-20k short of what I'd ideally need. That's based on the usual 4.5 times my salary that most lenders use on their websites when asking how much I can borrow.

My question is, would a lender (in particular my current lender) be likely to let me borrow more than 4.5 times my salary, particularly taking into account the amount of equity (50%+) that I currently have?

For the sort of properties I'm looking at, I'd have a LTV ratio of about 45-49%. I regularly make overpayments on my current mortgage and borrowing that extra £10-20k (above the 4.5x salary) wouldn't make a big difference on the monthly payments, so affordability wouldn't be an issue.

Obviously I can speak to a broker and/or my current lender at some point, but I'd be interested to hear other people's thoughts.

Many thanks.

george4064

When you say £10-£20k short, do you mean short in your gross salary or short in your affordability (deposit + mortgage availability)?

As a side note, do you receive an annual bonus each year? 

Will vary from lender to lender, but if you can show track record over 3 years you can often use up to 100% of the 3 year average of your annual bonus as income. So if that 3 year average is £5k, with x5 multiple you could potentially borrow up to a further £25k.

jk1122

george4064 said:

When you say £10-£20k short, do you mean short in your gross salary or short in your affordability (deposit + mortgage availability)?

I mean £10-20k in deposit + mortgage availablity. Sorry, I should have made that clearer.

I don't receive any bonuses unfortunately. Just a normal yearly salary.

getmore4less

£10k-£20k is meaning less without some context

What multiplier do you need to hit the total you need?

MaryNB

It is possible to get up to 5x with a low LTV but will depend on your salary and credit history.

I had a low LTV and went with Halifax and got a 4.75x mortgage. They may go up to 5x if you earn over £50k and have a low LTV. My friend had a low LTV and got 5x with virgin money. 

Thrugelmir

Equity provides the lender with security. However it doesn't improve affordability and increases the likelihood of default. Lenders write mortgage books at the macro not the micro level. 

jk1122

5x would be enough. I have a good credit history, but earn less than £50k.

ACG

Lenders affordability calculators take into account the LTV - where it asks. If it doesnt, then it probably wont make a difference. 

There are lenders who can go beyond 4.5x income, you just need to find the right lender for you.