Wanted- Lender who will lend 4.75 x salary with a 5% deposit. Any ideas?!

Whywontthiswork

As the title suggests, desperate to secure a mortgage that is slight over the generic 4.49 x allowed to borrow. Have tried a lot of brokers and have also tried HSBC and Nationwide direct.

Can any lurking MA on here give me any suggestions? We have a 6% deposit waiting to go, great credit, lots of AIP’s BUT about £10k off the amount we need to be able to purchase our rented house we live in. Any advice gratefully received! 

kingstreet

Typically, lending at 95% is more tightly requlated and as a result an income cap of 4.5 x is applied.

I know of no lender willing to lend more at that LTV.

cryvate

kingstreet said:

Typically, lending at 95% is more tightly requlated and as a result an income cap of 4.5 x is applied.

I know of no lender willing to lend more at that LTV.

Maybe it is bull, but the Nationwide Helping Hand mortgage goes higher and with 95% LTV:

A couple, who are eligible first time buyers, have a joint income of £55,000, a 5% deposit and no other costs impacting how much they can afford. With a Helping Hand, they may be able borrow up to £302,500. This is compared to the £246,950 they’d be able to borrow without one.

amnblog

cryvate said:

kingstreet said:

Typically, lending at 95% is more tightly requlated and as a result an income cap of 4.5 x is applied.

I know of no lender willing to lend more at that LTV.

Maybe it is bull, but the Nationwide Helping Hand mortgage goes higher and with 95% LTV:

A couple, who are eligible first time buyers, have a joint income of £55,000, a 5% deposit and no other costs impacting how much they can afford. With a Helping Hand, they may be able borrow up to £302,500. This is compared to the £246,950 they’d be able to borrow without one.

Try the Nationwide HH calculator and you will get a lending figure of £246,950 for £55,000 of household income, eerily close the the 4.5X cap stated by Kingstreet. Why Nationwide quote £302,500 in the text is a mystery.

Whywontthiswork

Sorry I should have said we have approached Nationwide HH and they can indeed lend us the amount we need and we have the AIP. HOWEVER- the interest rate is 3.69% and also as we are a bit older, they won’t let us take out a mortgage for more then 28 years which means the monthly payments are just over £1500 fixed for 5 years, and that’s £200-300 more a month than we were hoping for and therefore has me worried it’s unaffordable for us. 

theoretica

Whywontthiswork said:

Sorry I should have said we have approached Nationwide HH and they can indeed lend us the amount we need and we have the AIP. HOWEVER- the interest rate is 3.69% and also as we are a bit older, they won’t let us take out a mortgage for more then 28 years which means the monthly payments are just over £1500 fixed for 5 years, and that’s £200-300 more a month than we were hoping for and therefore has me worried it’s unaffordable for us. 

So you can borrow the money - but as is common when pushing the boundaries of borrowing it would come at a price.  Could you juggle your budget and give up things you want less than this house?  Would you have room to take in a lodger if you need more income temporarily?  What are your prospects for promotions and increased income? 

hangryconsumer

https://www.habito.com/one

They say "We’re also hoping to bring out a deal for 5% deposits soon – watch this space"

theoretica

hangryconsumer said:

https://www.habito.com/one

They say "We’re also hoping to bring out a deal for 5% deposits soon – watch this space"

But the interest rates look higher than Nationwide, even for 10% deposits https://help.habito.com/en/articles/5016566-habito-one-interest-rates

[Deleted User]

Beggars and choosers comes to mind here. 

You aren't going to get a cheaper option than Nationwide, and rates are going up every day at the moment. 

If you cant afford it comfortably at this point then what about in 5 years and rates are even higher than they are now

Whywontthiswork

Deleted_User said:

Beggars and choosers comes to mind here. 

You aren't going to get a cheaper option than Nationwide, and rates are going up every day at the moment. 

If you cant afford it comfortably at this point then what about in 5 years and rates are even higher than they are now

I appreciate that, but can many people afford £1500+ mortgage a month (and any associated costs with being a homeowner vs tenant) for a small terraced 3 bed house with one bathroom and original kitchen and bathroom and boiler etc. What is one to do, just accept they can never buy a house?! That seems so wrong when people work hard and save hard. I’m not trying to buy a mansion out of my price range, I’m just trying to buy a big standard family home to keep our living situation secure and start investing for our children’s future rather than renting forever and having no inheritance for them. Things are only getting life expensive so it feels like now or never. 

[Deleted User]

Whywontthiswork said:

Deleted_User said:

Beggars and choosers comes to mind here. 

You aren't going to get a cheaper option than Nationwide, and rates are going up every day at the moment. 

If you cant afford it comfortably at this point then what about in 5 years and rates are even higher than they are now

I appreciate that, but can many people afford £1500+ mortgage a month (and any associated costs with being a homeowner vs tenant) for a small terraced 3 bed house with one bathroom and original kitchen and bathroom and boiler etc. What is one to do, just accept they can never buy a house?! That seems so wrong when people work hard and save hard. I’m not trying to buy a mansion out of my price range, I’m just trying to buy a big standard family home to keep our living situation secure and start investing for our children’s future rather than renting forever and having no inheritance for them. Things are only getting life expensive so it feels like now or never. 

@Whywontthiswork I do really feel for you that I know you’re emotionally attached to the house because it’s your home. But, ultimately it’s the choice nearly all FTBs have and have to balance the risk of what’s worth it.

I think what’s being said to you is that there is a choice of lender; but it’s not as cheap per month as you would ideally like in comparison to others. Completely understand there’s a budget you have in mind but the lender is also factoring in that it is a slightly higher risk mortgage as that ltv and income multiple so that is reflected in the interest rate.

You can attempt to get the landlord down further as a first port of call but if you have to make these figures then this is the only way by the looks of it and a choice you have to make.

It’s always the most expensive the first mortgage you get and will improve with ltv reducing etc as you go along. The interest rate on this product is higher than some but still v low historically. You could wait and prices might come down a little but interest rate could rise and you may be in a very similar position again.

Its a really tough call and I completely understand why you feel as you do especially when you’re so close but at least you know there is a mortgage product out there for you at the top end if you really need to. Good luck!