How likely to be approved for mortgage when maxing loan?

Hlkns

Hello. We are desperate to relocate from expensive area where we are living now. Right now we are living in Staines-upon-Thames and to be honest we cant afford anything here. So we decided to relocate to Milton Keynes. But to be able to do that I'll have to apply just on my own.

Reasons why I can't apply with my other half:

• She owns flat abroad. Inherited. Worth approx. 30k Euro. - Because of stamp duty costs

• Her current work place is too far from Milton Keynes. ( 60 miles drive , 2hr public transport, 23k annually ) - So I don't think underwriters would accept that anyway

After completion she would quit her job and find new one in Milton Keynes.

Because of those reasons I must apply on my own. I am wondering how bad is to apply for the max amount based on affordability calculator?

About me:

1. Self-employed , Sole trader - Carpenter
2. Net profits: 

• 2021-22 : £64,000
• 2020-21: £53,500 including 1 SEISS grant of £4500
• So average salary: ( £64k + £53.5k ) / 2 =  £58,750

If I multiply £58,750 * 4.45 = £261k - max amount bank would lend me.

I'm thinking about house up to £350k without any schemes. What is my chances when asking for max sum?

Lets say:
House price: £350k
My deposit: £91k ( 26% )
Loan required: £259k
Loan term: 40 years

Debts: £0
Dependants: 0
Credit history: Excellent. No missed payments, no defaults, no CCJ's or bankruptcies.

My main question is is it normal practice to ask for max amount? All thoughts are welcome. Thank you.

@K_S

K_S

@hlkns If you're asking whether it's normal for applicants to look to maximise borrowing - it's not uncommon, particularly for FTBs. As long as you meet criteria and the numbers add up, it's not very different from applying for a bit less than maximum.

And FYI, 4.5x is unlikely to be the max loan-to-income multiple based on the income and LTV in your post. It's more likely to be be 4.75-5x, depending on the lender.

Hlkns

K_S said:

@hlkns If you're asking whether it's normal for applicants to look to maximise borrowing - it's not uncommon, particularly for FTBs. As long as you meet criteria and the numbers add up, it's not very different from applying for a bit less than maximum.

And FYI, 4.5x is unlikely to be the max loan-to-income multiple based on the income and LTV in your post. It's more likely to be be 4.75-5x, depending on the lender.

Thanks for your reply. I thought 4.49 is the maximum for Self Employed.

P.S. I am Self employed contractor and don't have permanent job location, I drive where ever I have to. It won't cause any problems in my situation because I am moving 60 miles ( 1 hr drive) from my current living place? Thanks!

K_S

@hlkns There's no universal 4.5x cap for SE income, it differs across lenders and many will treat it the same as employed income.

For a self-employed tradesperson applicant, I've never had an underwriter question the plausibility of a move in the region of 60 miles.

Hlkns

K_S said:

@hlkns There's no universal 4.5x cap for SE income, it differs across lenders and many will treat it the same as employed income.

For a self-employed tradesperson applicant, I've never had an underwriter question the plausibility of a move in the region of 60 miles.

Could you please suggest which lender would you personally choose for this this particular situation? I want to read lending criteria. 

I am very thankful for your time. You are always very helpful. God bless you.

K_S

Hlkns said:

K_S said:

@hlkns There's no universal 4.5x cap for SE income, it differs across lenders and many will treat it the same as employed income.

For a self-employed tradesperson applicant, I've never had an underwriter question the plausibility of a move in the region of 60 miles.

Could you please suggest which lender would you personally choose for this this particular situation? I want to read lending criteria. 

I am very thankful for your time. You are always very helpful. God bless you.

@hlkns There's really nothing to go on to suggest any particular lender. Even the SEISS grant is small enough that it should not make a difference based on how much you're looking to borrow.

To check out criteria and affordability, just use the MSE mortgage finder to see what the "best rates" are, then google "<lender name> for intermediaries criteria" for self-employed criteria and "<lender name> for intermediaries affordability calculator" to see how much they may lend. Do make sure that the lender is happy with leaving out your partner from the application for the reason specified and will consider if any of the deposit is gifted by her.

If she's contributing to the deposit and you would prefer both on the deeds, there's no real reason to leave her off the app simply because her income won't be considered. You can always have her on the application with her income disregarded.

MWT

K_S said:

If she's contributing to the deposit and you would prefer both on the deeds, there's no real reason to leave her off the app simply because her income won't be considered. You can always have her on the application with her income disregarded.

I would guess it is the SDLT issue that is the main reason to leave her off the deeds? (existing ownership of overseas property).

I assume the couple are not married...

Hlkns

MWT said:

K_S said:

If she's contributing to the deposit and you would prefer both on the deeds, there's no real reason to leave her off the app simply because her income won't be considered. You can always have her on the application with her income disregarded.

I would guess it is the SDLT issue that is the main reason to leave her off the deeds? (existing ownership of overseas property).

I assume the couple are not married...

Yes. We are not married yet.

K_S

MWT said:

K_S said:

If she's contributing to the deposit and you would prefer both on the deeds, there's no real reason to leave her off the app simply because her income won't be considered. You can always have her on the application with her income disregarded.

I would guess it is the SDLT issue that is the main reason to leave her off the deeds? (existing ownership of overseas property).

I assume the couple are not married...

@mwt You're right, I was thinking of another post there.

ACG

You could also look at joint borrower sole proprietor to avoid the stamp duty issue. The distance to work could still be an issue, but it might not be. 

The 4.5x income is basically a rule that the bank of england brought in to say that lenders can not lend above 4.5x income for more than 85% of their customers. Some lenders will still lender above 4.5x for the remaining 15%, but it typically has to be a small part of their book, so it could be big deposits or high earners etc. However I forget the actual figure, but I think it is only for lenders who have a mortgage book over £100m - so you could find smaller building societies will lend more. 

It can be a minefield (hence why some people need brokers).