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Only 4 times salary for mortgage?

MoneyInstigator
Posts: 20 Forumite
Hi all,
First of all I'm a newbie to house buying. Though from doing a bit of research it seems lenders are only offering 4 times an individual salary for the mortgage, is this correct?
Sorry for asking the obvious but how is then someone to afford a mortgage even with a 35k salary? The houses I am talking about range from 170k-220k in my area.
Do I simply wait a few years when the house prices will go down, assuming this happens.
I have about 8k saved up and in about 3 years time would have approx 25k saved up. Hopefully this would be enough to get on the ladder. I'm 26 and looking to get on the ladder before I'm 30, is this realistic?
cheers
First of all I'm a newbie to house buying. Though from doing a bit of research it seems lenders are only offering 4 times an individual salary for the mortgage, is this correct?
Sorry for asking the obvious but how is then someone to afford a mortgage even with a 35k salary? The houses I am talking about range from 170k-220k in my area.
Do I simply wait a few years when the house prices will go down, assuming this happens.
I have about 8k saved up and in about 3 years time would have approx 25k saved up. Hopefully this would be enough to get on the ladder. I'm 26 and looking to get on the ladder before I'm 30, is this realistic?
cheers
0
Comments
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You're better off on the stepladder.Happy chappy0
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Only four times?!
Most lenders now base their lending on affordability, and a few will go up to five times salary (and more), but you really need to look at if you can realistically afford this amount each month.
You've got plenty of time yet, save up a larger deposit and then see how the market is.Gone ... or have I?0 -
Basically - you need to be married or with a long term partner so you can both go in 50/50 on a place to be able to afford somewhere in the current climate. no other way to do it unles you're a)extremely well paid, b)have generous parents, c)self build.matched betting: £879.63
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Only four times?!
Most lenders now base their lending on affordability, and a few will go up to five times salary (and more), but you really need to look at if you can realistically afford this amount each month.
You've got plenty of time yet, save up a larger deposit and then see how the market is.
The thing is I know I can afford a 170k mortgage. The monthly repayments on capital + interest is something I can afford which also leaves me plenty of money for the usual expenses such as travel, food and entertainment etc.
The mortage repayments would come to approx £1100 over a 25 year period and I would have approx £900+ left over per month which I think is more than enough for all other costs.
Is it me or is 4 times salary mortgage a bit to less?0 -
Where do you live at the moment? Have you had to manage all the bills that go with a house before? £900 will not go as far as you think.
How long has it taken you to save up £8K, and what are you current outgoings?
No, four times salary is not too little! xGone ... or have I?0 -
On the other hand £900 goes a long way. I pay my rent and bills and run a car and have a whole life on this and less.
It's down to lifestyle, but £900 is a lot still if you count every penny and make every penny count.
Bills might come to £250/month, so if you can run the rest of your life (car, socialising, travel, holidays, gifts, stuff, etc) on £600/month (£20/day) then you'd be fine.
If, however, you like to hit the town a couple of times a week, only ever wear designer clothes, won't cut back on holidays/breaks and have a penchant for buying things you don't need, then you would be in trouble no matter what salary you get.
Owning a home often leads to you suddenly spotting all these great things that you think'd look fantastic in your homeFrom cushions to kitchen gadgets... all manner of cr4p you don't need.
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MoneyInstigator wrote: »The thing is I know I can afford a 170k mortgage. The monthly repayments on capital + interest is something I can afford which also leaves me plenty of money for the usual expenses such as travel, food and entertainment etc.
The mortage repayments would come to approx £1100 over a 25 year period and I would have approx £900+ left over per month which I think is more than enough for all other costs.
Is it me or is 4 times salary mortgage a bit to less?
Yes it's you. House prices are the problem, not salary multiples.
3 to 3.5x salary *should* be enough. Herein lies the reason that we are on the verge of a correction, now the silly multiples and lie-to-buy has all but dried up there are no longer the volume of sales to hold prices, doesn't take a genius to work out that this massive tourniquet on the flow of money into the market will cause a slide - which will then self perpetuate as people realise prices are going down and wait it out to see how low they will go.
Sentiment has already turned, 2008 will be the turning year on prices, Spring may see a dead-cat-bounce but that will be it IMO.0 -
MoneyInstigator wrote: »I have about 8k saved up and in about 3 years time would have approx 25k saved up. Hopefully this would be enough to get on the ladder. I'm 26 and looking to get on the ladder before I'm 30, is this realistic?
I was 40 when I bought my first house. 41 when I realised I couldn't afford to run it.
House prices have started dropping in price. When you're ready to buy it might be close to the bottom so you'll be putting a bigger deposit down on a property costing a lot less than it does today.0 -
MoneyInstigator wrote: »The thing is I know I can afford a 170k mortgage. The monthly repayments on capital + interest is something I can afford which also leaves me plenty of money for the usual expenses such as travel, food and entertainment etc.
Out of that £900 is also council tax, buildings and contents insurance, life insurance, water, gas and electricity bills, TV licence, repairs to the house......much enquiry having been made concerning a gentleman, who had quitted a company where Johnson was, and no information being obtained; at last Johnson observed, that 'he did not care to speak ill of any man behind his back, but he believed the gentleman was an attorney'.0 -
neverdespairgirl wrote: »Out of that £900 is also council tax, buildings and contents insurance, life insurance, water, gas and electricity bills, TV licence, repairs to the house...
Not to mention interest rate rise, contingency fund to cover unemployment, pregnancy reduced income+childcare (maybe you're infertile but the demographic the mortgage company calculates risk on isn't), plus the lump cost of things like new boiler = £3k, second hand car = 3k, boiler service etc... if you have several hundred spare a month why do you need 4xsalary you should have a big fat deposit...0
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