How can I quickest get into a £150,000 house?

pstones578

I am currently earning £25,000 and have debts of £11,950 which I will have cleared by June of next year. My earnings in the next year will increase to about 30,000-32,000. My total outgoing are £365/pcm and they are not expected to increase, while I am still living with parents. My total spare cash at the moment per month is £1200 (which is all being thrown at the £11,950) and when I get the 30-32,000 it will be about £1550, which I will save as much as I possibly can. I have been looking at house's around my area and will be-able to get the sort of house I want for £150,000. My current plan is to save approx £45,000 while I am living at home and then get a mortage for the rest. This means I still have 3 years left at home before I can leave. This plan assumes the house prices will not go up between now and the completion of my savings plan (big assumption I know). Are there any quicker ways of me getting into my dream home?

meanmachine_2

Well, if you're earning £30K, you would only need a 30K deposit, plus a £120K mortgage, so that might cut down your waiting time.

Who knows what the market is going to do. But you're right to wait and save the biggest deposit you possibly can.

pstones578

I thought that the multiplier that was used to determine how much mortgage someone can get is 3.75 x salary? Anything more is pushing it and would make it a bit more painful for me to re-pay the mortgage?

Woby_Tide

advising people to stretch themselves...tut tut meanmachine

(though I will add to the OP along the same lines, rather than working on multiples some lenders now work on affordability, whilst in essence it technically is tweaking the multiples and potentially stretching you, but on the other hand you can look at it differently. Someone such as yourself who seems fairly organised and savvy about what you're doing i.e. saving a fair amount of wages and aiming to go into a mortgage with little or no debt, however on a multiplier you'd be limited in what you could borrow, even if your outgoings meant you could actually afford a higher mortgage amount 'comfortably'. Likewise someone else could earn much more but have debts to service and less disposable income to service a mortgage but could get a higher basic mortgage amount. If you've done your figures and know what mortgage payments you'd be happy to service(along with all other costs associated etc.) sometimes the option of being granted a mortgage on affordability may be worth investigating, thoughthe usual caveats about not overstretching yourself apply)

meanmachine_2

Woby_Tide wrote:

advising people to stretch themselves...tut tut meanmachine

Indeed, that is why I suggest they stay at home and save.

Incidentally, if the OP is earning £32K, a £120K mortgage is 3.75 times income.

And correct, that is pushing it. Personally I'd never go over 3.25, and I think that should be written in law, but then the greedy lenders, banks, EAs would only start whining and moaning.

Lenders like Abbey, by the way, lend up to 4.1x salary. More fool them. And Northern Rock are even laxer in their lending criteria (although not for much longer, I wouldn't have thought)

pstones578

I've been looking at mortgage calculators and don't know what % interest rate to put in as a guide. Anyone know what I should be putting in to give myself a rough idea of what the re-payments would be?

paint

pstones578 wrote:

I've been looking at mortgage calculators and don't know what % interest rate to put in as a guide. Anyone know what I should be putting in to give myself a rough idea of what the re-payments would be?

You can get a five year fixed at the moment for a tad under 5%; rates may go down a bit over the next couple of years; or may go up! Personally I'd put in 5% as a good average figure on which to base my budget.

michaels

If you can't stick living with your parents it is possible to get offered multiples of 5+ x salary - try your bank. If you are buying a 2 bed place you could always get a lodger to subsidise the cost if interest rates were to rise (this is a good option as you don't have to pay tax on the rent). As you can work out, if you fixed for 5 years at 5% your monthly outgoings would only be about 875 so affordable on your next years salary. Then you could use a personal loan or credit card to get to a 5% deposit so there is no reason you shouldn't move within a couple of months of your salary increase if thats what you wanted - with a fixed rate you would not be overstretching yourself.

meanmachine_2

michaels wrote:

If you can't stick living with your parents it is possible to get offered multiples of 5+ x salary - try your bank. If you are buying a 2 bed place you could always get a lodger to subsidise the cost if interest rates were to rise (this is a good option as you don't have to pay tax on the rent). As you can work out, if you fixed for 5 years at 5% your monthly outgoings would only be about 875 so affordable on your next years salary. Then you could use a personal loan or credit card to get to a 5% deposit so there is no reason you shouldn't move within a couple of months of your salary increase if thats what you wanted - with a fixed rate you would not be overstretching yourself.

Oh dearie me no.

Taking out a deposit on a credit card is bloody ridiculous. To the OP I'd suggest they ignore that stupid advice. Really.

And credit card debts or loans are taken into account by lenders, so you probably wouldn't be able to get a 5 times mortgage with that debt.

Gah! Encouraging irresponsible lending on a money savings site?!!!! Shouldn't be allowed.

:mad:

pstones578

I'd already chose to ignore the get a loan or CC debt to get the deposit. But thanks for pointing it out for anyone who thought it was good advice.

Kenny4315

pstones578

Are there any quicker ways of me getting into my dream home?

Marry a rich woman, and move into her house.

But seriously, what you are doing is fine. Get a big deposit together, clear your debts, by then the market will have calmed down, and gone down. Then you'll be laughing, go in offering well below asking price (10% to 15%) as cash/ftb (arrange mortgage in principle), and don't be afraid to walk away until you get a really good deal, don't get all soppy about this house is the house for me blah blah, because in a few years you'll want / need to move on anyway, treat it as an economic decision and well as a lifestyle decision, that way you'll get a good deal.

On the subject of mortgages, banks are so stupid/greedy they will let you self-certify pretty much any amount of earnings without even checking even the basic details, a recipe for disaster.