First time buyer borrowing help ?

Pompeyboys

Hi all i have a question i hope one of you guys can help me with ,i am wondering what my total potential borrowing is on a property, my details are as follows:

Income - £19500

Deposit -£ 30000


The main reason i ask is because obviously my income multiplied by 4 doesnt add up to much for a property, but i have been told by a lot of friends that if you have a large enough deposit then the banks/building societys will let you buy a more expensive property than you could have without a deposit, is this correct ?

Finally i have no debts at all and i will be saving about another £3,000 in the next 6 months and thats about it any help/advice would be very much appreciated .

Thanks .

Griffin78

Some lenders will offer some lee-way on what you can borrow. Two years ago as a first time buyer I think my earnings were £23,000 and my deposit was £40,000. I went to an IFA and asked them to search the market for me as the usual 3.25 x salary wasn't enough for the properties I was interested in. Taking into account the saving I had done in order to generate my deposit and the fact that I didn't have any debts I was able to get a mortgage for £103,00 (probably more if I wanted). I then took out a 5 year fixed mortgage as I wanted the security of knowing what my repayments would be in a time where I knew I would need to get used to paying my way in the real world!
The fact that you have saved a good deposit and don't have any debts should allow you to get a slightly higher multiple of borrowing although make sure you don't overstretch yourself too far. Like me at the time, saving the amount you have on the salary you are on shows that you are good with your money :T
Good Luck

TheDink

Some lenders look at affordability rather than simply a multiple of your income. The main thing to consider is will you be able to afford repayments on a mortgage if interest rates were to go up.

Whatever you do, don't overstretch yourself and remember all the additional costs of buying (stamp duty, conveyancing fees, surveys etc) and living in your own home (insurance, council tax, furniture etc).

meanmachine_2

I don't know your circumstances, but guess that you've been able to build up a deposit by living at home, or having subsidised rent?

If so, then by taking on a mortgage your circumstances will change overnight. and your ability to save will no doubt be blown out of the water.

There's a very good reason why you can only borrow what your salary allows you to, because it gives you some kind of buffer should (when) interest rates return to 7/8%, or go even higher.

My advice to you is to wait, continue saving and then, when you are earning more, to then buy.

what sort of life will you have if your mortgage is creaming off 50% of your income, and that's while int rates are still historically low!

To be honest, most of these stupid property price rises have been funded by self certs (people borrowing 8 times their salary!), for fear of being "left behind". It'll come back and bite them in the !!!!!! eventually.

If tyou're determined to buy then abbey lends 4.2x your salary and companies like IF use this bogus "affordability" notion. Highly suspect, if you ask me.