Advice please on buying new home

neiluk

evening,

I was hoping to get some advice re buying a new home.

My wife and I are just about to sell our flat and will have £50,000 to put towards a new house.

We are looking to buy one in the region of 230,000-280,000 :eek:

Last year my salary was 28,000 (made 34,000 with OT)

and the missus made 27,000

We have no CC debt and have 2 x loans with a value of £476 per month.

If its any relevance we both work in the public sector and are in scotland.

Thanks in advance

Neil

Mathsguy

In a nutshell, I think you'd be lucky to get a loan of that size at a decent rate, probably best to reduce your prospects!

Lets take the lower figure of your new house cost estimate - £230,000. With a deposit of £50k, you'd be borrowing £180k, or 78% of the propery value. At 78% loan value, some of the better deals on the market will open up to you which is good but your limiting factor will be your salaries.

A year or two ago you probably would have been fine but these days lenders have cut back on how many multiples of income they will lend, typically 3.5 x primary plus 1 x secondary, or 2.5 x combined

Taking your best case scenario of salaries of £34k (if they accept OT as proof of income) plus £27k, this would work out as 2.5 x £61k = £152k which would fall short of what you needed. This also assmes that the lender does not take into account your existing loans too, which they are more likely to check up on these days.

You may be able to get the required amount of £180k by using a self certification mortgage but your monthly repayments will be much higher since a) you are borrowing more and b) self cert mortgages usually have a higher interest rate because they are a higher risk to the lender.