Mortgage Lengths
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baggerstorbay
Posts: 24 Forumite
Hi,
I understand that with a standard 25 year mortgage, the maximum amount you can borrow is 4.5 times your pre-tax earnings (doesn't buy much in Torbay, but that's another matter!)
Does that borrowing amount alter with a longer mortgage, such as a 30 or 35 year?
Many thanks,
BT
I understand that with a standard 25 year mortgage, the maximum amount you can borrow is 4.5 times your pre-tax earnings (doesn't buy much in Torbay, but that's another matter!)
Does that borrowing amount alter with a longer mortgage, such as a 30 or 35 year?
Many thanks,
BT
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Comments
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As far as I’m aware the amount you can lend doesn’t alter. The monthly amount and interest overall is altered. I maybe wrong though as currently going trough my application and weighing up 25-30yr mortgage for the same amount.0
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Not usually, other than the lower the term might reduce the amount you can lend.
The maximum you can borrow is actually closer to 5x or even more, however the bank of England brought in a rule that basically said banks can not lend more than 4.5x income to 85% of their customers. Some banks brought in a cap of 4.5x income for everyone but there are some banks and building societies who will go beyond that, but the ones who do go beyond that try to find small parts of the market where they are unlikely to go beyond 15% - I have one going through at the minute as an example at 4.7x income, although the customer does have a 60% deposit.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Thank you both, and that's quite interesting ACG.
The cheapest new build homes in this area are around the £200K mark, so even with the governement's help to buy scheme, a 75% mortgage of £150k is 5 times the pre-tax couple salary that we're on (and quite a lot of people in this area). And even without the scheme, £150K only just buys a half decent flat (with high maintenance) or a 2 bedroom terraced house in a terrible area.
Is there an easy way to find out which lenders will go beyond the 4.5x?0 -
You need a broker. I’m currently applying using one and have been given an AIP at 7x my salary. However it hasn’t been fully agreed yet, still at application stage. But I have a 71% deposit.
I couldn’t of got that deal without a broker contacting the lenders themselves0 -
Im not sure you will get 5x income using help to buy...I could be wrong however.
My theory being that Help to buy will account for more than 15% of a lenders book. I do not do help to buy however, so dont hold me to it.
In terms of lenders who lend beyond 5x income, I do not think there is a list anywhere as it is not a case of them offering it to everyone, so you probably will need a broker.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
We're going to look at getting a broker soon, just really wanted to know what our options were before contacting one.
Sadly, we don't have a 71% deposit. Ours will be around the 5% mark, but obviously if we go along the new build route, we'll also use the help to buy which will boost the 'deposit' up to 25%.0 -
I've got an AIP for 4.75x my salary from Halifax
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A broker will help you with your options, thats their job :P
Just bare in mind an AIP is not worth the paper it is printed on, Halifax mortgage offer is only a soft footprint. Have a read on here about peoples experiences with a halifax aip.mr_munchem wrote: »I've got an AIP for 4.75x my salary from HalifaxI am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
The HTB Equity Loan scheme has a maximum income multiple of 4.5x, so it wouldn't matter if a lender offered more as the HTB Affordability calculator would cap you out at 4.5x anyway...Im not sure you will get 5x income using help to buy...I could be wrong however.
My theory being that Help to buy will account for more than 15% of a lenders book. I do not do help to buy however, so dont hold me to it.
In terms of lenders who lend beyond 5x income, I do not think there is a list anywhere as it is not a case of them offering it to everyone, so you probably will need a broker.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
kingstreet wrote: »The HTB Equity Loan scheme has a maximum income multiple of 4.5x, so it wouldn't matter if a lender offered more as the HTB Affordability calculator would cap you out at 4.5x anyway...
Sadly, that wouldn't be enough for a new property in this area for a couple working full time on, or a £1 more an hour than, minimum wage.
I can see the Help to Buy scheme working in some parts of the country, but not here where property prices are high and wages low.0
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