Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • baggerstorbay
    • By baggerstorbay 11th Jan 18, 8:36 AM
    • 12Posts
    • 13Thanks
    baggerstorbay
    Mortgage Lengths
    • #1
    • 11th Jan 18, 8:36 AM
    Mortgage Lengths 11th Jan 18 at 8:36 AM
    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
Page 1
    • robgoode
    • By robgoode 11th Jan 18, 8:38 AM
    • 49 Posts
    • 32 Thanks
    robgoode
    • #2
    • 11th Jan 18, 8:38 AM
    • #2
    • 11th Jan 18, 8:38 AM
    As far as Iím aware the amount you can lend doesnít 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.
    • ACG
    • By ACG 11th Jan 18, 8:45 AM
    • 17,015 Posts
    • 8,909 Thanks
    ACG
    • #3
    • 11th Jan 18, 8:45 AM
    • #3
    • 11th Jan 18, 8:45 AM
    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 Adviser
    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.
    • baggerstorbay
    • By baggerstorbay 11th Jan 18, 9:00 AM
    • 12 Posts
    • 13 Thanks
    baggerstorbay
    • #4
    • 11th Jan 18, 9:00 AM
    • #4
    • 11th Jan 18, 9:00 AM
    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?
    • Jaywood89
    • By Jaywood89 11th Jan 18, 9:08 AM
    • 160 Posts
    • 72 Thanks
    Jaywood89
    • #5
    • 11th Jan 18, 9:08 AM
    • #5
    • 11th Jan 18, 9:08 AM
    You need a broker. Iím currently applying using one and have been given an AIP at 7x my salary. However it hasnít been fully agreed yet, still at application stage. But I have a 71% deposit.

    I couldnít of got that deal without a broker contacting the lenders themselves
    • ACG
    • By ACG 11th Jan 18, 9:32 AM
    • 17,015 Posts
    • 8,909 Thanks
    ACG
    • #6
    • 11th Jan 18, 9:32 AM
    • #6
    • 11th Jan 18, 9:32 AM
    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 Adviser
    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.
    • baggerstorbay
    • By baggerstorbay 11th Jan 18, 9:33 AM
    • 12 Posts
    • 13 Thanks
    baggerstorbay
    • #7
    • 11th Jan 18, 9:33 AM
    • #7
    • 11th Jan 18, 9:33 AM
    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%.
    • mr_munchem
    • By mr_munchem 11th Jan 18, 9:45 AM
    • 95 Posts
    • 33 Thanks
    mr_munchem
    • #8
    • 11th Jan 18, 9:45 AM
    • #8
    • 11th Jan 18, 9:45 AM
    I've got an AIP for 4.75x my salary from Halifax
    • ACG
    • By ACG 11th Jan 18, 9:52 AM
    • 17,015 Posts
    • 8,909 Thanks
    ACG
    • #9
    • 11th Jan 18, 9:52 AM
    • #9
    • 11th Jan 18, 9:52 AM
    A broker will help you with your options, thats their job :P

    I've got an AIP for 4.75x my salary from Halifax
    Originally posted by mr_munchem
    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.
    I am a Mortgage Adviser
    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.
    • kingstreet
    • By kingstreet 11th Jan 18, 10:16 AM
    • 33,533 Posts
    • 18,170 Thanks
    kingstreet
    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.
    Originally posted by ACG
    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...
    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.
    • baggerstorbay
    • By baggerstorbay 11th Jan 18, 11:03 AM
    • 12 Posts
    • 13 Thanks
    baggerstorbay
    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...
    Originally posted by kingstreet
    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.
    • Lysimache
    • By Lysimache 11th Jan 18, 11:30 AM
    • 157 Posts
    • 52 Thanks
    Lysimache
    Are your incomes under £22k for this £200k home? So £40k in total?

    Is there a reason you need to buy a home now or would you be able to spend a bit more saving up? (I realise it's hard to rent and save but buying with a larger deposit than 5% is typically how people in low wage high prices get onto the housing market.)

    Higher deposit after a few years would also reduce the monthly interest you pay and give you a better rate, giving you more money in your pocket.
    • baggerstorbay
    • By baggerstorbay 11th Jan 18, 11:46 AM
    • 12 Posts
    • 13 Thanks
    baggerstorbay
    Yes, our wages are both lower than £22K each.

    We don't have to have a new home, but even if we look in the second hand market, £120K-£150K doesn't buy much around here. Sadly, rents around here are expensive too, so renting whilst saving wouldn't work either. We're both living with parents at the moment to save as much as we can.
    • katebl
    • By katebl 13th Jan 18, 1:10 PM
    • 624 Posts
    • 314 Thanks
    katebl
    I'd suggest you just keep saving. Getting our deposit from 5% to 10% seems to have allowed us to borrow an extra 20k even though we've reduced our declared bonuses. What are house prices doing in your area, at what rate are they increasing?
    • Thrugelmir
    • By Thrugelmir 13th Jan 18, 1:16 PM
    • 58,876 Posts
    • 52,204 Thanks
    Thrugelmir
    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.
    Originally posted by baggerstorbay
    Many people start with what they can afford. Just to get a foot on the ladder. Bad areas in time often become good areas.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • charlie792
    • By charlie792 13th Jan 18, 5:43 PM
    • 1,653 Posts
    • 5,301 Thanks
    charlie792
    Many people start with what they can afford. Just to get a foot on the ladder. Bad areas in time often become good areas.
    Originally posted by Thrugelmir
    I'd have to agree with this.

    We bought in the outskirts of the city centre 4 years ago, in what most would class as a 'bad' area.

    Since that time a new build estate has been built locally and the city centre has undergone major redevelopment.

    My next door neighbour sold recently with 3 offers at asking price within 1 week. Based on the sold price, our house has increased in value by approximately £40k. Not so bad for a 'bad' area.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

581Posts Today

5,960Users online

Martin's Twitter