First Property

Author
Discussion

Osmoliver

Original Poster:

196 posts

105 months

Wednesday 25th May 2016
quotequote all
Hi there,

I'm just about to graduate from university and have a job lined up to start in August. Now that I'm entering the 'real' world I'd like to get on the property ladder as soon as possible.

From savings whilst growing up and saving whilst on placement year last year I'm in a fortunate position to have a decent sum of savings - some of this is tied up in an ISA.

In April 2017 the ISA matures and I'll have access to that lump sum and hence I'm looking to buy a property around that time.

Loan-to-value wise I shouldn't have too much of an issue getting a mortgage if help-to-buy schemes are still around.

My main concern is how much does will my gross earnings affect the amount I'm able to borrow? I'm aware some banks will only lend a certain multiple of your income (I think Halifax is 4.5 times), but do lender typically go above this as long as the mortgage is affordable under a stress test?

Advice from people that have gone through this and got the T-shirt would be really helpful.

Kind Regards,

Ollie

LordClaam

9 posts

122 months

Wednesday 25th May 2016
quotequote all
I'm in a very similar position to you having graduated last year and wanting to get onto the ladder asap.

Unfortunately for me I'm in the South East and even though I'm on a good salary for a grad and am lucky enough to have quite alot of savings - I'm still 18months-2 years away from achieving a salary that will be enough to get me onto the ladder i think, and that's purely down to the amount i could get for a mortgage. Having said that - that assumption is based on just the basic internet calculators rather than actually going in and seeing the banks, so I will do that over the next few months to clarify what stage I have to get to before seriously considering buying.

I'm also keeping a very close eye on the government 'Starter Homes' but they don't seem to be going anywhere fast at the moment.

Look forward to hearing how you get on.

Osmoliver

Original Poster:

196 posts

105 months

Thursday 26th May 2016
quotequote all
I think that's my next stage too, take a visit to a brokers and see what is actually available for me.

I'd just like a little bit of insight first to manage my expectations.

My graduate job is in Nottingham, where property prices aren't ridiculous and it's more expensive to rent than pay back a 25 year mortgage each month at current rates. Hence, another reason for wanting to buy fairly quickly.

I've not looked at the 'Starter Homes', I'll have to do a little bit of research.

Squirrelofwoe

3,181 posts

175 months

Thursday 26th May 2016
quotequote all
When I spoke to a broker a couple of months ago (currently buying my first property) the most I could borrow was up to 4.8 x salary.

In terms of managing your expectations, my understanding (and indeed what I was told prior to seeing a broker) is that 5 x salary is the absolute most you are likely to get, with 4.9 being a more likely upper limit. But there are others on here in the industry who will be able to confirm whether this is in fact the definitive truth or not.

Obviously depending on how much you earn the difference between 4.5 & 4.9 x salary could still be a decent chunk.

For me, being in a particularly expensive area of the South East, even this with a £33k salary wasn't enough to buy somewhere outright without a huge deposit, so I am currently in the process of buying a house under the shared ownership scheme (purchasing 50% equity initially).

It means I am only borrowing just over 3 x salary and getting a much better rate to boot. The combined mortgage + rent (on the 50% I don't own) is still significantly less than it would cost me to rent a similar property outright and leaves me a decent amount to overpay the mortgage each month in preparation to buy more equity further down the line. Could be worth looking into.

lewisf182

2,084 posts

187 months

Tuesday 31st May 2016
quotequote all
First things first, do you have a first time buyers ISA or a normal savings ISA? If I were you, I'd get on the first time buyers ISA ASAP as the effective interest rate is multiples of that of a normal ISA, and you won't have to wait until it matures (from my understanding).

Sounds like you've got your head screwed on though, I was in the same position upon graduating and ended up going through a broker which made it much easier getting a mortgage, I was even on a temporary contract at the time - however this was a buy to let interest only mortgage so very different from your circumstances as rental potential comes into effect. The broker gives you that direct link to the lender to be able to properly explain your circumstances rather than just a tick box exercise you'd get going through the process yourself so more likely to be accepted.

jonny70

1,280 posts

157 months

Tuesday 31st May 2016
quotequote all
Osmoliver said:
Hi there,

I'm just about to graduate from university and have a job lined up to start in August. Now that I'm entering the 'real' world I'd like to get on the property ladder as soon as possible.

From savings whilst growing up and saving whilst on placement year last year I'm in a fortunate position to have a decent sum of savings - some of this is tied up in an ISA.

In April 2017 the ISA matures and I'll have access to that lump sum and hence I'm looking to buy a property around that time.

Loan-to-value wise I shouldn't have too much of an issue getting a mortgage if help-to-buy schemes are still around.

My main concern is how much does will my gross earnings affect the amount I'm able to borrow? I'm aware some banks will only lend a certain multiple of your income (I think Halifax is 4.5 times), but do lender typically go above this as long as the mortgage is affordable under a stress test?


Advice from people that have gone through this and got the T-shirt would be really helpful.

Kind Regards,

Ollie
Get a help to buy isa going and then roll it into a lifetime isa in April and you will get an uplift of 20percent from the government .

Save as much as you can asides from this.

How much deposit do you aim to have / put down?

If you are putting down less than 15% I don't think you can borrow more than 4.5 x.

Osmoliver

Original Poster:

196 posts

105 months

Tuesday 31st May 2016
quotequote all
lewisf182 - I have both. I started a first time buyers ISA last year at some point, but you could only put £1000 in at the start and £200 a month thereafter. So I am currently doing that and have a normal ISA from before that matures in April 2017.
Good to hear that going to a broker seems like the right choice, thanks.

jonny70 - I've got the help to buy ISA going, I'll have to do some research on the lifetime ISA.
I should have £20k+ by April 2017 for a deposit. So, I expect the gross income cap is going to be my biggest obstacle to buying rather than deposit amount. My salary will be less than £30k (excluding bonus) from August.