moving home - how much can we borrow?
Discussion
Absolute maximum is usually 5 times combined salaries. The deposit amount doesn’t usually come in to how much they will loan you, only how much interest you’ll pay.
You might find someone who’ll lend you that much because that is a decent deposit, but it will be upper end at your salary.
You might find someone who’ll lend you that much because that is a decent deposit, but it will be upper end at your salary.
ThunderSpook said:
Absolute maximum is usually 5 times combined salaries. The deposit amount doesn’t usually come in to how much they will loan you, only how much interest you’ll pay.
You might find someone who’ll lend you that much because that is a decent deposit, but it will be upper end at your salary.
Thanks ThunderSpook. Much appreciated. You might find someone who’ll lend you that much because that is a decent deposit, but it will be upper end at your salary.
caymanbill said:
Hi all,
Me and the Mrs have been looking at moving from our first home and are a bit clueless as to how much we can borrow.
We have a reasonable chunk of equity in our current place - around 250K to use as a deposit. Is this taken into consideration by the bank when they calculate how much they are willing to lend to us?
Between us we earn 78K before tax annually. Minimal outgoings (for the sake of argument).
Nothing in our area (south east) tickles our fancy below 600K (current house valued at 425K) - i'm not sure if the banks would consider lending 350k, given that between us we don't earn mega bucks?
I'm aware that this is a hard question to answer without more detailed information but i'm just keen to understand what kind of ball park we might be able to lend before we go and speak to the bank. Online calculators seem all over the place.
Thoughts of the PH hive mind appreciated. Cheers!
4x salary is the upper end of the range of the combined salary multiple for a joint mortgage assuming clean credit files. You might be able to get a little bit more if you use a specialist mortgage broker, but I would imagine 5x would be hard to come by on a joint basis. Me and the Mrs have been looking at moving from our first home and are a bit clueless as to how much we can borrow.
We have a reasonable chunk of equity in our current place - around 250K to use as a deposit. Is this taken into consideration by the bank when they calculate how much they are willing to lend to us?
Between us we earn 78K before tax annually. Minimal outgoings (for the sake of argument).
Nothing in our area (south east) tickles our fancy below 600K (current house valued at 425K) - i'm not sure if the banks would consider lending 350k, given that between us we don't earn mega bucks?
I'm aware that this is a hard question to answer without more detailed information but i'm just keen to understand what kind of ball park we might be able to lend before we go and speak to the bank. Online calculators seem all over the place.
Thoughts of the PH hive mind appreciated. Cheers!
Call it £320k mortgage + your 250k equity = £580k. Bear in mind you’ll have to have other savings to cover the stamp duty (£19k assuming this won’t be a second property) plus solicitor and marketing fees for your old property which are likely to be not far short of £10k. Also any removal costs, decorating etc - it’s not cheap moving homes as I’ve recently found out!
Thanks for the info Pillskii. You're absolutely correct in that by the time moving costs are factored in we are a long way from being to afford anything that we would consider a reasonable "upgrade" from the house we are in at the moment.
It seems that moving "up the ladder" will actually be more of a challenge then buying our first house. I suspect many others are in a similar situation to us in this area, hence why houses in the price bracket we're looking at don't seem to be flying off the market.
It seems that moving "up the ladder" will actually be more of a challenge then buying our first house. I suspect many others are in a similar situation to us in this area, hence why houses in the price bracket we're looking at don't seem to be flying off the market.
HairyMaclary said:
Get some proper advice ffs. Your not buying a packet of crisps.
Speak to a ifa or broker not randoms on the internet.
OP: There are no silly questions - only silly, belittling and condescending answers. Speak to a ifa or broker not randoms on the internet.
Who’s to say that there aren’t any different mechanisms or avenues of approach that the so-called ‘independent’ financial advisors and online comparison crowd don’t offer because they don’t make any money out of it or it doesn’t suit their own agenda? There were quite a few caught out in the 90s with the wonderful endowment mortgages etc..
There’s really no harm in asking the question is there?
BRISTOL86 said:
Speak to Sarnie on here - I will never use another mortgage broker again after comparing his service with that of the previous broker I used, and everyone else who has used him will vouch for him too I have no doubt!
Exactly what I would do, efficient and helpful in a way everyone else involved with the house moving process isn't.BRISTOL86 said:
Speak to Sarnie on here - I will never use another mortgage broker again after comparing his service with that of the previous broker I used, and everyone else who has used him will vouch for him too I have no doubt!
I've not used Sarnie but would completely agree with the principal of involving a proper IFA or broker. We used a local guy recently and the product and market knowledge was absolutely superb. I thought I was reasonably savvy about this stuff, knew all the web sites to check for best rates, affordability calculators etc. I think I also naively had a notion in my head that IFA's were for wealthier people than myself and were more centered around investments and tax efficiency. But speaking to a decent IFA recently was a real revelation. They understand how each lender assesses risk, know who there's no point applying to, know who'll actually offer you the best rates, ignoring the headline figures and normally offer some sound advice on the rest of your finances. Saved us a fortune and I massively regret not doing it sooner with older mortgages or indeed just about anything financial.Pillskii said:
4x salary is the upper end of the range of the combined salary multiple for a joint mortgage assuming clean credit files. You might be able to get a little bit more if you use a specialist mortgage broker, but I would imagine 5x would be hard to come by on a joint basis.
Call it £320k mortgage + your 250k equity = £580k. Bear in mind you’ll have to have other savings to cover the stamp duty (£19k assuming this won’t be a second property) plus solicitor and marketing fees for your old property which are likely to be not far short of £10k. Also any removal costs, decorating etc - it’s not cheap moving homes as I’ve recently found out!
Late last year I applied for a top-up mortgage to fund our extension.Call it £320k mortgage + your 250k equity = £580k. Bear in mind you’ll have to have other savings to cover the stamp duty (£19k assuming this won’t be a second property) plus solicitor and marketing fees for your old property which are likely to be not far short of £10k. Also any removal costs, decorating etc - it’s not cheap moving homes as I’ve recently found out!
The basis only a few months ago was 5x joint salary, same as it was when I topped up to move to a new house a few years previous.
The difference in the past couple of years has been the netting off of available funds. I.E. a few years ago it was up to 5x. More recently 5x is the starting point, they then remove outgoings to get to a figure that you can borrow.
If your outgoings really are low, you may find you can borrow more than you think and closer to the 5x limit than 4x.
Was in pretty much exactly the same situation as you at the tail end of last year.
We put down a 40% deposit on our house purchase of £631k, and got a 60% mortgage through Santander. Affordability wise we could have afforded more, so are now overpaying, but the maximum amount they would lend us was 60% of the purchase price.
This was through a broker who we've used numerous times before - we had 1 other option from Barclays which was something like 0.04% cheaper, but their lending criteria were a lot tighter, and according to our broker (who I do trust) they are a nightmare to deal with.
We put down a 40% deposit on our house purchase of £631k, and got a 60% mortgage through Santander. Affordability wise we could have afforded more, so are now overpaying, but the maximum amount they would lend us was 60% of the purchase price.
This was through a broker who we've used numerous times before - we had 1 other option from Barclays which was something like 0.04% cheaper, but their lending criteria were a lot tighter, and according to our broker (who I do trust) they are a nightmare to deal with.
caymanbill said:
Hi all,
Me and the Mrs have been looking at moving from our first home and are a bit clueless as to how much we can borrow.
We have a reasonable chunk of equity in our current place - around 250K to use as a deposit. Is this taken into consideration by the bank when they calculate how much they are willing to lend to us?
Between us we earn 78K before tax annually. Minimal outgoings (for the sake of argument).
Nothing in our area (south east) tickles our fancy below 600K (current house valued at 425K) - i'm not sure if the banks would consider lending 350k, given that between us we don't earn mega bucks?
I'm aware that this is a hard question to answer without more detailed information but i'm just keen to understand what kind of ball park we might be able to lend before we go and speak to the bank. Online calculators seem all over the place.
Thoughts of the PH hive mind appreciated. Cheers!
My guess is that around 4x is probably the ballpark. If you don’t have kids then the lender may consider that at some point you will and that to all intents and purposes this may negate one of your incomes and so price that risk in. Me and the Mrs have been looking at moving from our first home and are a bit clueless as to how much we can borrow.
We have a reasonable chunk of equity in our current place - around 250K to use as a deposit. Is this taken into consideration by the bank when they calculate how much they are willing to lend to us?
Between us we earn 78K before tax annually. Minimal outgoings (for the sake of argument).
Nothing in our area (south east) tickles our fancy below 600K (current house valued at 425K) - i'm not sure if the banks would consider lending 350k, given that between us we don't earn mega bucks?
I'm aware that this is a hard question to answer without more detailed information but i'm just keen to understand what kind of ball park we might be able to lend before we go and speak to the bank. Online calculators seem all over the place.
Thoughts of the PH hive mind appreciated. Cheers!
On a separate matter, I’m not sure there is any rush at all in the current market to upsize. The rush is firmly on for those wanting to downsize and that is only going to build. In a rising cost for debt market then your deposit on your current property will shrink much slower than on the larger properties and the percentage premium on values is going to shrink dramatically. Personally, if I was still moving up then I would be sitting right and accumulating cash.
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