Earnings too low for mortgage?

[Countdown]

Circumstances are as follows;

Two young parents earning about £18k between them. They have £45k in savings. They are currently renting but would love to move out and have seen a property for £110k. The house is ideal because it's close to existing schools and work. Anyway they need a mortgage of £65k.

Is that realistic?

[V1nce Fox]

This is a Sarnie question.

[Driver101]

How can a family live on £18k?

[WY86]

£18k each or joint income? £18k joint must mean both do part time hours?

Do they have any loans or finance?

[Countdown]

Driver101 said:

How can a family live on £18k?

I'm not sure. I assume they might be getting some beenfits but I'm not sure. Anyway rough calcs suggest that on a £65k mortgage their repayments @4% interest would be circa £350 which is more affordable than the £500pcm they're paying in rent.

[Sarnie]

It's possible but it depends on the make up of the income.....

[trixical]

Nothing factored into those figures for solicitors fees, moving costs, contingency, the inevitable furniture and decorating they will want if they get it, so surely a £70k mortgage as a minimum is more realistically needed.
Also worth them being well aware from the start they will have an overlap of rent and mortgage

[WY86]

Also how consistent is their income? Nothing turns a mortgage company off more than inconsistent income.

[Sheepshanks]

Countdown said:

I'm not sure. I assume they might be getting some beenfits but I'm not sure. Anyway rough calcs suggest that on a £65k mortgage their repayments @4% interest would be circa £350 which is more affordable than the £500pcm they're paying in rent.

They'd be getting their rent paid by benefits, surely?

I don't know how hours etc and the split of income between them affects things, but I'd expect they'd be getting a hefty sum in benefits and tax credits.

[Saleen836]

Sheepshanks said:

Countdown said:

I'm not sure. I assume they might be getting some beenfits but I'm not sure. Anyway rough calcs suggest that on a £65k mortgage their repayments @4% interest would be circa £350 which is more affordable than the £500pcm they're paying in rent.

They'd be getting their rent paid by benefits, surely?

I don't know how hours etc and the split of income between them affects things, but I'd expect they'd be getting a hefty sum in benefits and tax credits.

Agreed, and unless inheritance/compensation received you have to ask how they have £45k in savings

[mike74]

No doubt doing the usual trick of deliberately choosing to limit the number of hours they work in order to claim optimum tax credits and other associated benefits.

Why would they want to buy somewhere when they can just carry on renting and sucking on the teat of full time working tax payers?

[Dingu]

mike74 said:

No doubt doing the usual trick of deliberately choosing to limit the number of hours they work in order to claim optimum tax credits and other associated benefits.

Why would they want to buy somewhere when they can just carry on renting and on sucking on the teat of full time working tax payers?

Mystic Mike is here! Incredible inference

[stuthemong]

mike74 said:

No doubt doing the usual trick of deliberately choosing to limit the number of hours they work in order to claim optimum tax credits and other associated benefits.

Why would they want to buy somewhere when they can just carry on renting and on sucking on the teat of full time working tax payers?

Dislike.

[GregK2]

They wouldn't be eligible for many benefits with £45k in savings. Certainly not UC anyway.

[Sheepshanks]

GregK2 said:

They wouldn't be eligible for many benefits with £45k in savings. Certainly not UC anyway.

Ah, forgot about that.

I did the calculation for a bloke working full time on minimum wage, wife not working, two kids, It was over £200/wk in benefits. Which makes it a bit mad them having £45K.

[Countdown]

Sarnie said:

It's possible but it depends on the make up of the income.....

"Gig economy" I believe. Delivery driver for the likes of Uber, deliveroo. It's all documented so the broker would be able to see the income but it CAN be variable.

[Countdown]

GregK2 said:

They wouldn't be eligible for many benefits with £45k in savings. Certainly not UC anyway.

I don't think they're getting any benefits. However i didn't like to pry.

[Saleen836]

Countdown said:

GregK2 said:

They wouldn't be eligible for many benefits with £45k in savings. Certainly not UC anyway.

I don't think they're getting any benefits. However i didn't like to pry.

If not they are doing well for a family of 3? 4? to live on less than £1400 a month

[Countdown]

Saleen836 said:

Countdown said:

GregK2 said:

They wouldn't be eligible for many benefits with £45k in savings. Certainly not UC anyway.

I don't think they're getting any benefits. However i didn't like to pry.

If not they are doing well for a family of 3? 4? to live on less than £1400 a month

Family of 2. No kids.

[NumBMW]

I thought they were 2 young parents?