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Mortgages question

Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
Hiya guys, now i already have a mortgage with my ex partner but i am maybe going to be looking into selling our house next year and buying somewhere on my own. My question is really about what multiples lenders give these days? When we got ours i think it was 3.7x joint income was the maximum. That was over 2 years ago now and i'm not sure if it's different for a single applicant.

I've done an internet search but mostly its just a rough guide of 3.5x, i've heard of my friends getting 4 and a bit times their salary though. I will have a deposit which we didn't when i bought with my ex so i think that makes a difference too.

Any help would be great thanks! :)
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Comments

  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    theres all sorts out there, ive heard of as much a 6x salary mortgages and 100%+ mortgages, but seen as you have a deposit thats not a problem.

    best to check around i would think.

    theres a lot of good mortgage advice over at moneysavingexpert altho im sure you'll find some on here as well!
  • PearlyPearly Posts: 345 The Mix Regular
    Hi,

    It depends so much these days, but generally you will be allowed to borrow more in relation to how much x your salary if you go for a mortgage on your own, than if you are getting a joint mortgage. This news article has some interesting info you may want to read.

    You can also try this website to see what lender's would possibly lend you on your current salary.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Northern Rock (!!) offered me 5.5x, I took Alliance & Leicester which gave me 5.1x - this is of 100% my basic salary and 60% my bonus (much higher than salary). Multiples might be higher in London than elsewhere, most people I know get 5+.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Good luck getting 5x salary in the current credit conditions.

    4x may be an option, especially as you have a deposit.. :)
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    When I was buying 2 months ago 5x was about the most. I got 4x and to be honest I wouldn't want any more than that on my current salary as I don't believe I've got the remaining income to live on comfortably and be able to do what I want with the property.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    You shouldn't be looking at how much the bank will lend you, you should be looking at how much you can afford to pay each month.

    I would be very worried if you took out a mortgage that was more than two-thirds of your salary each month. You would be setting yourself up for financial ruin.

    The banks won't tell you what you can afford, and just because a bank will give you the money doesn't mean you should take it.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    It varies anyway. Some banks and building socieities will lend higher than others. Also it will largely depend on whether you represent a good risk for them, I expect, in today's climate.

    For info though, Halifax, Nationwide and Abbey are amongst ones that will lend on a 5* multiple.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    TBH I wouldn't try and get a mortgage that is more than 3.5 times your income, put simply you won't be able to afford the repayments. Best bet is to save up for a bigger deposit, or get a smaller house.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kermit wrote: »
    You shouldn't be looking at how much the bank will lend you, you should be looking at how much you can afford to pay each month.

    I would be very worried if you took out a mortgage that was more than two-thirds of your salary each month. You would be setting yourself up for financial ruin.

    :yes:

    Especially important if you're buying alone, as it's more expensive to live by yourself.

    My bank would have lent me 5x my salary, but realistically, living alone I would only have been able to afford 2.5x max.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Whowhere wrote: »
    TBH I wouldn't try and get a mortgage that is more than 3.5 times your income, put simply you won't be able to afford the repayments. Best bet is to save up for a bigger deposit, or get a smaller house.

    I'd love to know how you and others making these type of comments would know?

    With no idea of the wage, the persons debts etc?
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    If I'd bought my house on my lonesome it would have been over 7 times my annual salary. Luckily with my boyfriend it's 2.6 times our annual salary. We're just about managing to afford it. We could probably do better if I stopped spending as if I didn't have a mortgage to pay!

    My advice would be to see an independent mortgage adviser. We had a mortgage offer from Northern Rock and were willing to go with them. The estate agency we bought from asked us to see someone they recommended and it was free. He was really nice and we got a much better fixed interest rate deal and the 'real' cost over the fixed period was lower than with Northern Rock. We're with Bristol & West. It is worth speaking to someone (a lot are free, ours was) because they have more 'tools' to investigate more lenders than you can possibly can on your own. Good luck. :thumb:
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Thanks for the advice everyone.

    I already know how much i can afford and as it's a bit more than 3.5x my income i just wondered really if lenders would lend more.

    I have no other outstanding finance or debt so i know that i can afford a bit more than the 3.5x norm. I know alot of people who have a mortgage higher than that and manage fine.

    (Before people start arguing about unexpected costs etc i have had a mortgage before, and still do, so i know to think of these things ;))

    Thanks again.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Whowhere wrote: »
    TBH I wouldn't try and get a mortgage that is more than 3.5 times your income, put simply you won't be able to afford the repayments. Best bet is to save up for a bigger deposit, or get a smaller house.
    How?? 5x is perfectly affordable. On a 5.5% interest rate,

    Earning £20k = £1.3k/mth after tax, a 5x multiple = just £450/mth interest repayments, £850 left
    Earning £40k = £2.3k/mth after tax, a 5x multiple = £900/mth interest repayments, £1,400 left

    So even with a monthly mortgage repayment on top of the interest repayment, should be affordable even with a 5x multiple.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Show me a 5.5% interest rate these days.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kazbo wrote: »
    Show me a 5.5% interest rate these days.
    I got my mortgage in March this year. 0.31% below the base rate, so currently 5.49%. Looking at my bank you can currently take out a new mortgage for 5.73%, which only adds £20-50/mth to my below figures, still entirely affordable. And anyway new mortgage rates are going to go down shortly, BoE hinted at a rates cut this afternoon.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    They hinted at a reduction next year, but not necessarily when next year.

    Most buyers on a moderate income at the moment need to be taking out fixed rate mortgages, not tracker mortgages, just in case anything happens. A lot of people also feel more secure knowing exactly how much they'll be paying month to month...fixed rate mortgages are well over the 6% mark these days.

    I also wouldn't advise anyone to just pay the interest payments on a mortgage.

    I certainly worked out I couldn't afford 5x my salary on mortgage when I looked sensibly at all the other costs I have a month, but we already know you underestimate them.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kazbo wrote: »
    I also wouldn't advise anyone to just pay the interest payments on a mortgage.
    It's not a bad idea if your salary's going to progress as you move up the ladder..so to start off with just do interest payments and the year after start repayments.
    Kazbo wrote: »
    I certainly worked out I couldn't afford 5x my salary on mortgage when I looked sensibly at all the other costs I have a month, but we already know you underestimate them.
    What do people waste money on? I earn less than £5k/mth (and annual bonus) and always put ~75%, £3-4k/mth of it towards the mortgage. ~£1-1.5k on bills, food, going out (quite a bit) and 1-2 European weekend breaks.. and I'm paying double usually.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    less than £5k per month take home, or salary? They are very different. £5k take home is a pretty high wage.

    As I'm sure you've mentioned elsewhere, your annual bonus is fairly large whereas most mere mortals won't have that boost to their funds.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Ricardo R wrote: »
    It's not a bad idea if your salary's going to progress as you move up the ladder..so to start off with just do interest payments and the year after start repayments.

    Not everyone can be that lucky as to have a guarentee like that. More and more companies are going for a graded structure of getting a score above the excpected level or no pay rise.

    Ricardo R wrote: »
    What do people waste money on? I earn less than £5k/mth (and annual bonus) and always put ~75%, £3-4k/mth of it towards the mortgage. ~£1-1.5k on bills, food, going out (quite a bit) and 1-2 European weekend breaks.. and I'm paying double usually.

    Yes and as the other thread showed, most people earn around the 1 - 1.5k a month. i.e covering bills and food. You throw in suddenly needing to do repair work to a house, or even just wanting to simply decorate a room and you're suddenly struggling to afford everything.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    less than £5k per month take home, or salary? They are very different. £5k take home is a pretty high wage.

    As I'm sure you've mentioned elsewhere, your annual bonus is fairly large whereas most mere mortals won't have that boost to their funds.
    £5k after tax..though I don't pay that much tax with some crazy offshore SIV restructuring thing in place. Annual bonus of no use for day-to-day expenses, just use to repay mortgage.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    That's a bit unfair if you don't have to pay your fair share of tax.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    katchika wrote: »
    That's a bit unfair if you don't have to pay your fair share of tax.
    If you have the option of either paying £1800/mth or £800/mth in tax, when you get next to nothing in return for that tax payment, I think the vast majority of people would opt for the latter. It's entirely legal and a lot of people do it. Maybe if the government didn't waste tax money on wars and bureaucracy we'd be less incentivised to opt for tax restructuring solutions.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Ricardo R wrote: »
    If you have the option of either paying £1800/mth or £800/mth in tax, when you get next to nothing in return for that tax payment, I think the vast majority of people would opt for the latter. It's entirely legal and a lot of people do it. Maybe if the government didn't waste tax money on wars and bureaucracy we'd be less incentivised to opt for tax restructuring solutions.


    I pay my fair share of tax and don't fiddle the system and at the moment, only get about £1,000 a month to live off. Can you explain to me how I can pay less tax please?
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Ricardo R wrote: »
    How?? 5x is perfectly affordable. On a 5.5% interest rate,

    Earning £20k = £1.3k/mth after tax, a 5x multiple = just £450/mth interest repayments, £850 left
    Earning £40k = £2.3k/mth after tax, a 5x multiple = £900/mth interest repayments, £1,400 left

    So even with a monthly mortgage repayment on top of the interest repayment, should be affordable even with a 5x multiple.

    How many people can afford to take out an interest only mortgage? Me and my partner have a mortgage of just over 3 times our joint income, and we have had to make a few cutbacks on order to afford it. There would be no way, long term that we could afford an interest only mortgage :no:
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    katchika wrote: »
    Can you explain to me how I can pay less tax please?
    http://www.welbeckwealth.com - enjoy. Great people.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    I think most of us can agree that Ricardo doesn't live in the same world we all do.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    BumbleBee wrote: »
    I think most of us can agree that Ricardo doesn't live in the same world we all do.

    Agree completely :yes:
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Ricardo R wrote: »
    http://www.welbeckwealth.com - enjoy. Great people.

    Ricardo - are you classed as being self employed then, or effectively working as freelance? I'm a little confused how a permanent employee of a company is able to use an external (especially offshore) system to to their accounts...? Is it just the way your company operate?

    To the others - I work in a similar way myself (although not offshore) as I am a consultant and I pay very little tax, and none of it is fiddling the figures. We're given certain dispensations for expenses etc etc which lower the tax bill a fair old whack.

    My take home is around the £4.5k-£5k a month mark at the moment as the contract I am working on right now isn't quite paying what I am used to, but it's nice and close to home so I'm not too bothered. To back Ricardo up here - if there was a legal way for all you guys to pay a lot less tax, you'd sure as hell take it!!
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Yeah I would take it, but it DOES seem very unfair that all the people who seem to dodge their way out of paying tax are the ones earning loads in the first place.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Seems like the ones who can most afford it don't pay very much of it.
    And of course I would pay less tax if I could!
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