Mortgage advice/experience

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SquiggleWiggle

Im not looking for expert advice or guidance, I just want personal experiences to help me. I will use a mortgage advisor once I’ve fully saved my deposit.

I’m going to sound so stupid but I honestly don’t understand how they work? All the mortgage calculators online say how much I would be able to borrow based on wages, but then I know friends/family who have managed to borrow over this?

For example, say I want to buy a house that is 500k. I have a 50k deposit, and based on my wages can borrow 300k mortgage. That leaves me 150k short. Is that a problem or would I be able to get a 450k mortgage?
 

BelleAmie

It’s unlikely that you’d be able to borrow significantly more than your current salary would cover - say you took the maximum mortgage you could get, and it worked out at £900 per month - even if in theory you could afford to spend another £400 a month on your mortgage because you live a very frugal lifestyle, your mortgage provider is unlikely to consider it a safe/good investment; you need to leave some wiggle room for interest rates to fluctuate etc.

My mortgage advisor said that you generally don’t want to allocate more than a third of your monthly salary towards your mortgage payment. You’ll need to consider whether to take out a fixed rate mortgage or a variable rate, and how many years you want the mortgage over. Taking the mortgage out over a longer period of time doesn’t mean you can borrow more but generally the monthly payments are lower - however you would end up paying more on interest in the long run. Personally I chose to take my mortgage over a longer period of time to make it more affordable, and in the next few years I hope to start making ‘overpayments’ so I’ll be able to pay it off sooner and avoid paying more interest than I have to; however I’m not tied to that so if there are months I can’t/don’t want to overpay, I only have to pay my lower standard mortgage amount - anything else is a bonus.

When calculating the amount you can borrow, really little things like monthly financial commitments can have a big impact. When you’re ready to get started, try and cut down on any regular payments - don’t take out a new car on finance, see if you can freeze or cancel any gym memberships etc because all those things cut down on what you can borrow.

I hope that is at least slightly helpful - if you have any specific questions, let me know and I’ll do my best to answer!
 
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Rxt156

My financial adviser was theee best money that I spent when moving house. Makes such a difference talking to someone that knows what they're on about. Had to pay a fee and they get paid by the bank for arranging the mortgage so they obv want to get you the best deal.

When I moved a few years ago I was told to work out around 4.5 times my salary as the very general estimate for what you can afford
EG 30k salary = 135,000k mortgage
IF i had a 20k deposit I could afford a house around £155,000. (These are just estimates for my example).

I decided to go quite a bit under the upper limit. I don't like the idea of having an enormous mortgage. Do what is best for you and make sure you do the maths!
 
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ComeForTheX StayForTheY

In the example you've given it doesn't look like you'd be able to borrow £450k if you are restricted to £300k based on a multiple of earnings.
It's possible your family / friends may have been able to borrow more in the past under different borrowing rules. Banks have stricter affordability rules now due to regulations which will limit what you can borrow.
 
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Tree_

Did they have a higher ltv than you? It's such a minefield. I can recommend Paul at y-not finance when you're ready. They don't charge you but get paid by the lender
 
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btw

Sorry for jumping on this thread but has anyone got any knowledge on whether mortgage lenders will include child / working credits within your income? Or do most lenders base it purely on your income from employment only?
 

PillowsofFluff

btw said:
Sorry for jumping on this thread but has anyone got any knowledge on whether mortgage lenders will include child / working credits within your income? Or do most lenders base it purely on your income from employment only?
Click to expand...
When we recently remortgaged, I mentioned that I received child benefit and was asked to provide a copy of the benefit award letter, so I guess they do take things like that into account? Not 100% sure though
 
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mcfeez

btw said:
Sorry for jumping on this thread but has anyone got any knowledge on whether mortgage lenders will include child / working credits within your income? Or do most lenders base it purely on your income from employment only?
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I think they count anything that qualifies as regular income.

Its about your income and your regular outgoings as well as your deposit/LTV ratio. You would possibly not be able to comfortably afford the monthly outgoings that 450k mortgage would bring about.
 
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Tree_

btw said:
Sorry for jumping on this thread but has anyone got any knowledge on whether mortgage lenders will include child / working credits within your income? Or do most lenders base it purely on your income from employment only?
Click to expand...
They do. I receive child benefit you know the standard that everyone gets and I included it in our application.
 
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WilmaHun

Generally a lender will offer 4.5 x your normal salary/income and that's the max they'll lend. Some lenders may offer slightly more/less but that's the average starting point. Other things will impact this such as any current debt you have, your credit rating and whether your income is likely to change in the near future.

If the max they are saying is £300k on their online calculator, then it's unlikely anywhere would offer you £450k. Also, the online calculators are a rough guide only and shouldn't be taken as gospel, when you do the formal mortgage application this amount could and quite often does change once they have assessed your affordability. For example, an online calculator gave X amount as a rough figure for me and my bf, but when we completed our mortgage application what we got offered was actually £15k less. Still enough for us to purchase our property, fortunately.

If they offer you X amount and you want to buy a more expensive property than that, any additional funds would need to be made up by yourself.
 
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Bleurghgram

I know you say you don’t want to speak to anyone yet but honestly I’d recommend a call with a mortgage advisor, I had one for free with no obligation and it was really helpful to find out what my options were.

I’m buying shared ownership as I literally cannot do it by myself any other way - even if I waited a few more years to save a 10% deposit, I don’t have the affordability as a single person.

It took me a long time to realise most of my peers who we’re buying young did so with parental help.
 
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btw

Congratulations! I hope it all goes well, I know how frustrating it is wanting to buy as a single applicant. I have a deposit but my single income just won’t be enough so I’m going to consider shared ownership too!
 
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CatCafe234

It’s a few years ago now, but speaking with a mortgage advisor was one of the best things we did when buying a house. We initially made an appointment with the mortgage advisor at our bank and he was so, so unhelpful. As soon as he found out my partner was self-employed he just switched off - it was such a miserable and depressing experience and we ended up thinking that we would never be able to get a mortgage. Our experience with an advisor was night and day - she was so helpful and didn’t see my partner’s self-employment as a problem. She was able to give us advice about the best mortgage for us and was just so helpful. I’d highly recommend making an appointment with a mortgage advisor.
 
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Bleurghgram

btw said:
Congratulations! I hope it all goes well, I know how frustrating it is wanting to buy as a single applicant. I have a deposit but my single income just won’t be enough so I’m going to consider shared ownership too!
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Aw thank you! I honestly can’t wait, as much as I love my housemates I’m ready for my own space. There are pitfalls to shared ownership so I can see why it gets knocked but it does work for people who go into it with their eyes open and with a vague plan for the future.
 
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Ss1471

So I used to work in underwriting, they will generally take child benefit etc but any responsible lender would do a separate affordability check for when this ends at time kids turn 18, but they would also generally speaking remove the cost of the dependant then also so it should balance out. My best advice is be as honest and transparent as possible throughout the whole application, you might think fudging income or trying to hide any outgoings might help but 9 times out of 10 anyone working at the bank will find it and that will only make your situation worse. Also no borrowing for a few months, especially going into overdrafts, payday loans klarna etc. just be as frugal as possible and save save save. It is such a minefield and a mortgage advisor is your best bet, they’re legally bound to find you the best deal and make sure it’s affordable for you. Good luck! We’re going to look to move this year and I’m dreading it already
 

Limey

Honestly, please speak to an independent mortgage advisor (not one from your own bank). They have a view of the whole market and can find you the most appropriate deal. I bought once on shared ownership, and then my second house in the normal way and used independent advisors both times. They will be able to advise what you can and can't include in terms of income, and help navigate any issues.

I've now moved my mortgage deal to my own bank, but only because it was the lowest rate in the whole market when my previous deal was up.
 
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kazizzle

100% agree with the recommendations to speak to an independent mortgage advisor. I had no clue and had been to see a house I liked and really wanted to get things moving but had no idea where to start. Parents bought our family home 30 years ago so were useless! My mortgage advisor not only gave great advice on affordability and dealt with all the paperwork, he also phoned the estate agent and schmoozed them a little to find out if they thought my offer would be accepted by the sellers before I officially placed it and to suss out if they had any other interest.

You can usually get advice and then choose to go and find your own mortgage without having to pay a fee but honestly the money on the advisor was so worth it.

I remortgaged last year and used the same advisor and didn’t have to do any paperwork or pay a fee because I was staying with the same lender.
 
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Rxt156

I have also remortgaged and stayed with the same lender, much easier and the advisor did it all for me even though there was no paperwork. Very little stress. Fab lady she is!!
 
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adviseplz

Hiya, I'm after a bit of advise on mortgage advisors vs mortgaging with a bank...

I've spoken to a mortgage advisor, who I will have to pay if I have put in an application with them. They've recommended a product to me that is suitable for me and shown me the interest rate and monthly repayment etc. which I am happy with.

If I've found that product myself and applied directly through the bank (and saving myself the mortgage advisor fees) what would the different be - do you think it's likely I would get the same interest rate, or worse?

I've spoken to mortgage advisors that are free, and just get the commission from the bank, but they don't have the product that is suitable for me.

Thanks in advance!
 
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