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Mortgage question

posted 1 decade 4 years ago
Hey everyone, this is a question for the future not immediately which is why I'm generally trying to find by word of mouth for now; and not yet approaching mortgage lenders.

So I know that generally you can borrow about 3 times your annual income for a mortgage BUT how much is this figure affected by your initial deposit? We don't have a very high income and so at this time would no way be able to afford to buy a property big enough for our family. However, in the future when my grandmother gets older and needs more support we have concidered all living together. We could not move in with her as her place is too small, but in her Will she has divided all her assets to be split equally between myself, my mum and uncle. So the idea would be that if we bought a house with her coming to live with us I would in affect get my third of the money at that time before she died and that money would go straight on the deposit for the house and then my hubby and I would continue to pay the mortgage re-payments.

Can anyone tell me how they calculate the mortgage you are entitle to if you are putting down a large initial deposit?

posted 1 decade 4 years ago
Well it can be quite complex, your wages and your deposit are a rather small part there are many other things, any outstanding debts, your credit rating, have you experience any long bouts of unemployment etc. When you have a deposit generally at around 25% you have a higher interest rate.
So you pay more back, if you bought a property for £100,000 with a 25% deposit you would pay in total around £133,000 at most building societies, however if you had a deposit of 10% you would pay back around £111,000.

If you have a 25% deposit, they will deduct that amount from the cost of the house, so a £100,000 house has a mortgage of £75,000 so your minimum earnings must be £25,000 and with an almost perfect credit rating.

You need to consider the fact that you will not be able to gain a mortgage until the sale of your grandmothers house has been completed and the money is in your bank account, so you need to take in to account extra expenses, until you are able to buy a house unless you have a spare bedroom you will need to rent a larger property.

When we moved we had a large deposit from a house we had inherited, so we have a very small mortgage however because of our large deposit our interest rate is shocking as obviously the building society want to make as much money as possible, so now we have used savings to pay it off in one lump sum otherwise we would be paying £9,280 more than we need to.

posted 1 decade 4 years ago
I'm in a position that I will be looking for a new mortgage as I hope to buy a new house once my dad's inheritance is finally sorted out. Currently the banks/building societies are looking for large deposits around 25% to get a reasonable interest rate. They are generally 3.5 or 4 times your salary although this rate changes depending on the lender and if the money is from one or more sources.

As Samuel mentioned the amount they will lend will also be dependent on debts and regular outgoings such as maintenance.

posted 1 decade 4 years ago
The only time we put a big deposit down was when we made money on the sale of our last house.

the money my hubby made on his first house pretty much just covered the fees for the solicitors etc so we got a 97% on the last mortgage (which i don't think exist any more lol). I think we were able to put down about 33% deposit on this house so we had borrow 67% of the value of this house.

As far as they worked out the mortgage to our earnings I think it was about 3 times my hubby's and double mine, then they worked out outgoings etc. We were told by one mortgage vendor they would lend us £160K thank god we didn't stretch ourselves anywhere near that because I don't know how we would have find the money to eat!

posted 1 decade 4 years ago
Now this is going back about 8 years when I was a Halifax mortgage advisor - so things have probably changed hugely - and now with the recession they are even worse!!
About a year ago the Halifax would do anything higher than a 90% mortgage! They used to do 97%. Before all this generally it was perceived that any lending below 75% was low risk (as you had put quite a large sum into the property. A lot of companies would self cert mortgages below 75% - but generally this would a higher rate as the companies doing this were (IMO) somewhat dodgy.
It is possible that they may consider lending more, but I imagine even more so now that they would need a very good reason.
It always used to be that any credit that has less than 12 months to run was never counted. Generally the lower the LTV (ie the bigger the deposit) then the better the rates were. A lot of this was down to credit rating as well, we always used to credit score, and then do a credit search as part of the AIP (agreement in principle) - this was a mortgage promise for 30 days, and subject to references and valuation. BUT all this was a long time ago........

posted 1 decade 4 years ago
Thankyou all. As you've all demonstrated it depends so much on personal circumstances; and I'm guessing with none of us certain how long the country will remain this way financially things could keep on changing. It's all so up and down isn't it. My in-laws have a moprtgage and they have been paying £1200 per month, but their payments have now gone down to £320 per month-a ridiculous jump down!
It sounds as though this isn't really something I can plan for too far in advance but better to wait until it is actually going to be happening. As you said Samuel also the consideration of my nan's living between the selling of her place and us buying somewhere. As far as credit rating goes I have never had any debts and am in the highest credit scoring bracket my bank assured me at my recent appointment. We'll see how it all goes.

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