Biggins

We are thinking about moving house in the next couple of months and are a little confused with regard to what sort of house prices we should be looking at. In other words, how much we could borrow based on our current financial status as follows:

Current Mortgage - £50k (repayment £270/month fixed until 04/05)

Current Property valued at - £125k - £130k

Joint pre-tax earnings - £45k

We were hoping to be looking at properties £225k - £275k, is this realistic??

imlach

So, looking at 3 times joint earnings multiple, you could safely borrow £135k.

You have about £80k of equity. So, new house should be around £215k if you want to stay within 3 times multiple.

You can borrow more from some lenders, but up to you if you want to push your boundaries. Are you spendthrifty in your other outgoings?

Diablo

Youve got £80K equity

knock of £10k for costs and incidentals gives £70k cash.

Say 3 times salary (joint) (some give more, some give less but the rates are going up ) so you're looking at borrowing up to £135K

Total = £205K

Any more could be financial suicide.

And before all the "I'm an IFA, this is crap" posts start, I am speaking from the harsh realities of dealing with insolvency for the last 14 years as part of my job.

D

Diablo

Add - so no, its not realistic, albeit possible.

davegtt

usual working out I found for the average couple was 3x the highest earning pay + the other.

imlach

All lenders have various ways of working out. Some work to your advantage, some don't.

At the end of the day, you can persuade most lenders to lend as much as you want, some are happy with this, some are not.

If you're borrowing less than 75% LTV, some often don't even ask about your earnings etc...

Biggins

Cheers guys, thats about what we thought.

Any idea of the monthly payments based on a repayment type mortgage of said amounts?

Cheers.

imlach

£135k at today's base rate of 4.75% on a 25 yr repayment would be £769.66/month.

If you could get a 5.5% fixed rate on a 25 yr repayment, it'd be £829.02/month.

jjones

fixed rates of 5 years are currently around 5.8%.

imlach

£853.38 for 5.8%, although I have seen 5.5% for 5 years around still....better be quick though!