Mortgage amount?

My fiance is on a trip right now so I cant ask him anything about mortgages in the UK, but I have been looking into houses for when we get married. We will be able to live in my Grandparents flat when we get married as they wont be there using it but idealy I want to move out ASAP and have our own place.

I've been looking online at rightmove.co.uk at homes, but as I dont have a guide of what kind of mortgage we will be approved for(if we even will be, based on these expensive prices  ) its quite frustrating! I also have been trying to find where I can get a free mortgage estimate but all ive found are things where I have to give me UK number etc etc, which I obviously dont have. Is there a website where you can just like...type in your salary, and see if/what you'd possibly be approved for? A general guide? I cant seem to find one and I'd like to have a general idea before he gets back so we can discuss it further.

His base salary will is £30,000 before tax, with bonus pay here and there. We have £37,000 in the bank to partially use for a downpayment. Hopefully I can get a job fairly soon but I dont think it'll really be in time to affect anything. I've been looking at stuff in the £100,000-115,000 range(slim pickings! ) but I'm not sure if thats too high or too low.

Long ramble short, does anyone have a website that could help, or does anyone know a general guideline of price I should be looking at?

Most banks that offer mortgages should have mortgage calculators on their websites.

You can also try the aggregated search websites like Moneysupermarket.

Hi Ashy,

Generally from what you've said, the figures of your income compared to the value of houses/property you are looking at is within the traditional 3.5x salary multiplier. With a very healthy potential £37,000 for a deposit, the roughly £100-115,000 a mortgage company will lend you means properties of that value you should be able to secure and buy without too much trouble. More than likely,  you won't use all of that savings as a deposit either.

Where abouts in the UK are you looking at and what kind of properties?

With the credit crunch biting harder - there is a little good news in so far that the Interest rates are looking likely to be cut today and maybe a couple more times throughout 2008 - however the flip side is that many mortgage lenders are tightening criteria and one such effect is that will insist on at least a 10% deposit and no less. 95% mortgages are becoming rarer and 100% mortgages are all but not available since the fallout effects.

For that price, I suspect you are looking at 1 or 2 bedroom apartments? some insider information for you is to make sure there's a lease of at least 90+ years remaining. The minimum is 80 years for which mortgage companies like to lend for - if the property you want is 90 years or less, try to negotiate the fee to extend it in the selling price - if you're lucky it can be a routine (as routine as property stuff goes!) procedure costing around £3-500, or if it's complex can be as much as £2-3000 - it depends on the small print etc.

I'd agree with professor potts, have a look at all the comparison websites - you join one, and then they compare stuff for you - maybe you can get your better/other half to do this!

Finally, try not to be tempted by the higher salary multiplier mortgages - I'm guessing many of these aren't available anymore but things like this is partly to blame for the credit crisis worldwide. They lull you into a false sense of security in that you can now borrow 30,40, 50 grand more - fine if you can afford the increased payments, but really look into all the associated costs before you sign on the dotted line.

Look on the web and have a read of property mortgage websites and you'll get more information of what I've said above plus anything which you personaly may find useful for your particular situation.

Hope this helps
Cheers! DtM! West London & Slough UK!

Dennis - would you agree that now is not really a good time to buy?


Vicky

Not Dennis but here's my two-penneth worth.

It's certainly not the greatest time to buy, we seem to be at the top of the market and it looks like interest rates are on an upward trend, I wouldn't buy that second invesment property for sure.

That being said, you need somewhere to live; so I wouldn't not buy a residential property.  You could wait, say 5 years, and gamble that the market would look better but then you've paid 5 years worth of rent (essentially dead money,) you still don't own a house and they'll be more expensive then than now.

The 'best' course really depends on circumstance.  You'd have to try really hard to make a loss on property in the UK over the medium to long term.  As long as you can afford the repayments if interest rates go up and are willing to stick around for 5+ years if the market slows then I'd say go for it.

Long term property will always go up, the problem can be that short term the market might slow and the house will increase in price less than inflation (leading to a real term decrease in value) or very occasionally you might get an absolute frop in value as long as you can afford to wait out these short term blips the a house is a good investment.

What I don't think we'll see again for a while is the massive short term gains that we've seen over the last 10 years.

Hiya,

Exactly what PR said!

It really depends on your situation. Housing is a basic requirement for everyone in todays modern world, you can rent or you can buy - pro's and con's for each in the very best of economic times.

I will strongly disagree with the 'stereotypical' notion that renting is 'dead money' - it simply isn't, it's a leftover from decades ago.
Todays world is ALOT smaller than what it was, just as recently as the 80's - overall if you were in a job it meant for life (give or take) and levels of immigration and movement were alot less. It made sense 'then' to buy a place, put down roots, have sprogs - i.e the 'traditional' route. Renting then, meant you gave a rich person who did have extra properties your money and was considered 'dead' becuase you didn't have a place of your own.

Look at the world today! - it's totally different, you could be working for years in a job, and in a flash it's gone (happened to me twice!) you then must look elsewhere, add on the fact air travel is so cheap, the world has now become an oyster for millions more people - there is a subtantial increase in people wanting to move to different climes, be it for work or retirement or investments purposes. Buying a place means you get 'tied' which is fine if that's what you want - however many more people nowadays know that a job may not last long and by renting it means they can have a quick get out if situations change. Another example more fitting to this forum is the 2 large US IT Companies I worked for - I met many people from the USA who arrived in the offices I worked at and aside from all the office banter - the 'serious' side of it was they chose to rent rather than buy simply becuase of the chance of change somewhere down the line. Renting offers quick changes, means you are not tied down and gives you flexibility you simply don't have if you buy.

Economically, why isn't buying anything on finance considered (as a psyche) 'dead money'? the UK only 'survives' because of it's consumer borrowing debt - it keeps the financial and law sectors of the UK turning the wheels of the country! - it's the convenience factor - you don't hear anyone saying 'oh you should BUY that car, or BUY that kitchen re-fit or BUY that holiday, everyone says 'oh I'll just stick it on my credit card' - although they are consumable items buying a house traditionally has been seen as an appreciating asset, so for that sakes it's considered anything but is 'dead money'

We all know what happens and we are here again - prices can go up as well as down - no one likes to think or prepare for when things go down, especially house prices.

Overall, there are other factors involved - but the 'house buying' craze is very prevalent in the UK, take a look over in Berlin as a big example - 89% of it's residents rent - buying a place isn't really thought of - partly for the reasons above and also the 'general' feeling isn't one of oh you MUST buy a property.

Lastly, currently it is a buyers market and buyers are being cautious - much more so than say 2001 and the years following the 1989 'crash' - however, the land mass hasn't changed and there is still a housing shortage, the demand for housing still outstrips supply and hence the 'likliehood' is that prices will on the whole climb with dips and troughs along the way - currently we are at a turning point for sure, only time will tell if this is a dip or trough in the longer term or indeed, with world political events and economic changes if it is a sharp downturn or not. I along with thousands of others thought 'it must be going down' in 2001 and after sept 11th it almost looked certain house prices would go down along with the economic slowdown that occured then - but they didn't - interest rates were cut and cut and house prices went up - could that same outcome be what's happening now?!



Difficult isn't it!  - If you can afford it now comfortably with some inbuilt emergency backups, and you want/need a place to buy in your personal circumstances - then go ahead and  buy. Peaks and troughs in it's value won't matter so much as mostly that means it's family orientated people who buy for the long term. Anyone else, yep, wait it out and see what happens, be be aware last time people did it, the prices carried on rising...

Cheers, DtM! West London & Slough UK!

I'll slightly disagree with Dennis's strong disagreement

In one way I agree, rent is no more dead money than buying food.  You need it, you buy it, you eat it then it's gone and you start again.

Housing is a strange thing that straddles the line between being a consumable (and a necessary one at that) and an investment.  So you can't compare it directly to a car or a holiday.

You need to buy it, you can either pay rent or pay the mortgage.  Rent works like the food bill, you'll always need to pay.  The difference with the mortgage is as well as buying shelter you also buy equity, not a lot at first, but it builds. 

But, like D said, it really depends.  One thing rent buys that a mortgage doesn't is flexibility.  This can be especially valuable to the expat who might not be in the same continent in 3 years time.

I think I'm so stressed over everything I didn't even think about the banks(stupid I know) and just was googling mortgage calculators which brought up stuff I have to sign up for and "put in house price, get your monthly payment!" so thanks! Geez depending on the bank the offers differ quite a bit! The £100,000-115,000 seems to be about the general response though.

I come from a family here who is all about own, own, own! My grandparents own a flat in england, a condo in north carolina, and a house in st. Louis. My parents own two homes as well. So I really am looking to buy. But looking online at homes the best in that range seems to be 1 bedroom flats. I could settle for that but I'm not the kind of person who likes to move a lot. Id really like to get  a house I could live in for a while and we do plan on starting(or, not preventing anyway) a family fairly soon after getting married and a 1 bed just seems not enough. Plus his salary will increase fairly dramatically every year so after a couple years we could afford probably a 3 bed house of some sort. So now I'm thinking perhaps we should rent for a little? I just don't like the idea of paying so much every month into  nothing. But at the same time, I don't want to go through the trouble of buying a place, and then a year or 2 later when we can better afford more what we want/need have to go through the sell/buy process all over again.

We're looking pretty much an hours commuting distance to Gatwick, in any direction really. Whatever area we can afford the most He grew up in southest London and I think he really is looking to stick in that area, but has agreed to go wherever I say I just want to be where we can afford more what we need, within a reasonable distance from the airport.

He gets back today so I'm going to discuss it more with him this evening. Its just been hard because he's been in training for the last 2 years, 6 months of that time spent in new zealand, and most of the other time spread out in bouremouth/southampton/middlands and everywhere inbetween, and now stuck at heathrow doing stuff so we haven't been able to talk other than 30 minute phone calls on a good day lately. Its hard trying to figure all this out myself! But he'll be back for  3 days so hopefully we can get stuff more sorted.

 Thanks for all your help!

i can relate.  when i decided to stay in england on more than just a temp assignment, i started looking at buying.  my head began to explode!  mortgages, down payments, tracker, interest only, buy to let, homebuyers survey, structural survey, oh my!

my advice- even if you decide you don't want to buy now- go see an independent mortgage broker.  make sure they're whole of market (arn't tied to one particular mortgage company, or a couple of mortgage companies).  ask them all your qustions about how much you can afford, etc. 

Hi Ashy,

PR - Yes, I agree with you - maybe by me saying 'strongly' disagree wasn' t the best term!

Another financial forum I visit had this exact same topic some months back - now people more knowledgable than me really broke it down with a mixture of real life experiences and financial calculations - it was bit of an eye opener! Some people who've rented for years put in their calculations of how much they'd spent whilst 'renting' and others in the same time frame had spent by buying - Generally, the figures were closer than you'd imagine - as ever, there's many different views and experiences - but overall, the 'feeling' its dead money isn't there with more financially astute people nowadays.

Ashy -
couple of things - I'm not being 'personal' to you or your situation - but a couple of things you mentioned I just want to pick up on.

You mention your other/better halfs salary is going to 'dramatically' increase every year - is he in the Law, Medical field or financials sector? - generally speaking, it's these sectors which seem to offer fairly susbtantial salary increases in relatively short spaces of time. If so, then your plan to maybe rent for a few years, build up credit and savings for a deposit and then buy a place more suited to longer term goals would be better. Of course, other sectors do have good salary increases, just that they 'usually' are further and fewer between.

you also mention about an hour's commute centered around the Gatwick area. That pretty much encompasses the South East of the UK which we all know is insanely priced - so be prepared to a) save up as much as possible or b) look for a place which you are willing to compromise more on given the potential income levels for both of you.

Very few people have the luxury of being able to go for the house they'd want right away in the UK, and are somewhere on this crazy thing called the housing ladder! - so statistically, I'd guess you'd be a part of it and if you were to buy now or in the near future, you'd repeat the process in the mid to longer 3-5 year outlook as that salary level increases.

Training for 2 years? - Medical residency? - I'm guessing a bit there. Or is it another work sector entirely? I'm trying to think of other sectors which require 2 years of training, Law Articles? something Engineering or research based? - again, I'm not stickin me nose in, just looking at the overall skill sector you're in and seeing the 'general' trend of income levels for it.

have a look at rightmove.co.uk and fish4homes and upmystreet websites for direct comparisons as to whats on the market, and maybe use local websites of towns/places to investigate further on your shortlist. Of course, if you can get down there and have a look, speak to estate agents and local people who are completely independant, you should be able to get more of a clearer picture of what you'd like.

Lastly - I'll add to, that my family and extended family are of the buy buy buy buy BUY things rather than 'finance' them variety - of course houses you do have to 'finance' and they are the biggest cost anyone coul dever take on - so I understand the 'pressure' as it were.

good luck !

DtM! West London & Slough UK!

i can relate.  when i decided to stay in england on more than just a temp assignment, i started looking at buying.  my head began to explode!  mortgages, down payments, tracker, interest only, buy to let, homebuyers survey, structural survey, oh my!

my advice- even if you decide you don't want to buy now- go see an independent mortgage broker.  make sure they're whole of market (arn't tied to one particular mortgage company, or a couple of mortgage companies).  ask them all your qustions about how much you can afford, etc. 

On the most part I'd agree with using an independant mortgage advisor - I did exactly this when I was buying.

However, I do also know that independants will also have certain 'deals' that other places won't be able to offer - and they'll push those deals to you and possibly 'coerce' you into taking it up, usually means a nice fat commision cheque for them once it all goes through! - so just be wary in case you're pushed or coerced into taking on that 'oh it's only another 20 or 30K' speil.

Cheers! DtM! West London & Slough UK!

If you are worried about that ask the advisor how much the commission is on the sale.  I worked with a couple and they were upfront about the amount.

In fact they may have to tell you, I can't remember the exact details, the y do have to tell how they are paid though.

You need to buy it, you can either pay rent or pay the mortgage.  Rent works like the food bill, you'll always need to pay.  The difference with the mortgage is as well as buying shelter you also buy equity, not a lot at first, but it builds. 

Disagree. You buy in a losing market, you're not building equity. You're losing pence on the pound every time you pay your mortgage bill. Talk to a financial advisor. Depending on your circumstances, it might be cheaper for you right now to rent than to buy, and that's in long term. Most people think it's counter-intuitive but it happens, and right now it's more likely to be true. You buy a 150,000 pound house, in two years it loses 30k in equity, say. You'd have saved money by renting instead.

The fact that the property prices will go down isn't a gamble, it's pretty much fact. The "rent is waste" "fact" is the kind of thing that'll have you purchasing at just the wrong time.

We're also looking to buy and after some consideration we're putting it off till about 2009.

Mortgage Advisors are regulated by the FSA and MUST offer impartial advice.

My boyfriend is a journalist on a broker focused mortgage mag (as opposed to a consumer focused mag) and he has furnished me with a list of reputable brokers, if that would be of any use to anyone.

He also wrote an article on how renting is currently cheaper than buying in some areas of the UK, including the South East.  Needless to say, we rent!

Vicky

The 'fact' is there are no facts, just guesses about what the market will do.

That's why any financial advice should be taken with a pince of salt, especially from strangers on an internet message board.

Your guess appears to be that the housing market will loose 20% of it's value in 2 years.

My guess is that the housing market will continue to increase at about or slightly above the rate of inflation.

Only time will tell who is right.

Although if house prices do fall by that much they'll take the entire economy with them so they may be the least of anybodies worries.