The Question
I wondered if I could get some advice from you in regard to whether my husband and I would be eligible for a mortgage. We have both been homeowners before – in our previous relationships. As such we have joint savings worth nearly £80,000 which we could put down as a deposit.
We currently rent and completely lucked out in finding a property on which we pay only £900 a month. It’s three-bed and the two kids each have a room of their own.
Here’s the rub – I work part-time and my husband was made redundant in October last year. He’s found a job but it pays less than his previous job. So, our joint monthly salary is £2,800.
My husband has a redundancy pay out of £19,000 which we have sitting in our current account and could use towards repayment or to bump up the deposit.
We have seen a lovely family house worth £390k – can we afford a mortgage?
The Answer
The way lenders calculate affordability varies, and in turn, the amount you can borrow also varies.
From the numbers you’ve given me, I’ve calculated a gross income of £33,600 per year, but of course, there are other things to consider (e.g. child care/maintenance costs, tax credits etc).
However, as a rough guide, most lenders will lend 4.5 times your annual income (again, this varies). Doing the maths, this could give you a mortgage of £151,200.
If either of you were to get a new, higher-paying job, then that income can be factored in straight away.
I’d recommend speaking to a mortgage broker to investigate your options based on a little more detail.
You can read more of Jeni’s advice on residential mortgages here. If you are interested in a buy-to-let mortgage, Jeni also writes a Q&A column on this area of the mortgage market, here.
If you have a question you would like to ask Jeni email kate.saines@emap.com
Jeni Browne is business development director at Mortgages for Business
