2007-02-20 06:55:34 · 13 answers · asked by STEPHEN P 1 in Business & Finance ➔ Renting & Real Estate
What the banks are now asking for is 5x your yearly wage...so if you earn 25k, you can get a mortgage £125000.00 or roughly just under £1000.a month but dont forget to add life and building insurances which can cost about £100 per month..
2007-02-20 07:03:30 · answer #1 · answered by fran 5 · 1⤊ 0⤋
Look at your average monthly income. DO NOT make the mistake of including overtime and bonuses. While banks will let you do this, it is NOT a wise financial decision.
Anyway, look at your average monthly income. You should NEVER get a monthly mortgage that is more than 29-32% of that. (I am includeing taxes, insurance, & escrow in that amount.) Your total debt (credit card, car loans, etc) should not be any higher than 40-50% of your monthly income. (The range is so large b/c so many websites have such a different opinion on the matter.)
Your income X 0.29 = low end monthly payment
Your income X 0.32 = high end monthly payment
Once you know how much you can afford monthly for that, assume about 1/3 of that amount is escrow, taxes, & insurance. 2/3 of that is mortgage.
low end OR high end (your choice) divided by 3 = amount spent on taxes, escrow, & insurance
Multiply that by two and that is the amount of your monthly payment that can go to your mortgage.
You CAN calculate it by hand, but it is CRAZY to do, so I recommmend using an online loan calculator. I have included SEVERAL below with little descriptions.
Of course, your credit will be a factor; the better your credit the lower your interest. The lower your interest, the more you can borrow for the same monthly payment.
Also, when considering buying a home, think about length of the loan. OBVIOUSLY the shorter the loan, the less interest you pay. But then you have higher monthly notes. The longer the loan, the more you pay in the long run, but the less you pay each month.
Now, ALL of this is simply "rule of thumb." You really need to look at what YOUR personal situation is. One of the calculators I am includeing below actually takes ALL KINDS of information into account.
2007-02-20 07:17:16 · answer #2 · answered by Jennifer Anne 4 · 0⤊ 0⤋
This question can be answered easily by contacting a broker. allow them to run your credit. This will give them a list of all the liabilities that lenders will include in your DTI (debt to income ratio). Give your loan officer your average monthly income before taxes. At this point the loan officer can input any loan amount they like and can tell you how large of a loan amount you can qualify for without going over the maximum DTI. My reason for suggesting this is loan officers have access to the software every lender uses to correctly calculate the figures you're wanting. This shouldn't cost you anything. Check with your loan officer before having your credit pulled to make sure you won't be charged for pulling your credit or any other fees. All brokers are different. Also, only allow your credit to be pulled once. Inquiries can pull down your score.
2007-02-20 07:56:13 · answer #3 · answered by yourstruly_76 1 · 0⤊ 0⤋
This varies from provider to provider. The general rule is 3 times your annual wage, but some companies are now offering up 5 times the annual wage. But it is all done on affordability checks and credit score.
They take into account all your monthly expenditures and then see what you have left over then make an assessment of what you can afford.
2007-02-20 06:59:46 · answer #4 · answered by Jess 2 · 0⤊ 0⤋
Figure 4 times your yearly income plus your down payment is the high end of what you can afford. That may stretch your budget though-- so plan accordingly.
2007-02-20 07:15:04 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Usually 3x income, but some offer more. More is not advisable, as you've got to have some left for bills and food, plus interest rates might rocket as well.
2007-02-20 07:05:01 · answer #6 · answered by Anonymous · 0⤊ 0⤋
You should be able to get upto 5 times your yearly income with most banks. Northern Rock have any excellent rate !!!!
2007-02-20 07:07:47 · answer #7 · answered by jobsy1 2 · 0⤊ 0⤋
Depends what your income is..how much debt you have..how your credit is...and few other things...
I can help you personally if you live in florida and see what it is..other than that get at me for more questions..
2007-02-20 07:17:04 · answer #8 · answered by Mike 1 · 0⤊ 0⤋
You can be approved for a lot more than you can pay.... remember, they take your income BEFORE taxes, and they don't consider any other bills. So you have to figure on your own what other bills you have (insurance, phone, electric, heat, etc.) and your TAKE-HOME pay before you can figure what you can spend.
2007-02-20 07:01:57 · answer #9 · answered by Just tryin' to help 6 · 0⤊ 0⤋
its generally 4-5 times. u can also take more if u convince the lender that u can repay later.
2007-02-23 00:09:42 · answer #10 · answered by bidia 3 · 0⤊ 0⤋