Mortgage broker - a necessity?

mendonca

Is there an easy formula/ratio to determine the highest mortgage possible for your current salary per annum? Or is it based on your past xx payslips? 

golfaddick

mendonca said:

Is there an easy formula/ratio to determine the highest mortgage possible for your current salary per annum? Or is it based on your past xx payslips? 

As a general rule of thumb the maximum you can borrow is 5 x income, although that is usually for high earners and/or specialist professions (doctors, lawyers etc).

However most lenders max is 4.5 - 4.75 x income. Then you have to factor in any outstanding debts such as car loans or credit card payments. Also if you have dependants (children under 18) then this will be factored in, as well as any child care costs, nursery/ school fees as well as maintenance payments.

Most lenders have an online calculator that you can use in the first instance......or just use your friendly broker...😉. 

My first question I ask is to look at the last 3 months payslips (as this is usually the minimum requirement) and its surprising how many people don't know their exact salary (which could include bonuses and overtime). 

mendonca

Thanks Golfie. Myself and friends are all in slightly different situations but a common theme seems to be the modest salary but high amount in savings that can be used as a deposit. 

What are your Stock ISA amount classified as part of a mortgage application? Obviously they do not bring guaranteed or fixed income.

Covered End

So how does it work re commission? 
Let's say your basic is £26K, plus £13K comm (which is regular going back a few years)? £39k in total. How much could you borrow please? (Asking for a friend). 

carly burn

golfaddick said:

mendonca said:

Is there an easy formula/ratio to determine the highest mortgage possible for your current salary per annum? Or is it based on your past xx payslips? 

As a general rule of thumb the maximum you can borrow is 5 x income, although that is usually for high earners and/or specialist professions (doctors, lawyers etc).

However most lenders max is 4.5 - 4.75 x income. Then you have to factor in any outstanding debts such as car loans or credit card payments. Also if you have dependants (children under 18) then this will be factored in, as well as any child care costs, nursery/ school fees as well as maintenance payments.

Most lenders have an online calculator that you can use in the first instance......or just use your friendly broker...😉. 

My first question I ask is to look at the last 3 months payslips (as this is usually the minimum requirement) and its surprising how many people don't know their exact salary (which could include bonuses and overtime). 

 That's not your exact salary though, is it?

MrOneLung

If you show regular bonus/commission that is taken into account 
mine was average of last 12 months 

golfaddick

MrOneLung said:

If you show regular bonus/commission that is taken into account 
mine was average of last 12 months

This usually.  Some lenders will take 100% of an annual bonus if it can be shown to be roughly the same over the last few years.

golfaddick

carly burn said:

golfaddick said:

mendonca said:

Is there an easy formula/ratio to determine the highest mortgage possible for your current salary per annum? Or is it based on your past xx payslips? 

As a general rule of thumb the maximum you can borrow is 5 x income, although that is usually for high earners and/or specialist professions (doctors, lawyers etc).

However most lenders max is 4.5 - 4.75 x income. Then you have to factor in any outstanding debts such as car loans or credit card payments. Also if you have dependants (children under 18) then this will be factored in, as well as any child care costs, nursery/ school fees as well as maintenance payments.

Most lenders have an online calculator that you can use in the first instance......or just use your friendly broker...😉. 

My first question I ask is to look at the last 3 months payslips (as this is usually the minimum requirement) and its surprising how many people don't know their exact salary (which could include bonuses and overtime). 

 That's not your exact salary though, is it?

Which is why I ask to see 3 months payslips. Lots of lenders will use overtime / bonus /commission.

I have been dealing with doctors for 20 years & they have one of the most complicated ways of being paid. Junior doctors get unsocial hours pay & before the EU working time directive was introduced most junior doctors earnt between 40%-100% on top of their basic pay. Consultants have Additional Programme hours on top of their basic pay alongside out of hours & Clinical Excellence Awards. A hospital Consultant with a basic pay of £90k could be earning around £120k with the other payments added in. Makes a difference with a 5x income multiple. 

golfaddick

mendonca said:

Thanks Golfie. Myself and friends are all in slightly different situations but a common theme seems to be the modest salary but high amount in savings that can be used as a deposit. 

What are your Stock ISA amount classified as part of a mortgage application? Obviously they do not bring guaranteed or fixed income.

Lenders dont usually take anything into account apart from your income, debts & your deposit. It doesn't matter if you have £50k worth of ISA's (that presumably you aren't using as your deposit) as they don't even ask to see it. The only difference it will make is if you have outstanding debts as you may well want to use them to pay down your debts......even if they are on 0% cards.

carly burn

golfaddick said:

carly burn said:

golfaddick said:

mendonca said:

Is there an easy formula/ratio to determine the highest mortgage possible for your current salary per annum? Or is it based on your past xx payslips? 

As a general rule of thumb the maximum you can borrow is 5 x income, although that is usually for high earners and/or specialist professions (doctors, lawyers etc).

However most lenders max is 4.5 - 4.75 x income. Then you have to factor in any outstanding debts such as car loans or credit card payments. Also if you have dependants (children under 18) then this will be factored in, as well as any child care costs, nursery/ school fees as well as maintenance payments.

Most lenders have an online calculator that you can use in the first instance......or just use your friendly broker...😉. 

My first question I ask is to look at the last 3 months payslips (as this is usually the minimum requirement) and its surprising how many people don't know their exact salary (which could include bonuses and overtime). 

 That's not your exact salary though, is it?

Which is why I ask to see 3 months payslips. Lots of lenders will use overtime / bonus /commission.

I have been dealing with doctors for 20 years & they have one of the most complicated ways of being paid. Junior doctors get unsocial hours pay & before the EU working time directive was introduced most junior doctors earnt between 40%-100% on top of their basic pay. Consultants have Additional Programme hours on top of their basic pay alongside out of hours & Clinical Excellence Awards. A hospital Consultant with a basic pay of £90k could be earning around £120k with the other payments added in. Makes a difference with a 5x income multiple. 

 Sorry mate. But what use is that of I get my bonus in April but look to move around November/December? You wouldn't see it on the wage slips.

I'm always a bit guarded when including overtime/bonuses. Overtime is not contractual in my experience so stating it as guaranteed is a bit misleading I would suspect.
I get people want to give themselves more clout when trying to get a lender to lend and when you see the price of houses today many mortgages must be eye watering. I generally struggle to see how people are affording them.
Even someone on £100 k plus is giving the tax man a fair chunk of that. But people do.
I often think I made a mistake being prudent when getting a mortgage. Others seem to have loaded themselves up to the hilt and are still doing alright as far as I can see.

golfaddick

carly burn said:

golfaddick said:

carly burn said:

golfaddick said:

mendonca said:

Is there an easy formula/ratio to determine the highest mortgage possible for your current salary per annum? Or is it based on your past xx payslips? 

As a general rule of thumb the maximum you can borrow is 5 x income, although that is usually for high earners and/or specialist professions (doctors, lawyers etc).

However most lenders max is 4.5 - 4.75 x income. Then you have to factor in any outstanding debts such as car loans or credit card payments. Also if you have dependants (children under 18) then this will be factored in, as well as any child care costs, nursery/ school fees as well as maintenance payments.

Most lenders have an online calculator that you can use in the first instance......or just use your friendly broker...😉. 

My first question I ask is to look at the last 3 months payslips (as this is usually the minimum requirement) and its surprising how many people don't know their exact salary (which could include bonuses and overtime). 

 That's not your exact salary though, is it?

Which is why I ask to see 3 months payslips. Lots of lenders will use overtime / bonus /commission.

I have been dealing with doctors for 20 years & they have one of the most complicated ways of being paid. Junior doctors get unsocial hours pay & before the EU working time directive was introduced most junior doctors earnt between 40%-100% on top of their basic pay. Consultants have Additional Programme hours on top of their basic pay alongside out of hours & Clinical Excellence Awards. A hospital Consultant with a basic pay of £90k could be earning around £120k with the other payments added in. Makes a difference with a 5x income multiple. 

 Sorry mate. But what use is that of I get my bonus in April but look to move around November/December? You wouldn't see it on the wage slips.

I'm always a bit guarded when including overtime/bonuses. Overtime is not contractual in my experience so stating it as guaranteed is a bit misleading I would suspect.
I get people want to give themselves more clout when trying to get a lender to lend and when you see the price of houses today many mortgages must be eye watering. I generally struggle to see how people are affording them.
Even someone on £100 k plus is giving the tax man a fair chunk of that. But people do.
I often think I made a mistake being prudent when getting a mortgage. Others seem to have loaded themselves up to the hilt and are still doing alright as far as I can see.

Sorry, I should have been clearer. If you want to include your bonus then a P60 is useful to show the lender your last years earnings. A lender may request it anyway if your pay slips dont equate to what is being said. 

Ie. In your example you might show Oct, Nov & Dec payslips, all showing a gross basic salary of £3k pm.......but the year to date figure shows more pro data because (as you said) you got a bonus in April. A lender may query this & want to see all payslips for that financial year.

I have been doing this for almost 30 years & one thing is for certain, you never know what a lender will ask for to confirm an income.

cafcfan1990

I think I'll be dipping into using a mortgage broker for the first time soon. Thanks for the thread, very helpful!

PrincessFiona

Anyone good any recommendations for a good mortgage broker. MSE advice is to use one

ForeverAddickted

I've been using L&C Mortgages online for the last couple of renewals - Everything done over the phone

SX_Addick

On a previous thread (can’t find it now) someone here recommended:

Marcus Beech - marcus@remortgage.com 023 8071 2202

Both my daughters have used him, over a number of years, including for sourcing mortgages for shared ownership. They both speak very highly of him and his colleague Ben, and whilst I’m sure others on this site are also very good, I doubt my daughters would go anywhere else for help and advice. 

Rob7Lee

PrincessFiona said:

Anyone good any recommendations for a good mortgage broker. MSE advice is to use one

I used @golfaddick - can't recommend him....... enough :-)