How do banks calculate max. mortgage offer?

Depends on age and other monthly loan repayments. If you are under 30 with no loans then will qualify for 5 times salary.

40 and no loans. Residence I'm in has no mortgage on it.

Any ideas what x times I'd get if I wanted to purchase/renovate a second property?
 
Paddy - I posted earlier in this thread (28/11) - I'd suggest stay clear of multiples - I'm assuming you are in PAYE type employment, with reasonably regular wages (weekly/monthly).

I'm not asking you to answer these questions on this forum, but suggest you do you so in your own time ...

a) Net take home pay - say monthly

b) Fixed amounts that have to be paid from same - e.g. car loan, petrol - exclude rent if your plan is to live in the property you intend to purchase - include any other fixed amounts (what I'm getting at here is lifestyle regular spending)

c) Analyse your circumstances - married/single, dependants - set aside any fixed costs here (leave yourself/selves enough to live on)

d) Set aside a 'fixed' amount, include some level for contingencies.

When you have all this done - see how much you have left over - that's the amount you have for your mortgage/life cover - use this figure to calculate what mortgage amount it would buy you. Then see what that mortgage would cost you if rates rose by say 2% - adjust accordingly.

An interesting test (on the basis you don't plan to purchase something tomorrow morning), would be to set this amount aside for the next few months in to a savings account - it will prove to yourself how much you can really afford and can you manage it.

Apologies if the above sounds like a lecture - I don't mean it to be.

I hope it's of some help.

Regards,


BM
 
Bank Manager ~ that's a concise and welcome reply.

I am in P.A.Y.E. employment, no loans, no dependents and can live quite modestly. I am a regular saver in the hope of purchasing that retirement property:

http://www.askaboutmoney.com/showthread.php?t=98354

As a teacher .... I'm used to lectures! And I'm partial to the bullet pointed/numbered lists myself.

Thanks again!
 
Paddy,

I see what you're planning now ...

Best of luck with it - a lot of my last post won't apply directly to you, but hopefully it may help - as I say it's just the process I subject my customers to!

If you are going for the renovate option - build in a big contingency - it always seems to work out that way ....

Best of luck in your search ....

Regards,


BM
 
Dont forget that the amount you can borrow also depends on if you are purchasng the property as an Investment property or as your private residence. If Investment property max mortgage is 85% of the purchase price and you can borrow up to 92% if living in property.
Spin
 
Paddy,

I see what you're planning now ...

BM


Thanks BM ... I've been there and done that with the new car, the gadgets etc. The mortgage on my current home was paid off about 3 years ago. My plan (dream or not) is to get that second property sorted and paid off as quickly as possible .... take retirement as close to 56 as possible and get out of the rat race.

Your post has helped to focus me. Thanks for that.
 
Dont forget that the amount ..........
Spin


In my case ... investment for my retirement .... I'd probably not install tenants in any property in the short-term and would probably consolidate my finances by selling the residence I'm currently in at a later stage.

I'd get out of Dodge totally when I'd retire!