Photo credit by 401(K) 2013
Getting a mortgage can be really confusing and for first timers it’s a real mess. But sometimes it’s really essential you find out how much you will get as a mortgage so that you can start selecting a house based on that. Previously the criteria for the mortgage levels were pretty simply most banks granted a 2.75 times more over the salary for people or couple who were working and had a regular income. But with the changing market, house prices have sky rocketed turning that calculation on its head! As a result mortgage lenders now have a different set of criteria to decide how to set your mortgage limit and here is how it works.
- Your earnings and what you can afford- are one of the prime criteria for the mortgage lenders to decide how much money to give you. You can get up to three times your salary or even four times your salary if you have a good mortgage lender. If you are buying with a partner and a friend then you may have to take the following calculation into account of 2.5 times your combined salaries previous to tax. Or it may also be calculated as 3 times the higher salary prior to tax, including 1 times the lesser payment prior to tax. If you are self-employed the situation is slightly different and you have to produce your business accounts and the mortgage is calculated as your net income.
- You may also have to pay off one-time fees for a whole lot of different conditions like administration and solicitor fees as well as registration and the stamp duty. A few hidden fees which can cut into the amount of mortgage you will get are solicitors’ fees for checking out the property and drawing up contracts, land registry fee, builders’ fees, building insurance, mortgage payment protection insurance, content insurance, and a whole lot more.
- Property evaluators will also evaluate the property you are planning to buy as many lenders limit the amount they will lend to certain types of homes. For example, many lenders limit the amount they spend on timber framed houses.
- Deposits are an important part of the mortgage scheme. You will have to provide lenders with at least 5-10% of the mortgage value as a deposit and a few good mortgage lenders can get you up to 100% of the total price of the house you want to purchase. But usually first time buyers are only provided up to 95%.
- One good way to find out accurately how much you can get on your mortgage is to use the many mortgage calculators available on line. These mortgage calculators are designed to find out how much you can get as your mortgage amount. But please do be aware that even though you may get a larger amount on your mortgage do not take on more than 25% of your income as a loan as this turns out very difficult to repay.