First Time Buyer Question - How much will they lend me?

DopeTech

I'm 26 and have been saving for the last few years, looking to move out of the parents place next year. I figure I will have about 20k saved by then. My annual salary at the moment is 22k net. Its a contract job but hoping to pick up something permanent in the next few months.

I read that the bank will lend you up to 3.5 times your yearly net income. Say I get a permanent job even on 24k a year. What are the banks likely to lend me? I have no other loans, never missed a payment on any previous ones I did have, my bank account looks healthy and I have a standing order set up to transfer money into a savings account weekly. I also often top this up if I have don't spend much in the week.

Ideally I'd like to buy a house in the Dublin commuter belt but if the banks won't lend me enough I will have to rethink and maybe buy an apartment instead.

mulbot

FrostyJim wrote: »

I'm 26 and have been saving for the last few years, looking to move out of the parents place next year. I figure I will have about 20k saved by then. My annual salary at the moment is 22k net. Its a contract job but hoping to pick up something permanent in the next few months.

I read that the bank will lend you up to 3.5 times your yearly net income. Say I get a permanent job even on 24k a year. What are the banks likely to lend me? I have no other loans, never missed a payment on any previous ones I did have, my bank account looks healthy and I have a standing order set up to transfer money into a savings account weekly. I also often top this up if I have don't spend much in the week.

Ideally I'd like to buy a house in the Dublin commuter belt but if the banks won't lend me enough I will have to rethink and maybe buy an apartment instead.

Yea,three and half times is the amount they will loan you, I'm in middle of getting myself sorted for a mortgage

L1011

On 24k you are going to have serious trouble getting enough to buy even a 1 bed apartment in a shady area - and they aren't going to use up an exemption for you. I would not recommend looking to move out to the sticks for less either though.

DopeTech

L1011 wrote: »

On 24k you are going to have serious trouble getting enough to buy even a 1 bed apartment in a shady area - and they aren't going to use up an exemption for you. I would not recommend looking to move out to the sticks for less either though.

Well i was looking on myhome.ie and there is the odd house for about the 85k mark out in meath/kildare. Would mean an hour commute to work every day but i wouldn't mind that too much.

KlausFlouride

Speak to a bank, (doesn't really matter which one, they all have the more or less the same rules). They'll go through the numbers with you and explain how it works and give you an idea of what you should do in the meantime to maximise the amount they'll lend. They are unlikely to lend to you if you're in a contract role, so bear that in mind.

L1011

FrostyJim wrote: »

Well i was looking on myhome.ie and there is the odd house for about the 85k mark out in meath/kildare. Would mean an hour commute to work every day but i wouldn't mind that too much.

They're usually that price for a very good reason! And possibly unmortgageable. Anything with "in need of renovation" in the ad will require proof of funds to renovate, for instance.

Athy is about the only place that consistently has houses that cheap. The commute is terrible and the town is worse.

DopeTech

KlausFlouride wrote: »

Speak to a bank, (doesn't really matter which one, they all have the more or less the same rules). They'll go through the numbers with you and explain how it works and give you an idea of what you should do in the meantime to maximise the amount they'll lend. They are unlikely to lend to you if you're in a contract role, so bear that in mind.

Yeah i'm looking for a permanent role at the moment. Think i will go in for a chat this summer and talk it through with them.

KlausFlouride

It's a good way to get a more concrete number. And they like to see things like regular savings and minimal debts. Part of the process is a mathematical equation, income - outgoings, does that cover the loan + stress % if interest rates go up. Also bear in mind they will ask for six months statements & credit cards, so keep those clean in terms of anything that would give them doubts (online gambling) and so forth.

Baby01032012

Hi OP,

I think it's 3.5 gross but I could be wrong.

However the point I want to make is you might not mind the commute now or even for next few years. Your young with no ties to be home by particular time in evening. When you want to go for a few after work or meet friends in town how are you going to get home? Also say in 5 years and in relationship or more and thinking of getting home together - this will be a milestone around your neck, you'll have ploughed all your savings into. Also by then you'll be sick of commute, trying to fit time around friends or family.
Build on your savings invest well and put mortgage on back burner.
Also You've got savings because you live at home. Banks also want to see proof that you've been living independently paying rent and bills and still managing to save.

OfflerCrocGod

It's based on your gross income.

mulbot

OfflerCrocGod wrote: »

It's based on your gross income.

+1,three and a half times that figure is what they base it on.