House Buying Process

The first step towards buying your home is to find out exactly how much money you can borrow to buy your home. This is worked out according to your income, using certain income multiples. These are usually three times your annual earnings before tax and National Insurance is taken away. If it is to be a joint loan, the lender is likely to offer you three times the annual income of the highest earner plus one times second income, or two and a half times the total joint income. Other payments such as commission or overtime may be taken into consideration by the lender but it tends to depend on how regularly you receive them.

Approaching a lender at this stage is a good idea because many will issue a mortgage certificate stating, subject to a valuation and status, that you are guaranteed a mortgage up to a given amount based on your stated income. Remember that you need to have saved up a significant deposit for most lenders to consider you at the moment. Before the ‘Credit Crunch’ you could get away with just a 5 per cent deposit or, in some cases, no deposit at all! This has now changed but you can still get mortgages with a 10-15 per cent deposit. The more you can put down as a deposit the better as you’ll get a greater choice of mortgages.