Size of Mortgage

What Amount Size Mortgage Should You Get?

Three Major Factors to Consider on The Size of Your Mortgage

You are all excited about owning a new home and you are prepared to spend a boatload of money to get the house you want. What about the size of your mortgage is it too big? Here are a few things to consider before going out and buying that fancy home. The first question you need to ask yourself is how much money do you have at your disposal for putting down a down payment and for those pesky closing costs?

Do you have an idea how much your lender will approve you for? If so how much will it cost? Will it be enough to satisfy my dream house before you venture out and start looking at homes, you should try to get a reasonably good idea of how much you can afford. You will also need to figure out how much you can comfortably afford to spend on mortgage and interest payments.

A down payment is usually between five and twenty percent of the total value of the home. So if you have a home worth £100,000 you will be expected to put down a minimum of £5,000. The closing costs will generally add another two to six percent of the loan.

For example let’s say you make £40,000 per year which works out to £3,334 per month. Now you walk up to an estate agent and suggest you really like the £125,000 flat. Let’s say you were able to afford a 10% down payment which is £12,500.00. Your total mortgage value would be £112,500.00. Now lets see how much the cost would be.

If you were approved a loan for a 30 year time period at a modest 5.75% you would end up paying £675 per month which is about 20% of your monthly income. If we were to theoretically believe that your other debts are £400 per month you would still be under the 36 percent threshold. If you want a £175,000 loan the chances of being approved are very slim. Lenders run a business and want to make sure they are also getting a good deal by having a responsible client. So they have to be responsible by not handing out outrageous loans to people who they know can’t afford them.

If you would like to know how much you can be approved for just fill out our application. We will give you a free no obligation quote.

To find out how much your new mortgage will cost click quote and apply button below to fill out our online application form or give us a call on 07490 – 227929.

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