mortgage limit

[polly1]

i have 20 grand deposit and earn around 20 grand per annum . What price can i expect to stretch to price wise?

[Ethel]

�90,000.

Being 3.5 x your salary = �70,000 plus your deposit.

You will need to pay legal fees and so on too.

Some lenders will lend much more, but I am fairly confident interest rates will continue to rise over the next 2 years, so it could prove an expensive disaster if you overstretch yourself.

[EverClean]

Ethel is correct. There are lenders that will stetch up to 5.5 or 6 times your income plus your deposit but you need to consider how affordable this mortgage will be throughout the term. Even getting a long term fixed rate can be misleading as if interest rates rise significantly while you are on a fixed rate, the jump in monthly payment when your fixed rate deal is finished could be devestating.

[polly1]

thank you - thats pretty much what i thought although i have been told stretching myself is worth it as there's really no point in buying a property that we still be worth very little when i come to sell it in the future.

[EverClean]

the bottom end of the market is moving faster than any other part at the moment, so you'll see a higher percentage gain over time with a smaller property at the moment.

[Ethel]

Polly - even less point buying a house that you can't afford. Mortgage misery is no fun at all, and everything costs more than estimated.

Gas and electric are rising alarmingly. As is petrol. Don't forget the dreaded council tax.

You need a life as well. :)

And EverClean is right - the 'cheaper' end of the market is seeing the highest per centage rises, and this will improve with the high demand for that sort of housing.

The smart thing is to buy a house you can afford, and make additional payments as when you can afford them, paying the mortgage off quicker. Or at least reducing it, so when you come to move up the ladder you will have more equity in the property.

Good luck!