Mortgages?

I’m not looking to get a mortgage just yet but I do enjoy looking at houses online and have tried to get a general idea of how it works. I put mine and my boyfriends wages into a mortgage calculator to get a general idea and it gave us a reasonable sum, however I checked with the bank and the sum was almost half of what the calculator said. I looked it up and found out most places will lend you up to 4.5/5 times your wage which is what the mortgage calculator said. I also went on a website to compare some mortgages and put into the ‘house price’ section the amount that the original mortgage calculator said we could borrow with a 10% deposit but when I looked further into it it said that we did not earn enough to borrow that amount. I’m just trying to get an idea of how it works as I just can’t seem to get my head around it as different places are saying different things, can anyone try to explain this to me in laymen terms so I can get a better understanding of how it works. 

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  • 7 months ago
    Favourite answer

    Unless you have excessive debt, the rule of thumb is that you will be approved for 3X your annual income.

    = credit score, employment, etc play a part in getting approved (yes approved, no not approved); but 3X annual income is the amount of the loan, minus excessive debt.

  • 7 months ago

    Not a good idea to purchase a house with a boyfriend. Wait until you are married. Or, one of you should purchase it and the other pay rent to live there with the owner.

  • Anonymous
    7 months ago

    Some calculators don't account for property taxes, insurance, PMI and so forth. Those three combined are a lot of your monthly payment.

  • Anonymous
    7 months ago

    I don't understand what you are are wanting to know about "how it works".    Do you have a specific question?

    "most places will lend you up to 4.5/5 times your wage"    Nope.

    Most mortgage calculators are very, very simple and do not factor in many of the variables such as what your total loan payment would be (including property tax, homeowner's insurance, lender's mortgage insurance if you're paying less than 20% deposit).   Your payment will be quite a bit higher than whatever the mortgage calculator says.   Mortgage calculators also don't generally take into consideration your debt, credit score, income history, etc. 

    A word to the wise...get married before buying real estate together.  If things go south, you will not have the legal benefit of a divorce proceeding to sort out what happens and who gets what.   I know you think that will "never happen", but hey, even half married couples think it will never happen and yet it does.

    Here are a few things to think about:

    What happens if you want out?    You won't qualify for an apartment unless you make a ton of money because you already owe this mortgage payment. 

    What happens if he wants out?   Let's say he moves out and stops paying his share.   Can you afford the whole mortgage?    And are you aware that if you pay the whole mortgage for the next 20 years, he STILL is half-owner and gets half when you sell?

    Or even worse, let's say he doesn't move out but moves in his new gf.   What are you going to do?   You can't tell the owner he can't move in his new gf. 

    What form of property ownership are you considering?  There are different kinds of ownership that are vastly different.    What happens if he is killed in a car crash?   Who gets his half of the house?    Don't assume it's you especially if you're not married.    

    What if your bf is sued or doesn't pay his taxes and a lien is put on the house? 

    What happens if you want to spend 40k remodeling and your bf doesn't want to pay his half as half owner?    What happens when roof is leaking but your bf would rather spend his money on a new car than a new roof?

    I'm always amused when people who have specifically chosen NOT to blend their financial/legal lives through marriage think it's a good idea to buy a house together.  

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