How much can i borrow on my next property?

[Avalonia]

Always fascinated to know someone's day rate but we also need to be told about your warchest , plan b and now IQ too

[Fandango]

So you want to borrow £540k with 25% deposit ie for a property ~£720k??

If that's the case I've got to be honest i think that is a bit of a stretch for £400/day! repayments are going to be ~£2200-£2800/month and considering rates are at an all time low the'yre only going to go up over time.

If you want to stay under the higher tax bracket your lookign at a takehome of ~£3500/month so that would leave you with ~£700/£1000 month to pay all your bills and live on otherwise you're going to have to constantly go into the higher tax bracket, which is fine if thats what you want to do.

[jamesbrown]

So you want to borrow £540k with 25% deposit ie for a property ~£720k??

Anyone considering that sort of leverage probably hasn't lived long enough to experience: a) a different interest rate environment; or b) a housing market crash. Borrowing that multiple of a day rate is quite likely to end in tears.

[ChimpMaster]

When I was looking last summer, Halifax gave me a decision in principle of just over 1000*daily rate. I don't know how they came up with that figure though.

Wow to think, if you have a billable rate of £1,000 a day, you could borrow £1m !!!

Damn, I'd do that just to have £1m sitting in my account for a laugh. Imagine showing your mates that g


EDIT:

At Halifax's 1.59% rate the monthly interest payable would be just £1300. So with the £1m you could buy a property portfolio generating a monthly income of around £10000 (£100k down on 10 houses, each priced at £300k and providing a rental income of £1500/month each, less mortgage interest costs of £500/month per house at 3% financing cost). So profit per month would be £8700, before incidental/running/maintenance costs. Boom.

A 2% rise in BoE rates would put the £1m financing cost up to £3000/month and the 10 houses financing costs up to a total of £8300, resulting in a much reduced profit of £3700 a month.

[northernladuk]

Wow to think, if you have a billable rate of £1,000 a day, you could borrow £1m !!!

Damn, I'd do that just to have £1m sitting in my account for a laugh. Imagine showing your mates that

There is a major flaw in your logic but get the reasoning

[electronicfur]

A few lenders will also consider retained profit if they feel the case is strong enough.

Which lenders will consider retained profit? I'm looking to get a mortgage soon and this would make a big difference for me. I need a lender who will take into account my company's share portfolio.

[Martin@AS Financial]

Which lenders will consider retained profit? I'm looking to get a mortgage soon and this would make a big difference for me. I need a lender who will take into account my company's share portfolio.

Woolwich are the main lender who will consider retained profit in a limited company. This is on a case by case basis though.

[TheFaQQer]

The usual sales pitch says 1200 times my day rate, but I suspect that there is a wider market if i have a 25% deposit and 4 years of company accounts. For reference my usual day rate is 400 and under the 1200 rule i can only borrow 480k when i need 540k for my dream home.

I know i could try and get a better day rate, but i'd like to see if anyone else has used a 'whole of the market' mortgage broker instead of a 'contractor broker'.

Wow - how times have changed.

Last April, you had only one year's accounts and now you have four!

Last April, you used Contractor Financials to get a mortgage. What figure did they use then?

[Taita]

As a contractor, you are in a very fortunate position. Generally speaking, lenders do not understand self employed clients.

However, as a contractor, you get 2 bites of the cherry when it comes to applying for a mortgage. You can either work off your salary and dividend or salary and net profit depending on which lender you approach. A few lenders will also consider retained profit if they feel the case is strong enough.

Obviously, there is also the more contractor friendly route which works off the daily rate which you have already discussed.

Sorry Martin but there have been lenders who understand self-employed clients ever since there have been self-employed-would-be-borrowers. I know of contractors who obtained conventional mortgages in the late 70's. It is all to do with how the case is presented to them......hence the 'specialist' brokers who have abounded since those days.

[MarillionFan]

The usual sales pitch says 1200 times my day rate, but I suspect that there is a wider market if i have a 25% deposit and 4 years of company accounts. For reference my usual day rate is 400 and under the 1200 rule i can only borrow 480k when i need 540k for my dream home.

I know i could try and get a better day rate, but i'd like to see if anyone else has used a 'whole of the market' mortgage broker instead of a 'contractor broker'.

Pfffff. My bank offered me 1.2 Million. Are you buying a one bedroomed flat?