Mortgage Clinic: 'Can a big deposit make up for a low income?'


'I have about £100,000 to put down as deposit on a house, and would like to borrow another £100,000. The trouble is, my income is low: I earn £12,500 a year on a doctoral studentship, though at least it's non-taxable. Can the large deposit make up for my low income?'

CS, Leeds

If you want to borrow £100,000, you would normally need an income of £25,000 to £33,000. Mortgage companies will lend between three and four times your salary.

But it should be possible to find a lender who will arrange a mortgage for you. You will be asking for a mortgage for half the value of the property, making you a low risk. It will be a plus if your salary is likely to rise once you finish your studentship.

A bank or building society might still reject you because you fall so far outside their lending rules. You will have to go to a mortgage broker who handles unusual cases.

"You have very good negotiating power, so use a broker who can speak directly to an underwriter and negotiate outside of the lender's normal criteria for you," says Katie Tucker, technical specialist at mortgage brokers John Charcol.

The broker can talk directly to the bank's head-office underwriters, who make the lending decisions. A good broker knows which lenders are likely to be sympathetic.

According to Tucker, Basinghall and Clydesdale Bank underwrite cases individually, so can be more flexible. Accord and Intelligent Finance will "gross up" your tax-free bursary to an equivalent, pre-tax salary. This means you will be asking for around six, rather than eight, times your salary.

You could also ask a parent or relative to guarantee your mortgage. This will increase the number of institutions that will consider you, and boost your chances of finding a competitive rate.

As your studentship is for three years, Tucker also suggests looking at three-year fixed or discount mortgages. A fixed rate might not be the cheapest, but you will know how much your repayments will be. You could then remortgage, and your higher income should allow you to find a better deal.

But before you decide on the mortgage type, you should go through your finances and your prospects with your financial adviser.

Your doctorate should boost your earnings, but you should consider what you would do if you do not find a job immediately after graduation, or if a job means moving to a different part of the country. It might be more flexible for you to rent – and keep the money you have saved in a high-interest account – until you know your future plans.

Send us your questions and you could receive £50 to spend at Amazon

Foxed by jargon? Confused by all the options? E-mail a question to mortgageclinic@independent.co.uk. We will not reveal your identity, and we cannot give specific advice.

If your question is printed, you'll receive a £50 voucher from Amazon.co.uk, so you can kit out your home with anything from a lawnmower to an espresso machine. www.amazon.co.uk/homeandgarden

News
people And here is why...
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
Voices
voicesBy the man who has
Sport
Arsene Wenger tried to sign Eden Hazard
footballAfter 18 years with Arsenal, here are 18 things he has still never done as the Gunners' manager
PROMOTED VIDEO
Life and Style
The new Windows 10 Start Menu
tech
News
business
Arts and Entertainment
Kristen Stewart and Robert Pattinson star in The Twilight Saga but will not be starring in the new Facebook mini-movies
tvKristen Stewart and Stephenie Meyer will choose female directrs
News
William Hague
people... when he called Hague the county's greatest
News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete today
News
peopleStella McCartney apologises over controversial Instagram picture
Arts and Entertainment
Twerking girls: Miley Cyrus's video for 'Wrecking Ball'
arts + ents
Arts and Entertainment
Ed Sheeran performs at his Amazon Front Row event on Tuesday 30 September
musicHe spotted PM at private gig
News
people'I’d rather have Fred and Rose West quote my characters on childcare'
Arts and Entertainment
There has been a boom in ticket sales for female comics, according to an industry survey
comedyFirst national survey reveals Britain’s comedic tastes
News
Kim Jong Un gives field guidance during his inspection of the Korean People's Army (KPA) Naval Unit 167
newsSouth Korean reports suggest rumours of a coup were unfounded
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Trust Accountant - Kent

    NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

    Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

    £18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

    Law Costs

    Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

    Day In a Page

    Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

    The children orphaned by Ebola...

    ... then rejected by surviving relatives over fear of infection
    Pride: Are censors pandering to homophobia?

    Are censors pandering to homophobia?

    US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
    The magic of roundabouts

    Lords of the rings

    Just who are the Roundabout Appreciation Society?
    Why do we like making lists?

    Notes to self: Why do we like making lists?

    Well it was good enough for Ancient Egyptians and Picasso...
    Hong Kong protests: A good time to open a new restaurant?

    A good time to open a new restaurant in Hong Kong?

    As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
    Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

    Paris Fashion Week

    Lagerfeld leads a feminist riot on 'Boulevard Chanel'
    Bruce Chatwin's Wales: One of the finest one-day walks in Britain

    Simon Calder discovers Bruce Chatwin's Wales

    One of the finest one-day walks you could hope for - in Britain
    10 best children's nightwear

    10 best children's nightwear

    Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
    Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

    Manchester City vs Roma

    Five things we learnt from City’s Champions League draw at the Etihad
    Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

    Trouble on the Tyne

    Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
    Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

    Isis an hour away from Baghdad -

    and with no sign of Iraq army being able to make a successful counter-attack
    Turner Prize 2014 is frustratingly timid

    Turner Prize 2014 is frustratingly timid

    The exhibition nods to rich and potentially brilliant ideas, but steps back
    Last chance to see: Half the world’s animals have disappeared over the last 40 years

    Last chance to see...

    The Earth’s animal wildlife population has halved in 40 years
    So here's why teenagers are always grumpy - and it's not what you think

    Truth behind teens' grumpiness

    Early school hours mess with their biological clocks
    Why can no one stop hackers putting celebrities' private photos online?

    Hacked photos: the third wave

    Why can no one stop hackers putting celebrities' private photos online?