Worked Example

John and Mary work in Peterborough.  John earns £31,000 p.a. and Mary earns £29,000 p.a.  They do not own their own home and John pays off £50 per month towards his old student loan and Mary pays £100 per month towards her store card balances.

They can borrow as follows:

Total annual income = £31,000 + £22,000 = £60,000.

Total monthly income = £5,000.

Total monthly outgoings = £50 + £150 = £150

Total net monthly income = £5,000 - £150 = £4,850.

Now do not worry abut the fact that they do not factor in to account your net income (i.e. after tax) or they do not take in to consideration any other living costs such as food etc.  Our chosen lender works on gross income and financial loan commitments.  That's it.

So annual income for lending purposes is £4,850 x 12 = £58,200

Thus the amount they are willing to lend to you is:

£58,200 x 4.1 = £238,620.

So if we were to gross up this amount to factor in the 15% we would perform the following calculation:

£238,620 divided by 0.85 = £280,729.

So for those who are not mathematically minded and rounding the numbers you could shop for:

Properties up to the value of £280,000 at 15% discount.

So you should shop for properties that you think would value up at £280,000 (rounding down £280,729) but you can get for roughly £240,000 (rounding up £238,620).

So if you see a property advertised for £200,000 and you know is worth £250,000 then you know you could go for it even if you did not have a deposit.  This is because it is below market value enough (i.e. greater than 15%) so you could use our scheme to acquire it.

Or if you see a property for £250,000 and you negotiate the price down to £200,000 and the property will value up at £250,000 then you can also get this property.

The good thing is the more below market value the more cash you get back.  So if you do get the property at 20% below market value then you will get this 5% back as a lump sum.  You can use this to pay your solicitor fees, stamp duty and even some moving in furniture!

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