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Mortgage offer really low

(32 Posts)
geeandfeesmum Fri 07-Aug-15 09:21:23

Ok, we live in a small 2 bed property that is no longer suitable for our needs. We were looking at buying a bigger place in a different area. We applied for a mortgage and we were offered £11k!!

So even our current mortgage company (whom we have always paid in a timely manner) wouldn't give us a mortgage for the property they have already given a mortgage for never mind a bigger one.

DH is self employed but this was the same even before that. I am currently a carer for one of our children but this was the same when DH and I were both in fairly well paid jobs.

I feel stuck in our tiny little house. I realise people cope but we genuinely need space for one of our children as she has meltdowns that mean she needs to be in her own space. Obviously, that isn't the mortgage companies problem but I just feel so trapped.

Does anyone know of anything we can do?

addictedtosugar Fri 07-Aug-15 09:29:52

Go and see a broker. They will be able to advise you without too many applications

Good luck.

SomewhereIBelong Fri 07-Aug-15 09:31:48

I would go to a broker - they will see beyond the "self employed and carer for child with SN - used to be in well paid jobs, aren't now" thing - I'm afraid the rules have got tighter - especially on the high st banks now that interest rates are due a hike....

Babyroobs Fri 07-Aug-15 09:54:16

The lending criteria have become a lot stricter in recent months, as pp says a broker might be worth a try.

geeandfeesmum Fri 07-Aug-15 10:10:35

Thanks for the reply. Is it possible then that a broker may be able to find something more than the laughable £11k we were offered.

It's just so annoying. We got "on the ladder" with a house that wouldn't fit our needs for long but we thought being on the ladder would help us when it came to moving. Then everything changed and now it doesn't count for anything. Except for the fact that because we are not first time buyers we don't qualify for any of the help that is out there.

SantasLittleMonkeyButler Fri 07-Aug-15 10:31:56

It'll be to do with the severe tightening up on mortgage lending criteria over recent years I should think.

How much do you need to borrow? If you need a relatively low amount, then a broker may well be able to find a deal for you. If it's a large amount then would you be better off moving to a larger rented property & letting your house out to help fund it? Even if only for a year or two until you're better placed to get a new mortgage?

geeandfeesmum Fri 07-Aug-15 10:35:54

Yeah, that is what we are thinking at the moment. I just wondered if there were any other options out there for us as that is a last resort.

Thanks.

PeterParkerSays Fri 07-Aug-15 10:56:44

What sort of equity have you got in your current house? The higher a deposit you can contribute to a new propeerty, the better the mortgage offer you'll get.

Did the provider who offered £11k explain why they wouldn't go above that?

geeandfeesmum Fri 07-Aug-15 13:59:05

We estimate we would be looking at equity of around £10-£15k. We bought just before the market crashed so it has been negative for a long time but is finally coming back up.

No they didn't say. We actually did a few mortgage calculators though and that was the highest offer. When I was working and DH was employed rather than self employed, the highest offer was £37k, again a pointless figure.

SomewhereIBelong Fri 07-Aug-15 14:40:06

To be fair, I probably wouldn't lend you a lot either... <sorry> Unless that 10-15K equity is on a house worth 30-50k -

If you are looking to borrow say £100k at a good rate you need to have £30k deposit (or equity), £35k salary between you, no other debt. Doesn't matter if you know you can pay it back, they need to prove you can in their books.

Superexcited Sat 08-Aug-15 07:48:34

Can you port your existing mortgage to a bigger property in a slightly cheaper area? Or could you port your existing mortgage to a bigger property that is cheaper because it needs a bit of work? Many mortgages are portable so as long as you don't need additional borrowing you might be able to take your existing mortgage to a new property.
I am surprised that you have been offered a mortgage of £11k because most mortgage providers have a policy of the minimum mortgage allowed being £25k. Did they explain how they had arrived at the figure of £11k?

geeandfeesmum Sat 08-Aug-15 08:21:42

Thanks for the replies. No they did't say why. The £10-15K is on a property worth £80k. Can't get much more of a cheaper area than where we are and the area we are looking at is more expensive. I guess we are stuck with selling up and renting then. Thanks for the help though, I appreciate it.

throwingpebbles Sat 08-Aug-15 08:37:40

Could you keep your house and rent it out and then rent somewhere else for you? That way you stay on the ladder?

Baddz Sat 08-Aug-15 08:40:54

Have you tried London and country?

Baddz Sat 08-Aug-15 08:41:39

But...yes....the lending rules are much much stricter now.

Lightbulbon Sat 08-Aug-15 08:45:49

I wouldn't get the mortgage I got in 2006 now, even with a 50% higher salary!

We have gone down the landlord & renting route.

You need to clear any other debts and build up a big deposit I'm afraid.

Oliversmumsarmy Sat 08-Aug-15 08:48:15

Definitely look at renting your own house and then renting a bigger place yourself. Usually the cheaper the house the higher %age return you get for rental income. Ask a few of rental agents to come round and value the property to see how much it could rent for.

Oliversmumsarmy Sat 08-Aug-15 08:52:41

We are at the other end of the scale, perfect credit score, large equity in our house but can't get a mortgage because we are too old.

NoArmaniNoPunani Sat 08-Aug-15 08:55:20

I would suggest over paying your mortgage for a year or two to build up more equity

Artandco Sat 08-Aug-15 09:02:44

Well I can kind of see their point. You have a tiny equity, tiny deposit, and no fixed income, where do they think the money will come from?

How many children do you have? I would just move child with sensory issues into your bedroom, so it's free in the day from noise, and any other children in second bedroom

FunnyNameHere Sat 08-Aug-15 09:20:26

How big is your current mortgsge?

How long has your DH been self-employed? Most mortgage lenders need to see two good years' accounts, but three is better. How many has he got? Can your DH submit 2014/15 accounts to HMRC now so you have more years of accounts? I'm self-employed and got a good mortgage, but i had to use a broker.

Lots of companies will accept benefits (tax credits, child benefit) as income.

I wouldn't lose the mortgage you've already got! Don't sell, or you might never be able to buy again: saving up a huge deposit will take YEARS and renting is unstable. Could you borrow less and just extend your current house?

geeandfeesmum Mon 10-Aug-15 16:34:09

Thanks, well I guess we are just going to have to go down the rent and sell route. I have read that if you haven't owner a property for 3 years you are classed as a first time buyer. Despite everything the papers are reporting, it looks to me like they are the only people who can get a mortgage now anyway.

DD already sleeps in our room at night and spends her time in the day in there. The baby is currently in our room but will be moving into the other room with DS. I was just hoping that there was another alternative. I feel like jumping on the property ladder when we did in the cheapest property available was the worst decision we could have made. Sorry just having a bit of a pity party as DS currently goes to school in the area we are looking at and will have to move to our local senior school when the time comes. He finds it hard to make friends and quite frankly, the local school would destroy him. We applied for council housing but don't qualify as we don't have a good enough local connection even though most of our family lives there. The immediate family members that do haven't lived there long enough.

FunnyNameHere Mon 10-Aug-15 18:10:46

You just need to consult a mortgage adviser. Definitely don't sell before you've done that. Self-employed mortgages are really complicated!

When I did online calculators to see what I could borrow, I got results like £75-80k. When I did it through a mortgage adviser, and got advice on all the stuff I could put through as income (tax credits, maintenance, etc), and had my accountant do my HMRC forms, I eventually got a great mortgage for £144,000. On my own, as a self-employed person with quite a low income.

Also, mortgage advisers aren't expensive as they claim a fee from the mortgage companies.

Don't give up, sell up and mope. Please be proactive.

geeandfeesmum Mon 10-Aug-15 18:27:34

Thanks for all the advice. I will keep looking into my options.

Superexcited Mon 10-Aug-15 19:08:56

I absolutely wouldn't step off the property ladder as you might struggle to get back onto it in the future, especially if house prices continue to rise.
Is there any way that you could make your current house work for the next couple of years until your DH has a oriole of years sel employment income figures? Could you give the bedrooms to the children and you and your DH use a sofa bed in the lounge?
Do you have a 2nd reception room which you could use as a bedroom?
Is either bedroom big enough to split into two smaller rooms either with a stud wall or just a curtain across the Middle?

It sucks living in a house that is too small (we had 9 people in a 3 bedroom house growing up) but actually children just adapt to it if it is all that they have ever known and it doesn't bother them that much, it bothers the adults much more.

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