Mortgage Advice needed please

[mickyme1]

We are looking to buy our house (first time buyers) end of next year. Currently living in London and house prices here are extortionate. My husband is okay with a flat but I need a house. We may move to Cambridge as we have few friends there, that way atleast we can afford to buy a house. We both work in London so travel would be additional expense from Cambridge. I have checked the ticket prices and they are roughly £300/month higher for each than what we normally pay currently to travel within London.

If we move to Cambridge now, our rent will be much lower compared to what we pay in London. £750 there and £1250 in London.

My questions below

1. If we continue living in London and apply for Mortgage mid next year, once it gets approved, can we use that money towards buying house in Cambridge? Knowing it would be £600 extra in total per month for both of us to travel to London. Or bank would not allow this?

2. If we move to Cambridge now, our travel expense would start immediately, meaning our eligibility would fall from what I understand? This is because its a fixed outgoing cost which cannot be avoided.

3. I am full time employed and my husband is self employed. He files his own SA accounts with the help of a friend who is in final stages of his accountancy profession. This means his accounts are not filed by an 'Accountant'. Would this be a problem?

4. Is the eligibility amount counted by averaging the last 3 years of income or the current one is taken into account as I may get a salary rise into next band mid next year.

How do banks look at this situation? Any help would be much appreciated.

1. No, you have to have your property purchase details in order to apply.
2. That is correct.
3. Your husband will need to provide SA302 documents for at least two full financial years, provided he is a sole trader or in a partnership.
4. The amount you can borrow is not purely based on income multiples. You cannot use predicted future income unless it is a situation whereby you are on maternity or paternity leave during the application. They will take your current annual figure, no averages for you, but a monthly average for your other half based on his latest annual.

Are you sure about costs in Cambridge? It’s a property hotspot at the moment, rents and house prices are rising rapidly.

Thanks delilahbucket. So in that case, if we continue living in London and provide a house buying address of Cambridge, would the bank automatically deduct that travel expense assuming what it would take us to travel to London? Sorry not sure how the mortgage system works.

thereinmadnesslies- Yes we have checked a few house prices and they fall under our affordability criteria. If we go now then it would be flat rented until we buy our house.

I'm not a mortgage advisor, but I am an accountant

HMRC have stopped issuing SA302's. I would get a qualified accountant to do his accounts next year as most mortgage companies require an accountants certificate

Thanks BritInUS1 for the info. That seems a good idea, I will ask him. Also, he's having a second thought of going into full time employment sometime next year. A friend suggested him we will get good interest rate offer from banks if he also gets into a job as opposed to self employment? I suppose this is due to fixed income coming every month.

Any more suggestions?

I don’t think you’ll be able to rent a place in Cambridge for £750 a month unless it’s a total dump.

My brother and his GF rent a small flat for £850 and it’s TINY (and not the nicest).

It isn’t just about what the bank might lend you but what you can actually afford so you need to think about being able to meet the payments. It sounds very expensive to afford the commute for both of you and a mortgage as well. Are you dead set on Cambridge or would you be happy to stay in London? There are some lovely yet affordable areas in outer London.

19lottie82- Its a friend of my husband whose flat I referred above. He said they would normally go for £1000 but happy to rent it to us for lower as its short term.

JoJoSM2- Yes we are looking for outer London areas as well where house prices are just above our budget or some within which needs refurbishment. The other option is to buy a discounted house which needs refurbishment and then get the work done when we move in or after a year or two when we have some equity.

Some banks use Office National Statistics average figures to calculate your expenditure e.g. 2 adults average outgoings are ££ a month

I travel up to Cambridge with work about once a month and no way would I want to have to do it 5 days a week.

You would get cheaper rental because of a friend but I agree house prices there are crazy. You'd want to be close to the station otherwise that adds on more travel time and faff to get to work.

MsHarveySpecter- Average outgoings I suppose should be fine but the extra travel expense is my concern here. When renting, we are not actually saving anything tbh compared to London as the extra adds up in the travel but when we buy a house, that may be a problem.. Or I will have to change jobs later near my home to cut the extra travel expense no other choice!

GreenPurpleRed- My current travel is about 1 hour 20 mins and travel from Cambridge to my work is about the same. So travel time wise no benefit.

Sounds like a fixer-upper in outer London might be a good option.

Just somewhere with a reasonable commute might be nicer.