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Original poster

Large deposit, low income

20 replies

shinynew · 01/09/2018 07:58

I am getting divorced. Will probably agree to selling the house. I will have about 80k equity from the sale (that's if I agree to the 60/40 split) i will need to spend about 10k of that paying off bills/car finance/ so I'm completely debt free. We live in the south east where a two bed property is minimum 250k. I have one child so do need two bedrooms. I'm thinking to do part buy part rent if one comes up.

Will probably sell, move back in with family for six months however long it takes, save a bit more, then decide what to do.

My question is with a deposit of 50-70k, am I likely to be able to borrow more from the bank than if I had a tiny income ?

Income is £13,500 + child benefit + maintainance (xh is proposing £240 a month - suspect this is far lower than it should be).

Also does anyone have experience of shared ownership mortgages? Do most banks offer them now...

Thanks in advance, so much to think about!

OP posts:

brokenharbour · 01/09/2018 08:46

Hmm, well the deposit reduces the risk but they will still do an affordability assessment on the monthly payments. So in terms of actual mortgage borrowing the deposit won't make that much of a difference, except there may be more wiggle room with a lower monthly payment as you'll probably get a lower rate.

It's not great news but I think you will struggle to buy I'm afraid considering you will have other outgoings. Will you need to pay for childcare?

Get booked in with a good mortgage broker and see where you stand.

Original poster

shinynew · 01/09/2018 08:50

Thanks. Yes that's why I'm thinking shared ownership might be my only option...they are between 90-120k round here..

It's crap living in such an expensive area...80k is a huge amount of money (well to me!)

I will see a broker, I know a good one, but it's early days yet, just mulling over my options x

OP posts:

Original poster

shinynew · 01/09/2018 08:51

Won't need to pay for any childcare in a years time (when I will be looking) x

OP posts:

ElizabethinherGermanGarden · 01/09/2018 08:56

I had the same deposit when I got divorced about 5 years ago but I was earning a lot more. To help you with your sums, on my £225k house with a 25 year £160k mortgage, my payments are £870 per month (fixed).

Original poster

shinynew · 01/09/2018 08:59

Thank you. That's helpful to know. I'm glad you managed to get a new place x

OP posts:

ElizabethinherGermanGarden · 01/09/2018 08:59

Sorry, that's not shared ownership, and I'm in the south east.

MissWimpyDimple · 01/09/2018 08:59

I'm in a similar position, though my figures are different.

I'm looking at £150k deposit and an income of around £30k.

Ideally I need a mortgage of around £170k. I'm dubious as to whether I'll get it. I currently (and have for many years) paid £900pcm rent so I would think it means that I've shown I can manage repayments.

In all honesty I think you will struggle with an income so low. Can you move to full time for a while to boost your income?

ElizabethinherGermanGarden · 01/09/2018 09:03

Good luck to you. The bit where everything is in flux is so awful but once you have your own place it gets so much better.

ourkidmolly · 01/09/2018 09:05

Can you increase your earnings? That's a low income for what you need to borrow. The mortgage companies don't always take maintenance into account either.

Original poster

shinynew · 01/09/2018 09:08

I'm going to increase my hours at work, so that will bring me up to about 16k a year. I work in a pastoral role in a school. I really love my job. I used to work in a corporate role which paid much more and hated it. I can't rely on anyone other than myself to do the pick up and drop offs, and school holiday cover, and paying for the clubs would cost more than I would earn with commuting. It's rubbish.

I think I could probs borrow 16k x 4 plus whatever deposit needed to get a shared ownership but that's it.

I don't want to rent if I can help it, I wouldn't get any housing benefit (rightly so) because of all of he equity, but then it would be gone on rent in a few years and this money is for my daughters future x

OP posts:

Original poster

shinynew · 01/09/2018 09:09

Goodluck misswimpydimple x

OP posts:

MaverickSnoopy · 01/09/2018 09:12

I'm in the south east and have a friend who was recently in your shoes. She split from her ex and they sold their house. She had about 80k equity for the sale but had a part time job with lower income. She's just bought a 2 bed shared ownership house for her and her daughter.

I don't know her exact figures so this is not comparable but in her case it was possible.

Have you looked on the help to buy website www.helptobuysouth.co.uk which lists all shared ownership properties. It would be worth having a look through to check affordability. I had a quick look and a house that's £275k with a 40% share will be a share cost of £110k. With a deposit of £50k you'd need a mortgage of £60k - so the question is, would you get that? I do also notice though that you usually need a minimum income with shared ownership - not sure how this changes with a large deposit. Don't forget you'd also need moving/conveyancing costs. I think in the first instance I'd be having a chat with a broker to find out what your options are. Then you can come up with a plan.

simplepimple · 01/09/2018 09:19

It is a difficult situation - crazy that mortgage companies wouldn't consider offering a mortgage that would cost the same as your mortgage and rent combined if you went for shared ownership - and also they won't offer you a mortgage that would cost the same as renting - even if you can prove you've been renting at that cost for a few years.

This is going to have a massive effect on your future choices - is there no option for you to keep they house until your DC are older? Any room for negotiation with the 60/40 split - is your ex a higher earner than you and therefore likely to find it easer to buy and be able to manage with less deposit?

P0ppyP0wer1 · 01/09/2018 09:30

If you look on right move or money saving expert web sites you can use a online calculator and put in deposit, price of house and it will calculate the estimated monthly mortgage amount. On top of deposit you will need to pay stamp duty, solicitor fee, mortgage arrangement fee, land registry, moving costs, post redirection costs, survey. On top you would need to add all bills like council tax, electric, internet, water, travel, food. I would research moving to a cheaper area, where housing is cheaper. Also look at increasing your salary, 13k is low.

Original poster

shinynew · 01/09/2018 09:31

There is the option I can try and stay in the house - xh is against this, he wants his money out asap so I would probably have to go to court to secure this which would cost money I don't have. Could borrow it off family if needed.

Solicitor said I could go for 70/30 as he earns a lot more than me, I took the lower paid job once we had our child so I could do bulk of child care/ his job would remain unaffected.

It's a nightmare to be honest. Have even thought about getting back him just to keep a roof over our heads :(

OP posts:

P0ppyP0wer1 · 01/09/2018 09:32

If you think the child maintenance is incorrect claim via CSA

Original poster

shinynew · 01/09/2018 09:55

Yes I will be, thank you

OP posts:

P0ppyP0wer1 · 01/09/2018 11:03

Some Estate Agents also have a financial advisor who you could talk to. They don't normally cost anything until you take out one of their products like mortgage, loan etc. You would need to take your income and out goings with you.

NeverTwerkNaked · 02/09/2018 07:58

I would think about staying in the house. Could you afford the mortgage repayments in the current house? Have you looked into whether you would be entitled to any benefits? And whether having a large cash sum might affect that?
I agree 70/30 split sounds like something you should push for in these circumstances anyway. But I think it is likely the court would agree you can stay in the house provided you can meet the mortgage repayments.

Otherwise I agree that shared ownership sounds like the most sensible option for you.

NeverTwerkNaked · 02/09/2018 07:59

You probably wouldn’t need to go to court to secure having the house. The court will make you mediate first and the mediator should be being pretty clear as to what the likely outcome would be if you did go to court

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