Mortgages, move and what's possible

[CrepituErgoSum]

Grateful for any advice about what's realistic here with mortgages.

So we have a flat in London we lived in for several years. It's currently got €275k owing on the mortgage and a very similar one just sold for €375. Six months ago we moved to Newcastle for work, we've been renting since then. We've also got a 12 month old baby who is in full time daycare, I've been back from mat leave since June.

We want to buy a home up here. We have consent to let for 12 months so we've currently got the flat rented out. We earn 90k between us, we both work full time.

I was assuming that at the end of the 12 months we would sell the flat, have around 100k deposit and would be able to borrow about 400k and buy a nice big house.

DH is insisting we should keep the flat as an investment, and that we could use equity in it for a deposit and borrow enough to buy a house for around 350k. His family have offered 10k gift towards our deposit but we've no other savings.

I'm VERY doubtful about the numbers. We haven't spoken to a lender yet but is his plan even realistic? Total borrowings of more than 600k on salaries of 90k?

Also, he's currently still on probation in his new role as it's less than 12 months. I'm quite possibly going to have to change jobs soon - I have been working remotely but employer is starting to want us back in the office but it's too far away for me since the move.

DS is convinced it's a huge chance to get ahead with our finances. I don't want to miss an opportunity due to being too cautious but I'm just not sure this will be possible. Any thoughts?

I don't think you'll pass the affordability criteria and it would be a huge stretch on that income. Once the consent to let is up, your lender will move you to a BTL mortgage product which is more expensive. Its no fun, and expensive, being a landlord plus there are a lot of legal obligations.

If you capital raise on your existing property you'd definitely be looking at a btl mortgage as although current lender has given you consent to let its highly doubtful they'd allow you to increase the mortgage on a residential basis.

If you do this and onward purchase you're going to be limited as to what lender you can use due to your jobs (I.e dp in probation, and essentially you with a new contract). You'll need to speak with a broker I think because they'll be able to advise on both, but you are definitely going to have to have a job to go to first.

For a BTL mortgage the deposit is usually bigger than a residential mortgage. Sounds like DH is double counting the equity to cover both deposits. Talk to a broker, they will set him straight and you don't have to be the one to burst his bubble.

You also need to look into the stamp duty situation.

Affordability wouldn't be an issue as you would need to remortgage the flat onto a BTL rate. However the max you could borrow would be 75% LTV which would only give you very little after the current mortgage was paid. In terms of your new house probationary periods are not an issue at all with the majority of lenders. Pretty standard to have at least a 6m probationary period in a new job. In terms of you moving jobs as long as your new job is similar to your old and there is no job gap many lenders will accept a copy of your contract and your first month's payslip. In your position I think I'd sell the flat and put a good deposit down on your new house