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Original poster

Right.... any Mortgage experts!! I need a bigger house!

30 replies

Toothache · 08/03/2005 13:35

I am currently looking to buy a 3 bedroomed house. We have a 2 bedroomed at the moment, but dd and ds are having to share a room.

When I go back to work fulltime in July our joint income will be £37,900.

We have a car loan of £5000 and a personal loan of £6500 (about 20% through paying it). So I know that will affect my mortgage.

We will make around £20,000 on our current house as a deposit.

However, most 3 bedroomed houses in the areas we are looking are going for between £120k and £150k.

If it just goes by earnings is there any way I can raise a bit more collateral?? If we get a 30 year mortgage will tha tmean we can borrow more?

I went to a mortgage advise, but she made me feel really pessimistic and actually embarassed me.

OP posts:
oliveoil · 08/03/2005 13:53

Hello!

elliott · 08/03/2005 13:55

Well, I thought that you could borrow between 3 and 4 times joint income, which should just about cover you - I think the bigger issue will be whether you can afford the repayments. in fact that's the way round I woudl do it - work out how much more you can afford on repayments, then see what that will get you in terms of borrowing.

I don't think getting a longer term will affect the amount you can borrow but it will reduce the monthly payments (but also means you pay mroe in interest overall).
don't forget you will also need money for stamp duty and other costs.
Sympathies though - its a complete nightmare trying to trade up at the moment (worse for first time buyers of course). We are just sitting tight and hoping that things will become a little mroe affordable in a few years...
ps what about extending?

Original poster
Toothache · 08/03/2005 14:03

Elliot - does stamp duty apply to Scotland? I don't remember that when I bought my 1st house.

I'm afraid it seems to be 3 times your single income or 2.5 times your joint income. The mortgage adviser told me to then take off the value of any loans I have.... so thats £11k off the total. By my calculation that puts us at about £84k. Plus our £20k deposit (IF we make that on our house).

Can't get ANYWHERE 3 bedroomed for that.

Hiya OO - How are you?

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oliveoil · 08/03/2005 14:06

Up to my eyes in potty training . Dd2 is a gorgeous fat podgy bundle, 6 months old. Go back to work in May . But sometimes .

No advice on your prob I am afraid.

How is your dd?

Original poster
Toothache · 08/03/2005 14:07

Aw she's a wee puddin too. I've been back at work for 6 wks now. Really missing being at home. However.... I get a LOT more MN time when I'm at work!!

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dyzzidi · 08/03/2005 14:08

We just bought a new house and the builder is now offering things like deposit paid and stamp duty paid etc why not look at a new house which wouls maybe offer those things.
My builder was Westbury Homes but I am sure Barratt homes has similar deals. It just might take the pressure off if it reduces the amount of mortgage you need.

Good Luck

hoxtonchick · 08/03/2005 14:10

if your first house was less than £60k you won't have paid stamp duty on it. £60-£300k is 1% and £300k+ is 3% i think.

NomDePlume · 08/03/2005 14:11

the leap up is £250k

hoxtonchick · 08/03/2005 14:11

NdP is right . i just remember we got hammered for 3%.

ks · 08/03/2005 14:13

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NomDePlume · 08/03/2005 14:14

£60k or less 0%

Above £60k but not more than £250k 1%

Above £250k but not more than £500k 3%

Above £500k 4%

Twiglett · 08/03/2005 14:16

have you tried filling out the mortgage forms on charcolonline.com and moneyextra.com (they are both pretty great mortgage searches)

Gizmo · 08/03/2005 14:16

I think Elliott's advice is sound. After a lot of agonising we went for a mortgage of approx 3.2 times income but only after carefully checking that we could afford repayments even if interest rates rose by 5%. At present the repayments are just over a third of our income, which is manageable, but I honestly expect the market to go a bit pear shaped in the next 12 - 36 months and expect our house will be worth less than we paid for it for a short while.

There seem to be a number of lenders who will lend on that sort of ratio but the two checks they apply are a)the loan:value ratio (which checks how likely they are to get their money back if things go pear shaped) and b) the affordability of the mortgage after your living costs, other loans etc. Being a bit tight on either of those criteria narrows your choices rather.

Honestly? Even though I have just done it I think moving house right now is a wee bit risky financially. If you can wait for 6-9 months you may find the market is going a bit soft and you can haggle and get a good deal (would recommend serious haggling even if you go for it right now).

Extending your place (if you can get planning permission and it has the scope) may be a better bet. Can't say it's any less stressful, though!

Prufrock · 08/03/2005 14:20

That'scrap toothache - your mortgage advisor I mean. Was she independant or tied to a bank?

A lot of lenders now work on affordability - not set multiples. Go to www.moneyfacts.co.uk now and do mortgage search. I have just done it with the details you gave (including that your dh has adverse credit and it came up with pages of lenders. Best seems to be Abbey - discounted to 5.19 for 2 years which would cost you £595.71 per month for a £100,000 mortgage or £834 for £140,000 (which would allow you to buy up to £150k and pay off the loans.

ks · 08/03/2005 14:41

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Prettybird · 08/03/2005 14:51

The Scottish market (with a few specific expeception, such as Aberdeen during and after the oil boom and Edinburgh at the moment) has never gone through the extremes of the highs and lows that themarket in England seems to exprience. Therefore I wouldn't worry too much about buying now. Plus Falkirk will be benfitting from the high prices in Edinburgh forcing people out of the city, so the prices there should stay fairly firm even if there were a slow down.

SO if anything, I would say the sooner you can buy the better.

However affordability is important. You need to factor in your child care costs, espiecially given your mother's change of heart. On the positive side, once your dh is finished his training, surely you can hope for an increasing salary from him as he becomes more experienced.

So even if things are a bit tight to start with, they would improve.

Is he any more responsible with his money now? If not, I would think very carefully before extending yourselves.

Original poster
Toothache · 08/03/2005 14:52

Thanks everyone! I don't think haggling works that well in Scotland as houses are put on the market at an 'offers over' price. At the moment most properties are reaching about 15% above the Offers Over price. It's just pot luck if you offer the highest price.

I'm talking about moving perhaps in the Autumn, as I'm still part time until. July anyway. So I'm hoping the house prices will have settled a bit.

We could probably afford a mortgage payment of around £600 per month. I'll try some of those calculators, thanks.

How do you 'self certify'??

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Original poster
Toothache · 08/03/2005 14:57

Prettybird - That IS including DH's payrise in April (tesco don't pay that well), but it goes up again quite sharply in September after his 6month probationary management period ends. He'll be earning £20k then. In total, with DH's payrises and me returning fulltime we'll be bringing in £11k pa more than we are right now so hopefully childcare prices won't be too much of a burden then.

He isn't really allowed any access to the income now. ... he wants to act like a child, he'll get treated like one!

OP posts:
sweetkitty · 08/03/2005 14:58

Toothache we are going down the self certify route as I will not be earning initially when we move. We went to a financial advisor recommended by the Guild of Mortgage Advisors or something like that, we are consolidating our existing loans into our mortgage and fixing it for 2 years so we know we can afford the repayments even if the market were to go pear shaped. In 2 years time we will go back to a more normal mortgage.

Original poster
Toothache · 08/03/2005 15:07

SK - What does self certify mean? How do you get a mortgage if you're not earning? I'm confused.

OP posts:
anchovies · 08/03/2005 15:21

Self certification is for people who cant prove what they earn (people with large profit related bonuses, self emplyed etc). The mortgages generally have higher interest rates though and sometimes longer tie-in periods (with redemption penalties).

Have you approached your own bank? We got a very good deal with ours, 4.99 fixed for 2 years and a much higher loan than anywhere else.

Beware of adding your loans to your mortgage, over 25 years such small loans will cost an awful lot more in interest.

ks · 08/03/2005 15:25

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sweetkitty · 08/03/2005 15:30

SK - we are going through the self cert route as we want to borrow a little more than most high street banks will allow DP is earning though and I will be again in the near future not right at the moment with the move.

Financially it is more costly in the long run but in 2 years time we can switch back and our main priority is getting out this flat and back to Scotland first and foremost.

batters · 08/03/2005 15:53

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kizzie · 08/03/2005 15:54

Hi toothache - glad to see everythings going so well for you after the birth!!!!!

Re. the move - I'd second the suggestion about extending. is that a possibility?
Kizziex