Can someone who knows a bit about moving house and mortgages please explain this to me?

[doricpatter]

OK, briefly:

Say your current mortgage was based on your pre-children income. Say you're planning to move somewhere bigger (but in a different, cheaper area) and sell your current home. Obviously your income's significantly reduced because one of you is doing childcare but you are confident you could still afford the repayments, especially given once moved I would be looking for PT work. Will we get a mortgage?

I ask because based on DP's income alone we won't be able to borrow enough to afford the new place.

I mean, we'd have to keep up repayments here, so surely moving somewhere where the repayments are cheaper isn't an unreasonable thing to do? Or would the technicality of the income multiples bugger it up for us?

It happened to us and we kept the same mortgage and just moved it over to the new house. As we'd never missed a payment, the lender didn't really care about our reduced earnings. Could you do that?

I'm not sure if we'd have got a loan from a new lender though.

In this current climate I doubt anyone would lend you money based on a job/ salary that you don't yet have. How much of a deposit are you able to put towards the future property?

At the moment, it might be a toughie, they're being very strict. It might be better to wait until you have PT work. If you are bringing enough equity with you - ie, your mortgage won't be more than 60% of the price of the new house, they may be more flexible.

The best thing you can do is talk to a mortgage broker. A lot of them are free and can give you a good idea what mortgages would be available to you. Try London & Country who are really helpful - I've recommended them lots (I don't work for them or anything) and never had any complaints from friends etc.

Yes income multiples would stop it. But they will usually lend you more multiples on one income than 2. So 3x1 or 2.5x2 etc etc

A self cert mortgage would have been an option but these are ended .

Why don't you phone your mortgage company and ask if your current mortgage is portable i.e. if you can take it with you to a new property. If it isn't, what criteria would they look at before granting a new mortgage.

At least you'd know what was what then, rather than guessing.

Sorry, I misunderstood - are you just moving with the current mortgage? You're not remortgaging? Then, as long as the valuer reckons the house you are moving to will still give you some equity with the mortgage, it shouldn't be a problem.

Not necessarily.

They dont have to let you move. It may depend on how they rate you. Many mortgage lenders would be very keen to have mortgages redeemed and wouldn't let you move. They know times are tough and may get tougher and they want to lose potentially bad mortgages.

OK, nitty gritty.

Current outstanding amount is around £95k over 20 remaining years. Current value of house is £105-110k. This mortgage is in my name only and was based on my income alone.

So we could sell and make £10-15k.

New house would cost us up to £100k. I'm hopeful we could get it for £95-98k. DP earns £17k + supplements coming to an extra £2k. (I could earn up to £10k for PT work.)

My current mortgage is "portable" although I think this simply means no early repayment charges, and as we're just on SVR just now that's irrelevant. Possibly not in my favour is that I swapped it to Interest Only for the 9 months of my ML so we had some extra breathing space (didn't know if I would be getting a retainer from work or not).

There's absolutely no reason we couldn't pay it - we're well insured, income protection etc, and the monthly repayments would be much less than what we're paying now - I'd probably extend the term by another 5 years so we had some spare cash to refurb it. I'm not 30 yet.

Does that help?

Most mortgages are sold as portable though so it would be hard for the banks to renege if the borrower is paying regularly and if the house that they are planning to buy gives them a reasonable amount of equity.

Would they look at the fact that in 18 months one of our two DC will be in school and our earning potential is therefore increased?

We are looking at porting our mortgage - we still have to fill out a form with our income, overall bills - not as much info as a standard mortgage application but nearly. So I think you may have trouble keeping your mortgage given it is your name and you have currently zero income. I think this is now standard practice I'm afraid. We have 75% equity so I don't think they have made us fill in the form as we are a potential bad debt! Different lenders may have different rules you need to phone up and ask.

Hmm, yes. It seems it's not just negative equity that's a problem but anything-other-than-massive-equity :(

It's maddening because (although they'll definitely get their money!) they'll have a more secure debt if they let us move. It would reduce our fuel bill by nearly £200 a month, open up a wider range of employment options for me and there's enough room for us so we wouldn't need to move again - not only that but it's in need of upgrading so could have value added to it to support our equity in a falling market. None of the above is true for this place.

I think you should speak to a mortgage broker.

i suspect that you would be blocked from porting as you are increasing the loan to value.

We are in the same situation with our mortgage - our bank wont lend us as much as our current mortgage. However we have spoken to mortgage adviser and there are alternatives out there but you may end up paying slightly more for borrowing the same amount. Good luck - it is very annoying isn't it!! Bl**dy banks it is all there fault in the first place.

I think I am right in saying portable does not mean you have a right to move your morgage to a new property just that if you do move house and the lender agrees to give you a new mortgage you do not have to pay the early repayment fee.Agree with others ,check with existing lender first and with a Mortgage advisor

Thanks, all helpful.

I'm going to speak to London and Country today (I've heard good things about them too) before going back to my lender. The IFA who arranged this mortgage for me would seem an obvious point of contact too but I didn't like him much so I'm trying to avoid him!

I'm finding this so frustrating - I can see what the bank's POV is going to be but in practical terms moving's a no-brainer.

Rangirl I think you're right - when I spoke to my lender a couple of days back the advisor said portable just meant no early repayment charges if we moved, we keep our existing rate, and any extra borrowing is like another separate mortgage on its own rate.

Well London and Country have given us a decision in principle for more than we need! Which is a long way off concrete and isn't a pretty interest rate but is a great start. Now to investigate DP's credit score and browbeat my current lender.