Any mortgage advisors there? How much can we borrow for a new house?

[PorridgeIsYummy]

Thanks in advance for any advice

We are considering moving houses to an area with better schools. Our assets are:

• current home which is worth approximately £300,000. We have £75,000 left on the mortgage.
• little flat which we rent out, value approx £100,000 and we have £50,000 left to pay.
• savings of £15,000.
• I earn £50,000 in a very secure, public sector job. My husband is taking a break from work but should rejoin by Christmas and we expect him to earn £30,000 approx.
• no other debts including credit cards, etc. 3 kids but educated in state schools, no major expenses apart from food and inexpensive holidays.

The area we want to move into is much more expensive and a comparable house to the one we own now would cost around £500,000. Can we afford it and what is the maximum amount, roughly, we could borrow in these two situations?

A. We sell our flat to raise some cash but keep our existing house and we rent it out. This would be our first choice.
B. We sell our house and keep the flat, or indeed sell both.

Thank you very much in advance.

Speak to a broker. It's about affordabilty now and they can take you through the process

Not a broker, but recently went through very similar questions with our broker.
Think you could easily do it by selling your house and you could still keep the flat. Generally max lent is 4.8x combined income. Need to release around £15,000 extra from equity of sale for stamp duty on new £500k house, + solicitors and selling fees.
Don’t think you could keep the main house and only sell the flat.

If you keep either of your current properties you would likely incur £15k extra stamp duty on the £500k purchase. Assuming you can sell both properties that seems the best route to secure the most to finance a new home.

So £225k from house 1 plus £50k from flat less selling / moving costs of approx 3% gives about £265k. Set aside buying costs of at least 1% / £5k plus stamp duty on £500k of £15k. Gives a net cash figure of £245k plus cash in hand of £15k gives £260k.

Standard mortgage income multiples of x4.5 single salary (50x4.5=£225k) or x3.5 joint (80x3.5=280k). May be less if significant outgoings (credit card, car loan, child care, commute) or due to age or dependent on security of second earner's job.

Looks just about doable. Owning more than one property would just add to cost and and cash available and also likely reduce mortgage amount available.

Not a mortgage adviser but this approach was my starting point when looking at our options recently. Also interested in alternative views.

We decided not to stretch atm in part because of the impact of the increase in mortgage on current cash flow and future security.

Our last two mortgages weren't done on multiples. Everybody seems to do it on affordability now so income and equity won't tell you how much you can borrow.
They need to sit down and examine your outgoings and calculate from that.

Moneysavingexpert has a decent guide with a ready reckoner which is roughly in line with figures above. Affordability test is unlikely to be higher than raw income multiple because BoE has global stress test rules for Banks on what % of loan book can be at max multiple.