Can I afford this house?

[Bazoo23]

Ok I'm clearly clueless so bear with me.

Partner and I bought our first home 5 years ago. Live in a part of the country where property is affordable, it was a brand new build 3 bed semi for 140k. Love the house, no issues but the 3rd bedroom is very small. Had 2nd child after moving in.

So the same builders are now building a new development. 4 bed detached with an integral garage for 206k!

We have 95k outstanding on our current mortgage and our house is now valued at between 145 and 150k. So we could put approx 40k down.

Partner earns around 30k a year, I am only part time so earn 10,500. The mortgage advisor is taking forever to phone me back so does anyone with a brain for property know if this sounds doable?

Standard multiplier of what you can borrow for a joint mortgage is 3.5 income, so you may struggle on that basis, but a broker may be able to find a mortgage if, for example your income will likely go up when kids are in school . Two further caveats to that (a) you must be able to demonstrate that you can afford the monthly payments taking into account debt, childcare costs etc; (b) you will need to take into account the length of the mortgage - you can set this at any period you want depending on affordability but you might not want (or a bank might not agree without a clear explanation) a mortgage term which runs into what would normally be retirement.

Is the house priced right ? That much extra for a further bedroom and garage sounds expensive.

It depends on your outgoings, any large outgoing like childcare or debt will bring down your affordability but if you take the basic 4 x salary formula at a minimum you should just be able to do it, there are loads of affordability calculators online, we can't tell you due to outgoings but they're really easy to do!

206k for a brand new 4 bed detached is really cheap! Even round here

No childcare costs as we have the 30 hours and I wfh so no extra needed. He starts school in Sept too.

Only have the usual outgoings, mortgage, council tax etc. Apart from car finance we dont have any loans or anything.

Why are you intent on brand new? In terms of future value they are rarely a good buy, almost always overpriced just because they are new and shiny. Have you looked at similar sized “second hand” properties for comparison?

Car finance, pensions and student loan are usually included in affordability checks, but many lenders will accept child benefit as an income.

I think based on basic calculations and how careful lenders are being at the moment, it might be tricky to secure the mortgage, but as others have said, it will depend on your other finances, and additional money you may have etc. You may also have more luck applying to repay over an extended period. (We took a 33 year mortgage as it’s all they would lend the amount we needed on, although we have always overpaid, so it’ll be far less in reality. Sometimes brokers can do an amazing job of finding niche mortgages, so there’s always a chance.

Good luck!

VanCleef

Its just my personal preference, since leaving home I've only ever lived in new builds and they're all I would buy. I know a lot of people don't like them.

Fingers crossed she will phone back today. We do have savings we could bump up the deposit with if necessary but I would prefer not to have to decimate them too much!

@VanCleefArpels "new and shiny" means brand new everything, boiler, electric, plumbing, roof plus warranty. If you were looking at a street of Victorian terraces you'd expect to pay more for the refurbed one vs the one that needed work doing to it yes? Of course they are more expensive, depending on incentives they have little initial outlay vs a lot of older properties and like any house won't be a big investment if it's already at the top of its peak price, but not everyone buys a house with a view of flipping it within a few years for profit, OP's first new build has done what it's needed to do maintaining its value and they've still built a good amount of equity. If it's a long term home no reason to not assume it won't grow like any other investment, but of course the less you do to a property the less you are going to earn, particularly in less competitive areas, but I'm personally not one for doing work!

User, yes the less work the better I'm not someone who loves a project, I dont have the patience or know how.
We wouldnt plan to move again for a very very long time if ever, so I wouldn't be looking to sell.

Plug all your finanances into a mortgage agreement in principle calc ( soft search so no credit check) and it will give you a ball park figure.
DD is currently buying and their AIP said £316k, they earn £90k between them and have 2 cars on finance, he pays £400 CM, she has £40k of student loans and they have one child under two.

The L&C calculator is really good

You should be able to manage it if x4 salary & you don't have any other debt.

Try plugging in your details to the mortgage section of money supermarket .com as this will also give you a sense of what you can get.

As others have said, new builds are often not the best of investments, but I am totally with you on owning newer homes - never again will I own a house where hanging a picture was rolling the dice as to whether a chunk of wall (made of horse hair) falls out.

Two other practical tips:

1. Do carefully weigh up the value of it being all new and the value of making something perfect. I have bought some lovely houses in the past which were beautifully done but always found we do work to make something work for us.

1. Do look at other similar houses in your area, if you haven't been looking. We made the mistake of seeing a gorgeous house when we weren't in the market, put in an offer, thankfully we're outbid. When we went on the market 6 months later and started looking at our options properly we realised how overvalued it was as well as not being right for us. We still drive passed it and shudder !

Thanks all I've done an online calculation and with a 40k deposit its come up with a rough figure of 217k being the maximum we could borrow. So fingers crossed. Hate waiting for phone calls.
The builders have offered to part exchange at market value if we struggle to sell as it's one of their homes and still relatively new.

@Bazoo23 that's great news, I would bite their hand off for that tbh, we sold our house privately last year and bought a new build and it was awfully stressful for various reasons. Will the house be ready before the stamp duty holiday ends?

User, it's not going to be move in ready until August unfortunately Although last time we bought from them they paid all our legal fees as an incentive so you never know!

don't forget to budget for agency fees to sell your old house, legal fees and poss stamp duty if you don't get it done by June (about £1600). I am assuming you have furniture etc so won't need to buy anything immediately.

Bells, the agency fees are all paid by the builders either way which is a bonus. They pay to value/advertise/estate agency fees and to part exchange if necessary.
Stamp duty will probably fall to us, think we might be slightly pushing our luck otherwise

Update - I spoke to the mortgage broker on Thursday and she has just phoned and said she has been able to get us a mortgage in principle - just needs proof of income etc which I have.

The builders are willing to part exchange rather than lose the sale but have said they would prefer not to if possible. So if we can sell our house ourselves they are offering a range of incentives and all fees paid.

So just need to get my house viewing ready now!

Perfect! Fingers crossed you manage to sell yourself but nice to know you have a back up if not, good luck!

Hi OP, I would really recommend London and Country. I am pretty clued up about mortgages and had a really straightforward mortgage (good deposit and salary etc) but I really benefitted from their help. Last time I tried to do mortgage direct with bank n solicitors myself, it was horrible, the bank were so disorganised. L&C take away all the stress. They also helped me find life insurance. Worth a look on their website.