Page 3 | Mortgage advice needed! - big deposit, low income

RainbowQueen36 · 2021-07-30T14:32:33+00:00

Does anyone have any advice on how to get a first mortgage with a large deposit but a low income? We have a large deposit - partly inheritance and partly gifted from parents - but our mortgage broker has only been able to get us a mortgage of £95,000 from the bank as we are low income earners. Firstly we live in Oxfordshire - one of the most expensive places to live in the UK! We have both lived here all our lives so have lots of family nearby and are reluctant to move too far away. Our deposit is £200k made up from inheritance and gifted amounts from both of our parents. We are both 36 years old and first time buyers. My income is currently £22,000 but my partner is self-employed and has not shown any income in the last 2 years unfortunately. So the mortgage broker is basing the mortgage on my income only. We could afford a property worth £295k but that does not buy you much in the area we live in. We would like to start a family soon so we would prefer to buy somewhere with some space (ie. not a pokey 1 bed flat) - and also so my partner can have a garage/workshop/garden space to continue growing his business. Ideally, we would like to buy a property that is worth around £350k but this seems impossible despite our large deposit. Does anyone have any advice or suggestions? Is this a pipe dream that we could get a bigger mortgage somehow? TIA

Limitedhelp · 31/07/2021 07:25

2 options
Your partner gets an employed role for the short term. (Banks require 3 pay slips. This could be 3 months or 3 weeks)

Your partner could inflate his salary. He could avoid submitting his expense claim, or take more dividends. This will make take home salary seem higher. He will end up paying more tax of course this way.

NoSquirrels · 31/07/2021 07:41

Don’t let your partners parents do equity release. That’s really not a good idea.

Concentrate any efforts on making your partner more employable. Does he need more/different qualifications? Could he do apprenticeship etc.

Just because he struggled at school, doesn’t mean further education or training aimed at adults won’t help.

What’s your job? Are you keyworker so shared ownership or low-income schemes might be open to you?

How old are your parents? Might they be in a position to be on the mortgage with you (rather than DP) so that you can get on the ladder, and you look to buy them out in 3-5 years when your DP’s prospects and earnings have improved.

Lastly - buying a property together when unmarried is a big commitment and you must be 100% sure you understand how owning different percentages works, what it means for the future if you split up etc.

I really would not do it with someone else’s equity release capital. Feels like a perfect way to store up a problem.

greenzeppelin · 31/07/2021 07:44

I think you need to rethink the whole thing.

I don't see an issue taking your parents inheritance if offered but DP taking equity release from his folks? No way! Just so you can get on a ladder you can afford anyway.

It's hard, and we have been sold the idea that owning property is the only way. This just means that when you fall on hard times the government don't have to foot your housing bill like they would of you rented.

CoronaPeroni · 31/07/2021 08:08

People saying they can't afford a 150k mortgage on 22k income, rents are usually more! My dd earns the same, the flat she lives in is 700 a month but a mortgage would be 490 for the same property. Hope you can work something out op.

Itsprobablynotcominghome · 31/07/2021 08:23

@CoronaPeroni

People saying they can't afford a 150k mortgage on 22k income, rents are usually more! My dd earns the same, the flat she lives in is 700 a month but a mortgage would be 490 for the same property. Hope you can work something out op.

There are many other costs involved with being a landlord.

I hate landlords, but you can’t expect them to charge the mortgage cost.

BeaBeaBuzz · 31/07/2021 08:27

At 3% the mortgage on £150,000 is around £700. I know rates may be lower at the moment but could easily be much higher than that. OPs total income is £1500. It just doesn’t add up

Neverrains · 31/07/2021 08:29

@CoronaPeroni

People saying they can't afford a 150k mortgage on 22k income, rents are usually more! My dd earns the same, the flat she lives in is 700 a month but a mortgage would be 490 for the same property. Hope you can work something out op.

People are saying that a mortgage lender won’t give a £150 mortgage on a £22k income, not that they can’t afford it.

CoronaPeroni · 31/07/2021 08:36

My comment about affording the mortgage was in response to a pp who said op wouldn't be able to make the repayments on a 22k salary. I was just pointing out that rents are a lot higher and have to be paid from a 22k salary. Also I wasn't complaining about the landlord charging 700, just pointing out that if my dd could actually get a mortgage she would only have to find 490 a month!

Neverrains · 31/07/2021 08:36

And yes, rents can be more which is why I asked the OP where they’re living now, as it must be quite tight paying rent in Oxfordshire on one £22k income.

Aprilinspringtimeshower · 31/07/2021 08:44

Are you married? If not buy in your own name and protect your assets. Your Oh could get work if he was prepared to do “any” job and produce an income to pay his way- not necessarily to pay mortgage but just to contribute to household income. He could do that while starting up his own business. His business has failed once before. Seems like he is happy to live with a precarious approach to paying his expenses.

Bells3032 · 31/07/2021 08:55

Op honestly I don't think right now is the time to focus on such a massive expense. I think your partner needs a bit of time to get himself either settled in his business or get a new job. The extra stress of homebuying just doesn't seem sensible

Those that say oh well I pay more rent than my mortgage so I must be able to afford a home forget the extra expenses that come with a owning a home rather than renting including service charges, or insurance and upkeep of the building, upkeep and replacements of appliances which even if you've got a healthy savings account can give you a good hit

Neverrains · 31/07/2021 09:01

Those that say oh well I pay more rent than my mortgage so I must be able to afford a home forget the extra expenses that come with a owning a home rather than renting including service charges, or insurance and upkeep of the building, upkeep and replacements of appliances which even if you've got a healthy savings account can give you a good hit

This is very true. We rented for years and it was a bit of a shock to the system when we bought somewhere and everything that went wrong was down to us to fix .

HmmmmmmInteresting · 31/07/2021 09:09

[quote Cocomade]Yep just looked on rightmove and this is a very decent first house;

www.rightmove.co.uk/properties/72407004#/?channel=RES_BUY[/quote]
Been on the market ages. In fact it was reduced in November last year! I wonder what's wrong with it.

HeddaGarbled · 01/08/2021 09:37

Another one saying don’t let in laws do equity release for anything other than to fund their own retirement, and even then, only if they’ve explored all other options first:

www.moneysavingexpert.com/mortgages/equity-release/

You two are young. You’ve got your whole working lives ahead of you. It’s hard right now but you’ve got options and lots of future earning potential. Allowing parents to risk their financial security in old age to get you onto the housing ladder is ethically dubious, IMO.

Original poster

RainbowQueen36 · 01/08/2021 10:42

I have previously spoken to my in laws about equity release not being a good idea. But they are convinced it’s the only way to help us as they want to see us in our own house whilst they are still with us. Without their help our deposit would be halved.

I’m definitely going to rethink things. Maybe put having a family on hold for a few more years and just keep saving as much as possible.

My partner and I had a chat about his business. He’s going to try and get another part time whilst he tries to get it off the ground. He agreed that if it doesn’t show signs of improvement in the next 6 months he will look for a full time job instead.

OP posts:

Flowers500 · 02/08/2021 10:24

@RainbowQueen36

I have previously spoken to my in laws about equity release not being a good idea. But they are convinced it’s the only way to help us as they want to see us in our own house whilst they are still with us. Without their help our deposit would be halved.

I’m definitely going to rethink things. Maybe put having a family on hold for a few more years and just keep saving as much as possible.

My partner and I had a chat about his business. He’s going to try and get another part time whilst he tries to get it off the ground. He agreed that if it doesn’t show signs of improvement in the next 6 months he will look for a full time job instead.

You are absolutely not remotely in the right place in your life to consider buying a house, or to consider starting a family. You’re supporting two people on a wage that is tight for one. If you could both earn an average salary then you would be able to afford a mortgage. Equity release is a terrible idea and won’t be enough anyway.

You should focus all your efforts into employment and sorting that out—this would only get more difficult when you owned or had a family!!!! You are probably going to need to be willing to move for employment if you can’t make your location work. Once you’ve sorted decent jobs, then you could try to buy near those jobs?

EarringsandLipstick · 02/08/2021 12:18

Agree 💯 with all that Flowers has said.

Start with employment. Thereafter mortgage & family.