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    • 321654987
    • By 321654987 13th Sep 17, 1:43 PM
    • 10Posts
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    321654987
    Upsizing now we're debt free
    • #1
    • 13th Sep 17, 1:43 PM
    Upsizing now we're debt free 13th Sep 17 at 1:43 PM
    Hello everyone.
    Looking for a bit of advice concerning our current financial situation.
    My partner and I have just completed a DMP - this finished in June and are now debt-free.
    Between being in debt and setting up the DMP we incurred 3 defaults. One in 2014 for £4006 and 2 in 2015 for £388 and £218 respectively. These were all paid off in 2016.
    We are now in a position where we need to move home as we have definitely outgrown our current home. A valuation of our property this week means we may have a deposit of somewhere between £10 and £20K to move with. We have good affordabilty and a joint income of £70K. The houses we'd be looking at are around the £200k mark.

    I'm aware that we will struggle to get a mortgage due to our circumstances and if we do the LTV ratio will also mean we will struggle, but wondered if there is any hope at all for us. As i said we need to move as soon as possible and so may have to consider selling and renting which isnt ideal. We have considered ploughing the 'extra' £900 we now have from our DMP payments into the mortgage in order to increase our deposit but the clock is ticking and cant stick around much longer.

    Can anyone offer any consolation or advice as to what steps we should take?
Page 1
    • getmore4less
    • By getmore4less 13th Sep 17, 2:28 PM
    • 30,237 Posts
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    getmore4less
    • #2
    • 13th Sep 17, 2:28 PM
    • #2
    • 13th Sep 17, 2:28 PM
    what's the current mortgage look like(amount rate term payment LTV)
    • 321654987
    • By 321654987 13th Sep 17, 4:27 PM
    • 10 Posts
    • 4 Thanks
    321654987
    • #3
    • 13th Sep 17, 4:27 PM
    • #3
    • 13th Sep 17, 4:27 PM
    We have a rate of 3.39% and our balance is around £84k it's got 22 years left and value of property is approx £100k. We got a 100% mortgage back in the good old days!
    • honeyblond
    • By honeyblond 13th Sep 17, 8:23 PM
    • 4 Posts
    • 1 Thanks
    honeyblond
    • #4
    • 13th Sep 17, 8:23 PM
    • #4
    • 13th Sep 17, 8:23 PM
    You'd probably be looking at a subprime mortgage which is what we're looking at now thanks to a dmp. at least once your df have dropped off you can look for a better mortgage deal.
    • 321654987
    • By 321654987 13th Sep 17, 8:56 PM
    • 10 Posts
    • 4 Thanks
    321654987
    • #5
    • 13th Sep 17, 8:56 PM
    • #5
    • 13th Sep 17, 8:56 PM
    Thanks for replying. I'd be more than happy with that. My worry is that we will need to find a massive deposit which in order to save for will delay our move by a year or two and we really want to move asap.
    • getmore4less
    • By getmore4less 14th Sep 17, 7:29 AM
    • 30,237 Posts
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    getmore4less
    • #6
    • 14th Sep 17, 7:29 AM
    • #6
    • 14th Sep 17, 7:29 AM
    £10 and £20K to move with. We have good affordabilty and a joint income of £70K. The houses we'd be looking at are around the £200k mark.
    Originally posted by 321654987
    We have a rate of 3.39% and our balance is around £84k it's got 22 years left and value of property is approx £100k. We got a 100% mortgage back in the good old days!
    Originally posted by 321654987
    income £70k that's net around £4,000-£4500.

    current mortgage
    £84000, 22y 3.39% £450pm

    £900pm free cash flow, total available £1350

    equity £16k
    costs to buy/sell £4k+

    95% mortgage on £200k purchase £190k

    best rate out there 95% is 2.5% more normal rate closer to 4% adverse ???? lets go 6%,
    at 90% LTV typical rates are more like 2.5% 85% gets under 2%

    payment over 22years and amount owing in 2 years paying £1350(for new LTV)

    2.5% £940 £166,500
    4.0% £1083 £172,000
    6.0% £1300 £180,000

    I would check with a broker where you are now and what sort of rates you are looking at for 90% and 95% and if they can place you with anyone.

    The short term impact of not being able to get a decent rate is massive on the initial cost and the LTV you can get to which impacts medium term as well.

    Saving to get to 90% very short term(<1y) could save thousands over the next 2 years.

    you need to weigh up the cost of doing this move now.

    the benefit of sticking it out another year, can start selling/looking at around 9 month.
    Squeeze the budget to make it happen sooner, what's the other £2,600-£3kpm getting spent on?

    Sell and rent which if more than £450 means savings take longer.(close to at least one work place to need only one car so saving more)

    Also
    What's happening with maternity/childcare?
    What have you done about the car?
    Last edited by getmore4less; 14-09-2017 at 7:32 AM.
    • 321654987
    • By 321654987 14th Sep 17, 9:55 AM
    • 10 Posts
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    321654987
    • #7
    • 14th Sep 17, 9:55 AM
    • #7
    • 14th Sep 17, 9:55 AM
    We are currently managing on one car, ie partner has it for work, I go everywhere on foot �� but are probably just going to buy a low cost runaround for him to use.
    I'm currently on mat leave so will be using some of that 900 to make up my salary but obviously we aren't paying for childcare at the moment.
    I think you're right. We just need to put up for a bit longer and plough as much as we can into a deposit.
    Thanks for your help.
    • getmore4less
    • By getmore4less 14th Sep 17, 10:12 AM
    • 30,237 Posts
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    getmore4less
    • #8
    • 14th Sep 17, 10:12 AM
    • #8
    • 14th Sep 17, 10:12 AM
    What is not clear is the bigger picture on why you have run out of space or if there is anything you can do in the meantime to help make it less of a problem. there may be something you have not thought of.

    You never did the debtfreewanabee SOA analysis to see if there is a way to improve the surplus often people find a few hundred when they do the analysis.

    What is the current mortgage deal with an 85% LTV might be worth reviewing with the current lender.
    • 321654987
    • By 321654987 14th Sep 17, 11:06 AM
    • 10 Posts
    • 4 Thanks
    321654987
    • #9
    • 14th Sep 17, 11:06 AM
    • #9
    • 14th Sep 17, 11:06 AM
    Sorry, I'm not sure what you mean by your last paragraph?

    We ran out of space a long time ago really when there was 3 of us. Now there are 4 and soon the baby will need to move into her own room. The second bedroom isn't large enough for them to share. We also need a garden, bigger kitchen, more storage and to not be on a busy main road. However we are prepared to wait if it means getting the best deal. In
    • getmore4less
    • By getmore4less 14th Sep 17, 3:02 PM
    • 30,237 Posts
    • 18,083 Thanks
    getmore4less
    Your current rate is high for 85% LTV there may be reasons for that but a change/retention deal with current lender may save money but has to be considered as part of a plan.

    I would get a brokers view on move options first then look at the trade offs.
    • fforsythuk
    • By fforsythuk 15th Sep 17, 5:06 PM
    • 22 Posts
    • 17 Thanks
    fforsythuk
    Can you not rent out your current property and then you yourselves rent a bigger property to suit your needs? Maybe consider doing this for a couple of years whilst your credit report heals so that you can apply for mortgage at some point in the future at mainstream rates?? My cousin is having to do this and so far it's currently working for him...
    • xyz123
    • By xyz123 15th Sep 17, 5:26 PM
    • 1,500 Posts
    • 368 Thanks
    xyz123
    Well done on getting debt free. Are your jobs secure and I am not judging you but r u sure you won't have any more debt problem? Taking such high LTV mortgage at higher rates is long term commitments. Have you factored in all childcare costs for both children when looking at affordability. Only you can decide if kids sharing bedroom and bigger garden are worth the additional commitments. Good luck.
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