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  • FIRST POST
    • PheoUK
    • By PheoUK 16th Oct 16, 1:49 PM
    • 349Posts
    • 190Thanks
    PheoUK
    Mortgage Options / Opinions
    • #1
    • 16th Oct 16, 1:49 PM
    Mortgage Options / Opinions 16th Oct 16 at 1:49 PM
    Hi All,

    We currently have a 3 bed terrace house which has been valued by estate agents at £295k (in the south east on the Ldn/Btn main line, about 25 mins walk from the station). We have approx 100k equity in the current place (190k remaining on a tracker).

    My wife has taken a new job in London, and we're considering whether it would be sensible now (While childless) to make a move while our income is relatively good (£90k joint income) into somewhere bigger and more "forever" / long term home - as we feel like the current place would be fine with a newborn, but would get cramped after a while.

    We've found a house I love / my wife likes (needs decorating) at 400k.

    I'm pondering two things re the mortgage:

    - We have no debts outstanding with the exception of my wife student loan, but we only have £7500 in cash (I say only, considering we're very lucky!!). The fees on this house total approx £15,000 (sols/stamp duty/etc). So we would have to use some equity toward the fees. Leaving us with £90k. Does anyone have an opinion on how the mortgage companies will see this level of cash? Will they look down on it?

    - One reason for moving is that my wife has a new job in London - pay rise, meaning more guarunteed income, but obviously commuting costs. She currently receives a sales bonus, and we estimate that she would have an income equal every month ( net tax and train fare) of the top of her current base + bonus). Will mortgage lenders be OK with applying for a mortgage while changing job? Bear in mind I'm not moving roles, have been with the same company for 10 years and contribute 2/3rds to our joint income, as I'm older.

    - Its an extra 100k debt, for a total of approx £320k. This feels like a lot, but it also feels like this is the practical reality of living in the south east/commutable distance to london. I've done affordability calc my self, and on two incomes its a walk in the park, even if rates hit 5.5% (and we would be looking @ a 5 year fix at approx £1400 a month). It only becomes tighter if we have kids and go down to one income, although this is still also doable with a net positive cashflow (just quite a bit tighter obviously!)

    Any thoughts on the above three questions? Should I go for the forever home and set us up for later? Or am I being foolhardy considering such a large debt, even on a repayment mortgage.
Page 1
    • amnblog
    • By amnblog 16th Oct 16, 2:20 PM
    • 8,849 Posts
    • 3,365 Thanks
    amnblog
    • #2
    • 16th Oct 16, 2:20 PM
    • #2
    • 16th Oct 16, 2:20 PM
    Available cash, not a problem.

    Change of job, not a problem (depending on timing and lender).

    Should you buy now, when you can afford to do so? Why not.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • muhandis
    • By muhandis 16th Oct 16, 2:32 PM
    • 215 Posts
    • 82 Thanks
    muhandis
    • #3
    • 16th Oct 16, 2:32 PM
    • #3
    • 16th Oct 16, 2:32 PM
    Here are my thoughts, speaking as one half of a couple who recently bought our 'forever' (or at least for the next 15 years) home for ~400k in very similar circumstances, albeit in an East London suburb, on a combined income similar to yours with my husband on a vanilla basic income and me on basic+bonus+commission -

    - We had between 60-65k as deposit, enough for an 85% LTV mortgage. Plenty of options at that LTV. So I think your 90k cash *should* easily suffice for getting a mortgage to buy a house costing 400k.

    - My income being slight complicated (small basic + quarterly performance bonus + monthly sales commission) reduced the number of lenders since different lenders consider bonuses and commission income differently. NW worked best for us but if I recall our broker correctly, Santander and one other mainstream lender were also options. This might be a consideration for your wife's income. As for changing jobs, some lenders will consider lending on just one payslip in the new job and some might need 3, again your broker will be able to help in this matter. But in your place I would apply while still in the current job (if that is indeed an option).

    - Whether the debt is 'too large' or not is something that you will have to ponder upon. We thought it was doable and necessary because we are planning to be working and living in London for the foreseeable future and are planning to start a family so it was right for us. Like you say, it was just the reality of buying a house in London/SE. I'm sure there are others in that situation who would have decided that they aren't comfortable with that much of debt. Depends upon your risk appetite and personal circumstances.

    We have been cutting expenditure like crazy ever since we got the mortgage and are on track to overpay by 10% each in the first 2 years of the mortgage so that when the 2 year fix comes to an end we'll hopefully be able to remo/switch at a much lower LTV.

    Hope that helps.

    Hi All,

    We currently have a 3 bed terrace house which has been valued by estate agents at £295k (in the south east on the Ldn/Btn main line, about 25 mins walk from the station). We have approx 100k equity in the current place (190k remaining on a tracker).

    My wife has taken a new job in London, and we're considering whether it would be sensible now (While childless) to make a move while our income is relatively good (£90k joint income) into somewhere bigger and more "forever" / long term home - as we feel like the current place would be fine with a newborn, but would get cramped after a while.

    We've found a house I love / my wife likes (needs decorating) at 400k.

    I'm pondering two things re the mortgage:

    - We have no debts outstanding with the exception of my wife student loan, but we only have £7500 in cash (I say only, considering we're very lucky!!). The fees on this house total approx £15,000 (sols/stamp duty/etc). So we would have to use some equity toward the fees. Leaving us with £90k. Does anyone have an opinion on how the mortgage companies will see this level of cash? Will they look down on it?

    - One reason for moving is that my wife has a new job in London - pay rise, meaning more guarunteed income, but obviously commuting costs. She currently receives a sales bonus, and we estimate that she would have an income equal every month ( net tax and train fare) of the top of her current base + bonus). Will mortgage lenders be OK with applying for a mortgage while changing job? Bear in mind I'm not moving roles, have been with the same company for 10 years and contribute 2/3rds to our joint income, as I'm older.

    - Its an extra 100k debt, for a total of approx £320k. This feels like a lot, but it also feels like this is the practical reality of living in the south east/commutable distance to london. I've done affordability calc my self, and on two incomes its a walk in the park, even if rates hit 5.5% (and we would be looking @ a 5 year fix at approx £1400 a month). It only becomes tighter if we have kids and go down to one income, although this is still also doable with a net positive cashflow (just quite a bit tighter obviously!)

    Any thoughts on the above three questions? Should I go for the forever home and set us up for later? Or am I being foolhardy considering such a large debt, even on a repayment mortgage.
    Originally posted by PheoUK
    Last edited by muhandis; 16-10-2016 at 2:34 PM.
    • Thrugelmir
    • By Thrugelmir 16th Oct 16, 3:48 PM
    • 51,249 Posts
    • 43,041 Thanks
    Thrugelmir
    • #4
    • 16th Oct 16, 3:48 PM
    • #4
    • 16th Oct 16, 3:48 PM
    You may have found a house to purchase, but you need to at least get yours under offer before a vendor will take you seriously.

    With £90k of joint income and no debts. Perhaps you should be asking yourselves where the money is going. Personally I'd build some more equity/savings while your circumstances allow. Suspect your £15k for moving costs maybe on the light side.

    Guidance for lenders is currently for interest rates at 7% for affordability checks. Borrowing less would make burdening yourselves with a huge amount of debt more palatable.

    Ultimately it's your choice though.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • PheoUK
    • By PheoUK 17th Oct 16, 6:12 PM
    • 349 Posts
    • 190 Thanks
    PheoUK
    • #5
    • 17th Oct 16, 6:12 PM
    • #5
    • 17th Oct 16, 6:12 PM
    Hi All,

    Just wanted to say thanks for the opinions and experiences they are good food for thoughts. You're right we need to get ours on the market but wanted to temperature check what we were thinking was actually realistic.

    Still considering options as indeed it is a lot of money, conversely potentially we're talking about a long term family home! We could indeed stay where we are to collate more capital, but that relies on the property market staying relatively flat! Nothing is easy eh!
    • getmore4less
    • By getmore4less 17th Oct 16, 7:26 PM
    • 26,262 Posts
    • 15,796 Thanks
    getmore4less
    • #6
    • 17th Oct 16, 7:26 PM
    • #6
    • 17th Oct 16, 7:26 PM
    The numbers are OK

    You could create quite a lot of disposable income to overpay reduce debt and secure an easier future reducing risks associated with loss of income either voluntary(kids) or not of your choice(redundancy)

    Lifestyle choices on where you distribute your income are in your hands.
    • PheoUK
    • By PheoUK 18th Oct 16, 10:06 PM
    • 349 Posts
    • 190 Thanks
    PheoUK
    • #7
    • 18th Oct 16, 10:06 PM
    • #7
    • 18th Oct 16, 10:06 PM
    We've spent the money on doing up this house, which had no kitchen and an original bathroom, which has driven equity.

    Not been throwing it away on the horses!

    That having been said there are ways we can economise, which we're constantly looking at. Aided by the MSE budget calc and money dashboard.com (great site that!)
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