help with new mortgage pls?

kizatt

i'm trying to arrange a mortgage to buy a new property, but am having probs due to possibility of not being able to sell current home in time & new lender taking into account outstanding mortgage. any ideas/help much appreciated.

we are buying a house for £198K (also valued at £198K) and have £50K deposit from trust fund. our current home is worth £110K and has outstanding mortgage of £46200 of original £58K with lloyds. my husband earns £36K. I don't work, but get child benefit & child tax credit (which i know may or may not be taken into account depending on lender) worth £2800pa. 3 kids. we have no loans or outstanding debts & clear our credit card in full each month. our current mortgage payment is £365, although we've consistently overpaid by at least £100.

we bank with nationwide & had meeting with them today (after last 2 weeks of talking with brokers - local & martin's recommendations & consistently having nationwide recommended). they will lend max of £153K if other mortgage cleared but only £106800 if not.

can borrow up to £20K from relatives if necessary, but would rather not. also prepared to rent out current property if doesn't sell in time - rental income likely to be £450-£500/mth (nationwide will not consider rental income unless 2 months proof of income).

so far max mortgage i've found based on our income is £180K with woolwich (still only need to borrow £148K, but need to know they'll allow that plus exisiting £46.2K). haven't spoken to any brokers again yet.

entry date 24th oct. offer accepted on basis we don't have to sell home to buy new property (which we don't from the point of view of requiring equity from current home as deposit, but clearly do when it comes to affordability calculations - unfortunately brokers we consulted all happy to proceed on basis our property would sell in time, but given current market i'd prefer to err on side of caution - estate agent says should get interest, should sell, maybe around or below asking, but unlikely to be completed in time). in scotland, so all under scottish law.

really would appreciate any ideas and advice. can happily research different mortgage deals etc, but out of depth when it comes to who will or won't allow existing mortgage to continue til property sells . thought i'd done all my homework. gave brokers all the info, including intention to rent out if not sold, & even pressed one on what would happen if house not sold in time - all to no avail until eventually got an honest answer from nationwide themselves today.

new house is everything we're looking for - don't want to miss out just because the market's rubbish just now

thanks:T

poppy10_2

If the house is on the market for £198k, you should be able to knock the price down to £180k with some negotiation.

Bluebirds1975

poppy10 wrote: »

If the house is on the market for £198k, you should be able to knock the price down to £180k with some negotiation.

Agreed/ Try and reduce to asking price. We went to view a property recently reduced from £224,995 to £209,995. Was told by EA that the vendor wouldn't go any lower than £200,000.

After a few days we agreed a price of £190,000 :money:

herbiesjp

Ok - you thought about letting out your current property temporarily. And if you did you could get £450-500pm rental income?

You would need to get consent to let from your current lender, but it should be ok.

This way, this current property would be "ignored" for affordability calculations when lenders for the new property look at the new lending

Different lenders have different rules, but I'm sure you could find a lender to meet your needs

Has this option not been discussed with you by the brokers? You mention it, and it seems like the easiest option for you, but I'm surprised they have not gone into any detail with you about this

kizatt

thanks for your replies :beer:

the price has been agreed & isn't negotiable any longer (not under scottish law anyway & we had lower offers rejected due to higher offers by other potential buyers - looks like this is the one house bucking the current trend ). our offer was accepted because theoretically we don't need to be part of a chain (as long as we get this mort nonsense sorted!)

yep, i agree the best way forward is to accept renting out the property as a realistic option if the house doesn't sell in time. the brokers i discussed things with (3 different ones) had different approaches:

1. ignore it-proceed with new mort without taking into account (or at least not that was discussed beyond my initially pointing it out at the outset - i would have assumed it had been taken into account had i not discovered otherwise by chatting with another broker)
2. cross that bridge when we come to it (ie arrange mortgage on basis of selling current house & get buy to let mort on it if not sold & just hope the new domestic lender doesn't find out so it won't affect mort on new property)
3. get permission to let from current lender, arrange new mort for new home - no mention of impact on new loan amount

all 3 recommended nationwide who definitely won't lend to us under those circumstances & one also recommended a woolwich product with max LTV of 60% because we're intending to sell our house & totally ignoring not only potential complication of existing mort being taken into account, but also that we'd need equity from house to have 40%+ deposit.

seems to have been a total misunderstanding that intention to sell isn't quite the same as actually selling

anyway, on more positive note have now had decision in principal from hsbc who take current mort/double council tax etc into account, but as monthly expenses rather than deducting outstanding loan from amount they'd lend. as we've no other loans, credit card debts etc it doesn't make our monthly expenditure unmanageable & they're able to lend what we need - without us having to have rental income (although we'd like to have rent coming in, obviously!). phew! :j

fingers crossed it all goes smoothly from here - i'm up to my eyes in paint now trying to get our house looking less like it's been wrecked by 3 kiddies for the past 5 years & have no more time for mortgage hassles

bws
kizatt

SouthCoast

Why are you in a hurry to buy the new property before your old property is sold?

kizatt

just a quick update.

to reply to southcoast - because i want this new house been looking for a couple of years, don't want to stay where i am for various reasons including having outgrown the house & never having been happy here...

anyway, we've now arranged a buy-to-let on our current property & have found a reputable mortgage broker who, fingers crossed, is going to sort out both mortgages for us. feel much happier with the prospect of renting than selling in this current climate.

thanks again for your replies

Toughluck

Just read all this thread, and as herbies said this should have been easy to do. Where you are at now is fine and very simple to do. Covert your exisitng mortgage to a BTL, ignore that monthly payment for lending purposes, and find a lender, C&G, for example who will use your CTC and child benefit in their affordability calculations.

As far as I know, Nationwide will only do 4.25 x your mans income and wont take into account your benefits.

Looks as though your there anyway so well done.

Conrad

You did not need to convert your current mortgage - thats added cost. One lender I know will allow you to buy the new property and disreguard the existing.

Best of luck.

kizatt

yep, i know i could have got permission to let from my current lender, but got a better deal on a buy-to-let remortgage (currently on 7% svr with lloyds tsb, changing to 0.99% tracker with bm solutions ) & got free legals, valuation refunded etc. have to admit my head's mince now & i haven't sat down and carefully calculated exactly which would work out better over the term of the tracker deal taking into account the arrangement fee, but i'm happy enough with what we've arranged.

as for the mortgage for the new property, it'll probably be halifax or c&g taking into account ctc & child benefit as well as rental income to offset additional mortgage. nationwide would still have been able to lend enough but required 2 months proof of rental income which we obviously won't have in time.

one quick note - hsbc turned out to be no use at all - don't know if adviser i was speaking with got it wrong originally, or if their system genuinely is just this crap, but they went from being able to lend us £153k at decision in principal to £38k on application!! something to do with having 3 children, so she said....... suspect some details weren't entered correctly 1st time round & there was a bit of back-tracking going on, but i wasn't best pleased at time

can't believe i'm in the best financial position i've ever been in & it's been so bloody complicated

best news so far is my brother in law might decide to rent from us, so aside from potential family-type problems (which i'm just ignoring the chance of ), we may well have our tenant sorted & can get on with the business of being excited about our lovely new home

kizatt xx