Will a mortgage lender take in to account a very near pay rise?

sammyjammy

I hope you don't mind me asking but you talk about your partner so I assume you're not married, have you considered what would happen if you split up? Have you consulted a solicitor over how the gifted deposit/loan from your father might be considered if the worst were to happen.

You don't have to wander far around this board to see the unpleasant results for those that don't consider the future.

beecher

ollyfarrow wrote: »

The opportunity has presented it self and we have taken a chance. Remember, more is lost through indecision than wrong decision!

that's a new one on me and I doubt it is one which would stand up to much interrogation to be honest. Making the right decision is what is important, and the right decision can be to walk away.

It seems like a big risk to me, but as long as you've thought out the possible ramifications of not being able to remortgage to pay your father out when the time comes, and what will happen if your personal circumstances change, then I suppose you've weighed up the pros and cons. Just take a little time to read some of the threads on here from people who thought their present lifestyle would stay as it was, or who banked on being able to remortgage, or who didn't realise how much having children would change their earnings potential.

Best of luck.

Thrugelmir

ollyfarrow wrote: »

Thanks for the concern and I can see why you would suggest to not taking on so much.

Most people start off buying a little 2 bed terrace or maybe a flat. Then, depending on their circumstances they aim to move every ten years (give or take) and move up the property ladder as their wages increase.

We are just jumping the queue. You could say that instead of starting off on rung number one of the property ladder we are starting off on rung number 3 or 4.
Effectively we are buying a house that we are going to stay in for the next 20 years. That is why it was very hard to find a property that suited our needs and was 'future proof'.

The 1ook loan from my dad will be repaid off, not each month, but in the form of an affordable remortgage when we can afford to do so. For instance; if after ten years most people move out of their terrace and buy something bigger, we will just remortgage a higher amount against the property and give the equity to my dad.

If most people move up the property ladder 2 or 3 times during a 15 year period, we won’t move at all, but we will take on a higher mortgage at different stages to pay my dad back.

The 20k gift is only a gift to help with getting a house. It is not as if I could turn around to him and say 'actually forget the house, but can I still use the 20k to a new car?'.

I can see why my arrangement might seem odd to an outsider, and I suspect that I haven’t explained it properly. As far as I can see, my dad is being very generous in trying to help me out. My dad works in finance and would not be giving me bad advice. He does not expect monthly payments on the 100k loan. We would be paying a monthly mortgage of £660 with a joint net income of £2230. To me that looks pretty good?

We are at a time when you can buy a four bed detached house in a good area for 250k. We wouldn’t have been able to do that 18 months ago.

The opportunity has presented it self and we have taken a chance. Remember, more is lost through indecision than wrong decision!

I do appreciate all the feedback I get on this forum and I suspect that shortly I will be asking for more!

As previous posters have said good luck. Personally I not sure that the pitfalls of this opportunity have been thought through.

Most people are currently trying to clear debt as quickly as possible. Not saddle themselves with a lifetime of mortgage repayments and high house costs!

ollyfarrow

beecher wrote: »

that's a new one on me and I doubt it is one which would stand up to much interrogation to be honest. Making the right decision is what is important, and the right decision can be to walk away.

It seems like a big risk to me, but as long as you've thought out the possible ramifications of not being able to remortgage to pay your father out when the time comes, and what will happen if your personal circumstances change, then I suppose you've weighed up the pros and cons. Just take a little time to read some of the threads on here from people who thought their present lifestyle would stay as it was, or who banked on being able to remortgage, or who didn't realise how much having children would change their earnings potential.

Best of luck.

I do appreciate the advice. Thanks guys.

The bottom line is that if no mortage lender will touch me on my own, or with my partner, then we have no option but to look at a much lower priced property.

At the moment, it looks like that might be a real possibilty.

Mrs_Bumble

Ollyfarrow, I have read through this thread a few times now and you worry me. I think that you are taking on an awful lot of debt and I think that can lead to a lot of misery.

Are you expecting your personal circumstances to remain the same for the next 7 years, you don't anticipate leaving the area because of your job? You do not anticipate any little drains on your resources, ie children in the future? 10 years might seem like a long time to repay the £100K interest free but in the scheme of things?

At least if you bought a smaller property that more affordable you could see how things went, taking on large credit committment like you are potentially going to can put an awful lot of pressure on you and can cause problems.

I think that you should really think long and hard and maybe speak to an independent adviser for an objective view?

uzubairu

ollyfarrow wrote: »

I do appreciate the advice. Thanks guys.

The bottom line is that if no mortage lender will touch me on my own, or with my partner, then we have no option but to look at a much lower priced property.

At the moment, it looks like that might be a real possibilty.

You are probably right.

BUT

You do have the option of saving for a few more years and:-

a) house prices falling a little further so you get more for you and your dad's money.
b) building up a larger deposit or not needing to lend as much from your dad
c) your partner's credit rating improving over time
d) thinking about what other financial commitments will come (eg kids/reduced income) and if you will be able to afford them

Don't saddle yourself with so much debt without thinking about it really carefully.

We borrowed £113K 3 years ago, and that still make me wince when I think about it.
We did a lot of thinking and considered numerous scenarios (even the what if we split up one), before we signed on the dotted line.

ollyfarrow

Have thought about this:

What about a house worth 175k.

120k in the form of a mortgage, 55k deposit (35k borrowed from my dad in the form of an interest free loan for ten years, 20k gift from my dad.)

You guys have seriously made me consider my plans.

Mrs_Bumble

What can you get for the 20K gifted deposit???

beecher

Have a look and see what you can get for £150k or thereabouts. In my eyes it is madness to have a 4 bed house when there are only the two of you starting out. Moving house isn't that big a deal - stressful at the time, but far better than starting out with a huge debt. Who knows - you may never need a 4 bed house anyway as no-one knows how their life will map out.

£150k with a £100k mortgage and just under 3 times salary, paying back £30k over 10 years at £250/month sounds far more practical, and would allow you to sleep at night!

ollyfarrow

Mrs_Bumble wrote: »

What can you get for the 20K gifted deposit???

Not a lot!

In answer to your earlier question about future life changes.

No, I'm not likely to more to a new area and my job is safe as houses. However, we do want children at some point.