Thinking of moving home to bigger house, can someone help with what happens..

Dazza

Hi all,

Sorry for sounding a bit dumb but wouldn't mind a bit of help regarding finances and how if would effect going for a new home.

We were first time buyers 5 years ago and bought a 3 bedroom semi for £82000, we currently owe £76000 on it. We bought a new car in November via a loan for 5 years and owe £15000 on it. We also have credit card balance of 4500. So the question is how much could we borrow for a new home based on the following. I have a salary of 27K my wife works part time and earns 7K, i.e. 34k total. We have 2 kids aged 5 and 2. We would like to move to something bigger.

Our neighbours house (practically identical to ours) recently sold for 125000 so I am hoping we could achieve something near that (they had a garage, we don't, we have a new kitchen, they didn't!)

So can I do the following . Clear our current mortgage 76K, clear the car £15K and clear the credit card 4.5K total 95.5K. If we get say 120k for our current home we use the remaining 24.5K as a deposit and our combined salary *3 would give us our allowable amount to borrow?????

silvercar

34 x 3 = 102 + deposit of 24.5k = 126.5k. Allow for moving costs etc. realisitcally your looking for a house under the 125k stamp suty threshold.

The other option is to keep the car loan going and borrow a bit more. If you think you can afford it and/or expect wage increases in the next few years it may be worth considering.

PoorDave

Dazza wrote:

Hi all,

Sorry for sounding a bit dumb but wouldn't mind a bit of help regarding finances and how if would effect going for a new home.

We were first time buyers 5 years ago and bought a 3 bedroom semi for £82000, we currently owe £76000 on it. We bought a new car in November via a loan for 5 years and owe £15000 on it. We also have credit card balance of 4500. So the question is how much could we borrow for a new home based on the following. I have a salary of 27K my wife works part time and earns 7K, i.e. 34k total. We have 2 kids aged 5 and 2. We would like to move to something bigger.

Our neighbours house (practically identical to ours) recently sold for 125000 so I am hoping we could achieve something near that (they had a garage, we don't, we have a new kitchen, they didn't!)

So can I do the following . Clear our current mortgage 76K, clear the car £15K and clear the credit card 4.5K total 95.5K. If we get say 120k for our current home we use the remaining 24.5K as a deposit and our combined salary *3 would give us our allowable amount to borrow?????

From the reply above, it seems you can't do both (pay off car loan + car and move to a bigger house). It seems you'd only be able to stretch to about £125k, which sounds like it's about the same amount you'd have just sold your current house for.

Seems like your options are:

Move to a bigger house (probably around £150k). Keep paying off car + loan.

Or

Stay where you are and remortgage your existing house to provide enough capital to pay off your loans.

Then again, you would most likely get more than 3* your combined salary, i would think. I think me and my wife did

homer_j_3

silvercar wrote:

34 x 3 = 102 + deposit of 24.5k = 126.5k. Allow for moving costs etc. realisitcally your looking for a house under the 125k stamp suty threshold.

The other option is to keep the car loan going and borrow a bit more. If you think you can afford it and/or expect wage increases in the next few years it may be worth considering.

Just to add that if you keep car loan or any other debt outstanding then this can impact the amount you are borrowing because the lender may wish to consider the monthly payments to this as part of your affordability.

Ultimately, the best way to work is use the above information and see how that sits against the properties available in your area. If its enough then fantastic if not then let us know what you need and we will tell you if its physically possible.

If you go to a broker then they will be able to ensure you get the best product/deal for you.

Dazza

Thanks for the responses folks..

The houses that we are looking at cost in and around the 150K mark. We are in NI so quite a few of the areas are exempt on stamp duty up to 150K. My wife's cousin also has a removal company so we could call in a favour there. But we would still have estate agent and solicitor fees.

In my current position (work) I will get to the top of my current scale in two years, my salary will be around the 32K mark. Promotions could (hopefuly!!) see me move onto a scale where 38-40 is achievable. Don't think banks take that into consideration though ?

Joe_Bloggs

Let's assume a made up maximum lending criteria of 3.5x largest income + 1x smallest income. That would give you 3.5 *27000 +7000 = £101,500
Add in the deposit of 24.4K then you get the grand total of £125,500.
You may have had enough to buy your neighbours property . Remortgaging fees, removal and Estate agency costs may amount to a few additional thousand. Don't you love house price inflation ?

Are you prepared to move to an area that gets you more space for your money ? Is your mortgage competitive, are you stuck on SVR ? Have you got your tax credits sorted out ? What rate is the £4.5K credit card debt at ? These are moneysaving questions you can ask yourself. You could probably borrow more but it seems you are stretching your means to stay where you are, with such a young family.
Best wishes for the future. Wiser advice may follow.
J_B.