Affordability

Tomsdad67

Hi

I was unfortunate enough to have been made redundant 18 months ago but managed to get a new job which I started in Jan 09. All is going well with this job but my earnings are less than from my pre redundancy job.

The result being that the house hold budget has been tight especially due to the size of our mortgage which was no problem with my previous salary but is now a bit of a headache.

We have therefore decided to sell and move to somewhere smaller and reduce our mortgage rather than continue to stretch ourselves. We trying to be a responsible borrower

We have a monthly income of approx 5K and credit repayments of approx 11% of this per month from 2 credit cards 1 each and a car loan of £6K.

Our current mtge is approx £2K per month which we are fully up to date with. We both have a good credit rating with no missed payments and a record of having finance but keeping on time with the payments and settling loans on time etc

After paying for food, insurance, life cover utilities etc we currently have about £800 left to cover school dinners for kids, clothes, entertainment, travel to work daughters Bally etc etc

We are looking at a property which would require a new mortgage with a monthly payment of about £1100 saving £800. For which based on the telephone fact find discussion we have been given an Acceptance in Principle.

Unfortunately the first 2 months of this year were a little expensive due to new tyres for the car, follow on from christmas etc etc and as a result we over spent each month. meaning we went overdrawn by the end of each month (Within our O/D limit) We are now back in the black as I have just received an annual bonus.

I have re worked our finances based on the new mortgage payment and we would have stayed in credit dispite spending over our income for the first two months of the year (N.B for March we spent a little less than our income) and would not have gone overdrawn at all.

Obviously the abi will all be clear from my bank statements when I submitt my application. What do you think the Mtge underwriters will think of this?

Will they assess the state of our finances based on the new mortgage repayment, or will they hold the fact that our current mortgage payment and outgoings are causing us some challenges and hence we went overdrawn in Jan and Feb against us.

getmore4less

The key will be the target LTV on the new place and the salary multiple.

Will you have a big enough deposit and enough to still pay all the fees.

I would have another closer look at the budget and priorities.

Moving is a very expensive way to maintain some lifstyle choices that could be cutback for a year or two and then be added back once the debt levels have been reduced.

£5k Income
£2k Mortage
£550 debts
£1650 bills
£800 general

Why not do a SOA and get people to look at it.

Tomsdad67

Hi

Thanks for that. Based on our combined salaries of £92K the lender has suggested we could borrow well over £200K.

We are selling our current property for just under £400K which after fees settling current mortgage etc will leave us with about £100K. we plan to put down a deposit of about £30K and retain approx £70k to use to renovate / extend the property we wish to buy. Therefore we are looking at a mortgage of approx £160K approx 80% LTV

Simon11

Tomsdad67 wrote: »

Hi

Thanks for that. Based on our combined salaries of £92K the lender has suggested we could borrow well over £200K.

We are selling our current property for just under £400K which after fees settling current mortgage etc will leave us with about £100K. we plan to put down a deposit of about £30K and retain approx £70k to use to renovate / extend the property we wish to buy. Therefore we are looking at a mortgage of approx £160K approx 80% LTV

You're in a slight financial problems but then want to spend 70k on refurb? Isn't it best to invest this into your mortgage to make it cheaper to live by every month? Also spending 70k on a refurb, doesn't mean the value of the property will increase by 70k

Tomsdad67

Thanks everyone for your thoughts.

Everything you have referred to are things my Wife and I have discussed and very aware of.

However, what I am really interested in is will an underwriter base their assessment on the size of the new loan repayment and how that would fit with my finances or will they look badly upon the fact that I have struggled a little over recent months due to the size of my current mortgage?

Thanks again everyone for your input

LilacPixie

Toms TBH I would consider staying put for a bit and getting your finances under control and more stble before moving. My understanding is an underwriter will look at not only how your mortgage will fit with your finances but also you financial history and your 'struggle'.

Have you spoke to an adviser?? We did and he said 25% is the magic number as far as deposits are concerned. He said underwriters seem to display leniency depending on the deposit. and bigger deposit the more lenient they become.

Micheal_Hilton

Hello China Doll , here are a few tried and true from my own collection .

Sour Dough Crab Dip

2 round loaves sour dough
16 oz. cream cheese , softened
13 oz. crab meat
1 tsp. horseradish
1 1/2 tsp. lemon juice
4 green onions , chopped
1/3 c. stuffed olives , chopped
3/4 c. almonds , slivered and chopped
Cut top off of bread and discard . Remove center of loaf , leaving 1/2 " thickness at sides and bottom . Cut removed bread into 1 " cubes . Place shell in a 325 degree oven for 10 min. or until dried .
Mix cheese with crab and stir in remaining ingredients . Place bread shell on baking sheet and fill with crab mixture . Cover with foil and bake for 20 min. until center is hot . Serve on platter surrounded with the bread cubes .

dimbo61

If you are looking at buying a £200K property you should be putting down at least £50K deposit and if you still have £50K for improvements !!! then consider an offset mortgage to keep the savings while having work done.
Buying a small house and spending thousands on improvements may not add that much value and involve months/years of living on a building site.
But I live in a modern 4 bed house with good sized rooms,upvc windows,good insulation,modern central heating etc and my wife hates mess!

Wutang_2

Micheal_Hilton wrote: »

Hello China Doll , here are a few tried and true from my own collection .

Sour Dough Crab Dip

2 round loaves sour dough
16 oz. cream cheese , softened
13 oz. crab meat
1 tsp. horseradish
1 1/2 tsp. lemon juice
4 green onions , chopped
1/3 c. stuffed olives , chopped
3/4 c. almonds , slivered and chopped
Cut top off of bread and discard . Remove center of loaf , leaving 1/2 " thickness at sides and bottom . Cut removed bread into 1 " cubes . Place shell in a 325 degree oven for 10 min. or until dried .
Mix cheese with crab and stir in remaining ingredients . Place bread shell on baking sheet and fill with crab mixture . Cover with foil and bake for 20 min. until center is hot . Serve on platter surrounded with the bread cubes .

Very important information.