Looking for some advice from those in the know!

traveller01_2

Hello all,

I was wondering whether or not any of you who perhaps work in the industry could give me some advice on the following.

My wife and I are buying a new build home, since our family is soon to increase by one. The full purchase price is £189,995.00.

We currently own and live in an apartment, which we're going to hold on to until its value returns to that for which we paid it. The apartment is currently valued at £105,000.00 and has an outstanding mortgage of £84,000.00. Our mortgage lender has agreed to allow us to let the flat on our current mortgage product; however, that prevents us from releasing any equity, because of the LTV. We have tenants moving in next month.

When we reserved the new house, we did so on an 85/15% shared equity scheme, since we didn't think we would be able to afford a sufficient deposit due to the tightened mortgage lending rules at the time. As such, the developer's IFA advised only two lenders, Nationwide and Halifax, would lend on such a scheme. Nationwide calculated what they could lend us by multiplying our incomes (£25k and £33k) by their multiplier, and deducting the outstanding mortgage from that. We could, therefore, afford the house, and would be paying a 5% deposit.

Nationwide would not accept the proof of earnings of £33k. We approached Halifax. They calculated what they could lend us by multiplying our incomes (now £25k and £15k) by their multiplier, and simply ignoring the outstanding mortgage since they were happy that the rental income covered the mortgage repayments (which it does, easily). We could, therefore, afford the house, BUT would be paying a 10% deposit of nearly £19k. The mortgage payments would be circa £750 a month.

We decided that was fine, though very tight on the deposit, and to go ahead on that basis. Tomorrow we have an appointment with the solicitor to sign the contracts.

BUT:

Yesterday I took a new job. Our proven income is now £25k and £27.5k. Given the way Halifax take account of our outstanding mortgage, having used their calculator online we could afford the new home without having to use the shared equity scheme. The mortgage payments would be £250 a month more, but that's affordable and we wouldn't ever have the stress of repaying the developer their 15% (which falls due in five years).

BUT:

Halifax don't appear to accept a 10% deposit (our £19k). We probably really can't find anymore than that.

So, my question is really - does anybody out there have any suggestions as to how we could go about this without taking the shared equity scheme? i.e. lenders who will accept a 10% deposit, and when calculating how much they will lend will ignore the outstanding balance on the apartment's mortgage given that it is covered by the rental income?

Or am I just making things complicated?

I apologise about the length. Thank you for taking the time to read this.

With many thanks for your help,

traveller01

Thrugelmir

Your new job won't help matters. As you will have a probationary period to serve. Something any lender will consider closely.

You seem to be making matters exceedlingly complicated and taking a considerable gamble on both house prices and interest rates. With the amounts you have at stake.

While the rental income covers the mortgage repayments. Only the interest element of your mortgage repayment is offsetable against rental income for tax purposes. So may not generate the return you expect.