Second mortgage - don't think anyone will have me

VT82

Hi everyone,

This is my first post so please be kind - I'm a long time lurker but never before in the mortgage forum. I have a strange situation that I don't think many mortgage providers will be able to help with, so I was hoping the helpful people on the forum might be able to point me in the right direction.

I bought a house with a friend back in the heady days of 2006, when it didn't matter what you were buying, or for how much, as long as you were buying property. It seemed like a no-brainer. We bought it about a year before the absolute peak of the market, so it could have been worse. Fortunately, due to a combination of low interest rates allowing us to overpay, buying a 3 bed semi where demand has stayed decent, and getting a lodger in, we have actually done quite well out of. The mortgage is down to £107k and an estate agent recently recommended that it could be listed for £135k and sold for over £130.

The way in which we bought was also a bit strange, but once again seemed perfectly reasonable back when Property Ladder et al was full of grinning thickos making money on property. I paid a 5% deposit on the place, but my friend hasn't paid any deposit, and I pay around 60% of the mortgage. The plan was that when we sell, I will get the first 5% of the sale price, and around 60% of the equity after paying all sales fees.

The time has come where I desperately want to sell, because sharing with people who are still happy to live like students now they are approaching 30 is getting a bit much for me. We didn't write into the contract what would happen in this scenario, as we ignorantly thought we would have about £40k in equity and would both happily cash it in and go our separate ways by now. My housemate doesn't want to sell - after all, she has a dirt cheap mortgage, money from the lodger, and has no savings to get another place so would go back to square one if we sold. I have managed to convince her to sell, but she doesn't want to move out for 6-12 months, by which time we will have to wait for next Spring to avoid the Winter lull.

As a result, and here's where you come in, I was thinking of moving out and buying somewhere else, and renting my room out in my current place. If I rented my room out, I would be about flat on my incomings (share of 2 lodger rents) and outgoings (mortgage, share of bills and council tax) for the house. However, it would mean I wouldn't be able to access the deposit and new equity from my current house for a deposit on my new place, so would be far from ideal. My housemate is not in a position to buy me out.

My vital statistics are:

Salary: £30k
Savings: £21k
Deposit share of equity in current place if I could sell: £13k
Current mortgage: £400pm out of a joint total of £650pm (including £270pm overpayments, which could be stopped so rent would cover it)
Current Bills: £140pm out of joint £280pm into joint account, which more than covers bills
Lodger Income: Would be around £480pm share out of a joint total of £650 for both lodgers
Amount I am looking to spend on my new place: £100k-ish

With all this in mind, do you think there is a lender who will lend me an 80% mortgage (I could get it down to 75% borrowing £5k off my dad if I needed to), at less than 3x income multiple, taking into account my lodger income covering my first mortgage? I would really like to not have to touch my existing mortgage at all, for example turning it into a buy-to-let mortgage, because it is on a really good deal.

Reading it back, you'll probably say if I'm that desparate to move out, I should either put my foot down and demand to sell, seeing as I have put all the money in so far, or just rent somewhere else. Maybe that's true, but I really want to buy somewhere ASAP that I can call my own and keep nice, and not have to move again when I can buy easily after finally selling my stupid house.

All advice appreciated. Thanks.

VT

Thrugelmir

If your "partner" is unwilling to sell. Consult a solicitor as a sale of the property can be forced through. This may focus your "partners" mind to the reality of the situation.

No legal agreement being in place, propose a 50/50 split of the net sale proceeds. This means that you are giving away a little, but at least have the freedom to move on.

VT82

Thanks for your reply.

I have spoken to a family friend who is a solicitor, who has looked at the contract we drew up. Forcing it through isn't a viable option - I could force it through the courts as if we were getting a 'divorce', but that would cost a bit too much, and would apparently take just as long as me taking the 'softly softly' route that I have already talked about with my housemate - of selling in 12 months.

I have asked her if there is a figure she would agree to sell for if I guaranteed it for her, but she says it's more about sorting her life out and finding somewhere to live than about the money. It's annoying delaying my plans because someone else can't sort their life out. I know on one hand I should feel bad wanting to kick her out of what is her home too, but she really is living here at my expense (financially and emotionally).

Does anyone know if I could qualify for a mortgage? Sometimes it's a shame it's not like the good old days with everyone throwing credit at me!

VT82

It looks like I may be able to get a mortgage after all. I spoke to HSBC and they checked if they would lend to me. It turns out I narrowly missed on the affordability, but only because they assumed I would have to pay the full mortgage on my first place, and would not take into account any of the lodger income. They need you to have less than 60% of your income going out on all your mortgage and bills each month - surely it should depend to an extent on how much surplus income you have, rather than a percentage? If your income was £10k per month, do they really expect you to save £4k of it?

Still, even with all these harsh assumptions I only narrowly missed out, so I'm hopeful there will be someone who will have me. Any suggestions? I still want a decent rate though, I'm far from sub-prime!