Borrowing more money on existing mortgage- help

benkeenan2005

Hi,

I need some help!! Myself and my partner want to move back to the town we grew up in. We currently have a 2 bed house worth about £145,000 we've got a mortgage for £130,000 (which we have £125,000 left to pay) We put down £15,000 depoit on the house, if we sold the house for £145,000 we would get that deposit back.

We have £10,000 in savings and the house we want to purchase is £170,000 so we need to borrow about £20,000. However our mortgage company have said they won't lend us any more. We have recently had a baby so my partner now only works part time earning about £6000 per year with possile bonus. I earn £16000 basic and about £20,000 bonus per year. We get child benefit of £80 and child tax credits of £90 per month.

How can we borrow this extra £20,000?!

Can we borrow the extra money from another mortgage company?

Would it help if we had guarantors? Would they be guarantors on the whole mortgage or just the extra £20,000?

We currently pay £800 per month on our mortgage, we could afford to pay another £100 per month, why do they not take this into account?!!!

Please help!

opinions4u

See a whole of market mortgage adviser to see what you can and can't do.

The reality is your incomes rely on bonus and state benefits to top them up. How would you pay the mortgage if:

1) You didn't earn bonus?
2) Your state benefits were reduced or removed?
3) Interest rates moved upwards?

Perhpaps you need to lower your expectations of the value of property that you want to buy.

we could afford to pay another £100 per month, why do they not take this into account?!!!

I suspect they have, but have factored in to their calculations the uncertainty of the 3 points above. As I see it, your income has dropped but you want to borrow more.

benkeenan2005

I have earnt a bonus every month since i have worked for the company, its not whether i'll get a comission but how much.

We have had our mortgage for two and a half years we have never missed a payment and manage well with our income - otherwise how have we managed to save £10,000 in that time?!

We are not asking for a mansion, we want to move back to the area we grew up in and its expensive- it doesn't get much cheaper than £170,000 for a 2 bed. We need advice on how to borrow this extra, we know we can make the repayments.

We have no debts what so ever

opinions4u

benkeenan2005 wrote: »

I have earnt a bonus every month since i have worked for the company, its not whether i'll get a comission but how much.

Although firms can and do change commission structures, often to the detriment of their sales force. It's a way of cutting costs without paying redundancy.

We have had our mortgage for two and a half years we have never missed a payment and manage well with our income - otherwise how have we managed to save £10,000 in that time?!

And good for you. Maybe low rates have helped. Maybe you've looked after your finances well. I wish more people had taken the opportunity to build up such a cushion.

We are not asking for a mansion, we want to move back to the area we grew up in and its expensive- it doesn't get much cheaper than £170,000 for a 2 bed. We need advice on how to borrow this extra, we know we can make the repayments.

Look at the first line of my previous reply. That is your best bet.

Bigger deposit can also help. At the moment you look like you need to borrow between 85% and 90% of the purchase price. If you could introduce a 25% deposit that would open more doors for you.

Don't forget to factor in estate agents, solicitors, early redemption fees on the current mortgage, new valuation fees, new product fees, stamp suty etc.

benkeenan2005

If anyone else has any comments that would be appreciated.

The facts are

• my earning have gone up since we first took out the mortgage, 16kpa basic + bonus + commission = £36kpa
• my partners has gone down to £6000pa + possible bonus
• + £80 child benefit + £90 tax credit - per month

Therefore:

• we have £20k equity minimum (£125k left on £145 value of property)
• we have £10k savings

We need to borrow an extra £20k as our current mortage on 5.34% fixed runs with Bank of Ireland until April 2011 and they won't increase our mortgage (would this change if we increased the term?)

HOW DO WE BORROW THE EXTRA?

benkeenan2005

opinions4u wrote: »

And good for you. Maybe low rates have helped. Maybe you've looked after your finances well. I wish more people had taken the opportunity to build up such a cushion.

QUOTE]

low rates haven't helped us as our friends are enjoying the low rates while we tried to 'play it safe' on a 3 years fixed at 5.34% (repayment)

opinions4u

I have tried to lay things out in a matter of fact way. I'm sorry that you don't seem to like the answers I've given you.

In addition, the fact that more than half your income is bonus/commission will be a worry for many lender.

As I said on the first line of my first reply: "See a whole of market mortgage adviser to see what you can and can't do." ... I really couldn't have made it any clearer.

InMyDreams

benkeenan2005 wrote: »

If anyone else has any comments that would be appreciated.

We need to borrow an extra £20k as our current mortage on 5.34% fixed runs with Bank of Ireland until April 2011 and they won't increase our mortgage (would this change if we increased the term?)

HOW DO WE BORROW THE EXTRA?

You can't keep your current mortgage, sell your house and borrow 'an extra £20k' from somewhere to buy a different house. When you sell, you will have to pay back the mortgage, plus early repayment charges if they apply (which could run to thousands).

If you want to move, you need to start looking again from scratch at how much you can borrow in total... the 'extra £20K' on what you are already borrowing becomes irrelevant as soon as you sell your current house. It could be that if you did move house, even the Bank of Ireland would not even lend you the £125K any more.

Other than that, I would just be repeating everything opinions4u has already said.

firstaspect

Exactly as opinions4u has said in the first line of the first reply. Go see a whole of market mortgage advisor, there's plenty around and are usually free. They'll look at your situation and look across the whole of the market to see if any lenders will offer you the money you require.

beecher2

There's no guarantee you'll be able to borrow the amount of money you wish. There's not even a guarantee you'll be able to port your existing mortgage without the additional borrowing you need.

You need to see an adviser, and to take into consideration the ERC you'll need to pay.

TrickyDicky

The basic reply is: Because the bank dont think you're a safe bet.
Just because you think you can afford it, does not mean the bank thinks you can. It is the bank's money to lend to whomever it sees fit, not yours to borrow as and when you like.

Some might think that lending more money to someone in your position might be "irresponsible". Havnt the media (and the general public) been shouting about how irresponsible the banks have been and how they caused this mess?

The line has to be drawn. And unfortunely for you, you currently lie underneath it with Bank of Ireland