Can I borrow more than the house is worth?

Rbarty87

I'm a first time buyer and looking to buy a house in just over a year with my partner for around £90,000-£100,000 with a deposit of around £14,000 after some hard saving. The problem is my partner has a loan he'll be paying for the next 5yrs!! The re-payments for this are £230 per month, this will make paying the mortgage bills etc very difficult and he will probably have to live like a hermit once we get a house. What i need to know is if we found a house for £90,00 with that amount of deposit would the bank give us a mortgage for say £100,000? Or would we have to re-mortgage after a year? Get an interest only mortgage for the first year to make it easier? What can be done other than paying the debt off now as we really need to save. Please help and make it clear. I'm struggling to find an answer.
Thanks in advance

_Andy_

Rbarty87 wrote: »

What i need to know is if we found a house for £90,00 with that amount of deposit would the bank give us a mortgage for say £100,000?

No - if the purchase value was £100k the maximum mortgage would be around £90k.

Or would we have to re-mortgage after a year?

Still wouldn't give you more than 90% LTV.

Get an interest only mortgage for the first year to make it easier?

Not at that high an LTV. If repayment is going to be a struggle you shouldn't be looking at purchasing at all.

hillcats

The days of borrowing more than your property is worth are long gone...
I believe this was a factor that brought down Northern Rock, due to high lending...

Based on your post, can you really afford a mortgage ? What happens when interest rates rise ?
The lenders will more than likely think otherwise...

Start saving hard, clear debts first then consider a mortgage, as you will hopefully be in a better financial position.

Loanranger

I agree with everything already said.

Interest only mortgage would probably be impossible for you, too.
Lenders are wanting to see evidence of exactly how you'll pay off the capital sum.

Can your partner overpay on the loan without any penalties? If so, it may be good idea to pay off loan before putting money aside for savings as the interest rate on the loan will be much higher than the interest rate on the savings.

hillcats

Loanranger wrote:

Can your partner overpay on the loan without any penalties? If so, it may be good idea to pay off loan before putting money aside for savings as the interest rate on the loan will be much higher than the interest rate on the savings.

A good point made by Loanranger

TrickyDicky

Rbarty87 wrote: »

I'm a first time buyer and looking to buy a house in just over a year with my partner for around £90,000-£100,000 with a deposit of around £14,000 after some hard saving. The problem is my partner has a loan he'll be paying for the next 5yrs!! The re-payments for this are £230 per month, this will make paying the mortgage bills etc very difficult and he will probably have to live like a hermit once we get a house.

Pay off the loan with your £14000 savings. Money in a savings account is really with nothing if you have the same amount of debt (and you're probably worse off because the money you are savings earns less than the amount you pay on the loan). This way you can save the £230 per month towards your house.

And now for some straight answers, as you asked:

What i need to know is if we found a house for £90,00 with that amount of deposit would the bank give us a mortgage for say £100,000?

No.

Or would we have to re-mortgage after a year?

When you remortgage you pay off your old mortgage. You can never borrow more than 90% of your house value (or less if its a different mortgage product).

Get an interest only mortgage for the first year to make it easier?

On the information you have given, you are unlikely to get interest only anyway. You still have the money you borrowed to pay back.

What can be done other than paying the debt off now as we really need to save. Please help and make it clear. I'm struggling to find an answer.
Thanks in advance

Its a common misconception that saving while you have a debt is a good thing. It almost always is not, as I pointed out above. You will save more by paying off the debt. I think you'll find it a lesson learned - money borrowed has to be payed back!

Rbarty87

Thanks, we can afford the mortgage repayments i just wasn't prepared to split my left over wages as i'm a little selfish. Guess i'll have to .
Just wanted to know if there was anyway to get the load debt in with the mortgage but there obviously isn't.
Many thanks for your time and advice.

_Andy_

Rbarty87 wrote: »

Thanks, we can afford the mortgage repayments i just wasn't prepared to split my left over wages as i'm a little selfish. Guess i'll have to .
Just wanted to know if there was anyway to get the load debt in with the mortgage but there obviously isn't.
Many thanks for your time and advice.

No worries, let us know if you've got any other questions.