Impact of Overseas Mortgage on Mortgage Application

Gopes

Dear All,
I want to try and buy a pied-de-terre in the UK, over the next 6 months or so.

I currently co-own a Holiday Apartment in Portugal, with my best friend. We brought this property in 2007 as an investment, and have so far, always managed to let it out (holiday lets) sufficiently, to easily meet our outgoings.


Holiday Property Details:

• Cost €174k
• Outstanding Mortgage - circa €135k (with a Portuguese bank)
• Current advertised sale prices of similar apartments in area - circa €220k (most probably irrelevant).
• Current monthly mortgage payments - circa €550
• Average annual rental income - circa €12,000

Everything to do with the property is on a 50/50 basis - although presumably if my friend was to "default" (he is on a very comfortable financial grounding though), then I would be liable for the entire debt. We do have a legal partnership agreement signed and witnessed, covering (hopefully) all eventualities.


My Salary Details

• £45k Basic plus £10k bonus in 2010. Bonuses are not guaranteed, but have been in excess of £5k for the last 4 years. Hoping salary will go up by 8-10% in April (just had my annual appraisal :j).
• Savings/Investments - Circa £65k - of which I would seek to use £40-£50k as the deposit on my new home (leaving a reasonable reserve for unforeseen circumstances).

I would be looking to buy somewhere in the £220-£250k price category, so am looking to borrow £180-£200k (4-4.5x basic salary).


Questions

1. I realise that for Stamp Duty purposes, I will not be a FTB (:mad:). Will this also be the case for mortgages - i.e. would I be able to apply for a FTB mortgage in the UK?
2. Does anyone have a rough idea of what the impact of the overseas property will have on the amount I might be able to borrow? On one side of the equation, we have circa €12k per annum income coming in - but then circa €7k going out in mortgage expenditure). Of course technically only half of that is attributable to me - how will a mortgage lender look at it?
3. Am I being totally unrealistic, to look to borrow 4-4.5x basic salary, on a 80-85%LTV (given the Portuguese property)?
4. My fiancee who lives with me, will be contributing towards the mortgage (a comparatively small amount, as her income is low). She would probably contribute £200-£300 per month towards the mortgage - what bearing does this have? We will draw up a separate agreement to reflect her contribution, in the event of a separation, but as far as the lender need be concerned, I am the sole person liable for the mortgage.

Sorry for all these questions - I am due to speak to a mortgage broker in the next few weeks, who may be able to provide more clarity - but at least the Portuguese property issue maybe slightly out of the ordinary, and I would like to understand what impact this may have (either positive or negative)

Cheers
Gopes

summer1982

Hi there,

Sorry no help with your question but can I ask where you advertise your holiday home? I have an apartment in Cyprus but definitely did not cover my out goings last year (first year I let it), I am finding it hard to pay for it along with our mortgage here

Any advice would be great.

Thank you

Gopes

Sent you a private message.

Damaged

i wouldn't even bother mentioning the other mortgage to be honest.

Gopes

Damaged wrote: »

i wouldn't even bother mentioning the other mortgage to be honest.

Thanks - I did wonder about that - but clearly the lender would reasonably expect to be informed of this mortgage - would I not be sailing "close to the wind"? What would happen, if the lender subsequently found out?

Could "not telling the lender" be deemed as mortgage fraud?

Cheers
Gopes

Gopes

Does anyone else have any views/experience of this?
Cheers
Gopes