Moving house/ lender - advice needed please!

surreybased

Sadly for you this is the situation. The credit boom that ended in 2007 meant there has been soaring house prices which do price out 'normal' hard working middle income families. Banks have now restricted lending - or have gone back to how it was pre 2000 and as a result it is extremely difficult to buy a famiy property in London without dual income, very large deposit or parental guarantee.

My dh has a very good salary, no debts and LTV of 40% however he was restricted to just under 3x salary as we have children and now banks take into account realistic living costs. They will also base interest rates on the average (typically 6%) rather than current low levels. Most interest only mortages are also no longer available.

Not sure what the future holds - it feels as if high house prices aren't substainable (as your case shows) however there has been a lot of european investment in recent times, parents are often helping their adult children with very large deposits and BTL investors who got in early on property have available cash so house prices have been propped up. Look on a site such as nethouseprices.com and see what values house prices were in 2000/1 (in your area). You can then see how crazy house price inflation has been - especially relative to salaries.

dimbo61

Well the good news is that you are on a great rate of 2.5% interest only and if your wife has a second child the same sex as the first then they can share a room for a few years!
Overpay as much as you can every month and reduce your debt while building up the equity in the flat.
Dont think you will get more than £250K for your current place who wants to pay £8K in stamp duty if they pay more but you have had 3 years of cheap living.
I earn a similar amount to you and have paid off £45K in 3 years but I live cheaply.
So build up your savings in ISA,s and overpay the mortgage

lobsta100

Thanks for your responses.

To be honest, I knew that it looked pretty bad for us out there in terms of mortgages in general.

Not really sure what we will do when we do run out of space in our flat!

Would my BMR interest only mortgage allow me to overpay? I assume any payments still only go towards interest, or is there a way of starting to pay back capital while I am on this low rate?

Thanks for the constructive comments and for those of you that werent constructive - try and be sympathetic as I have a family to support and am doing the best I can!

beecher2

Overpaying goes towards the capital. You might be better saving the overpayments, if you can achieve more than 2.5% as a savings rate. Fill up ISAs etc. Waiting until you wife goes back to work might be your best option option as you'd probably need a joint income of 80k to have a hope of affording a 320k mortgage. In the meantime, declutter and make the most of what you have.

shortchanged_2

OP I think your only real options are;


1) Sell up and rent a bigger house

OR

2) Change religion

[Deleted User]

shortchanged wrote: »

OP I think your only real options are;


1) Sell up and rent a bigger house

OR

2) Change religion

Or take the £225k you were looking to borrow, and use it to take the bus to the area you need to get to for your religion? How many bus trips does a quarter of a million get these days? Got to be at least a couple of months worth...

dimbo61

I would split any spare money and overpay 50% and save 50% in cash ISA,s earning more than 2.5% or whatever your mortgage rate rises too!
think carefully about what you buy for the flat ie bedroom furniture ( have a look round IKEA) and see how things work out IF! your wife goes back to work.
Good LUCK

rabbitmumu

lobsta100 wrote: »

!
Surely there are plenty of people out there who obtain mortgages for houses costing £400k who do not earn £100k?!It can't be that uncommon for a wife to be looking after children and not working?

I am sorry and try to be nice but OP seriously need a reality check. There are quite a lot of people in London (not a lot when you know there are only about 5% of the UK population) who actually do earn more than 100k a year (or couples with at least £40-£80k EACH). And a lot earn over 100k and that's why there are so many over £1m properties in London.

For a wife not to be working and have kids, people I know usually earn over £120K.

Even for those who are earning £40k plus, they may have parents helping them out. Having a deposit of say £150k and then 5x £40k salary (in the good old days) = £350k.

Based on your savings and salary, a £470k property is completely unrealistic. There's always exceptions and individual circumstances do vary, but I do hang around with lots of people having properties of around 1/2m and they earn at least over £60k EACH husband AND wife.

I do live in London and know the market quite well. I am sure there are decent areas where you can find a small 3 bedroom semi-house under £300-350k in outskirt London (hopefully 20-30 mins by train to central london is not too unrealistic for you?!)

lobsta100

Rent for a 3 bedroom house in the areas I can realistically live in (the religion thing again) - NW4/ HA8/ NW11 - are likely to be £1,000 a month or so.

I think the issue is that in my circle/ community it is common for people my age to be married/ have a family and I am on an average- good wage for my peers. I see people moving into houses from their first flats and I assumed therefore it is ok to secure a mortgage in my sort of situation.

I am realising now it must be that they have a parent or someone paying a deposit or being a guarantor.

Looks like I will stay put until we physically cant move around anymore!

MrsManda

lobsta100 wrote: »

Rent for a 3 bedroom house in the areas I can realistically live in (the religion thing again) - NW4/ HA8/ NW11 - are likely to be £1,000 a month or so.

Searching www.rightmove.co.uk there are quite a few 3 bedroom places for sale for less than £300,000 if you search the postal areas you are looking at and even more 3 bedroom places to rent for less than £1,000 - especially if you already have furniture so can rent an unfurnished place.