Complex Query (mortgage, childcare, life etc)

brendcam

Hey guys,

Bit of a long complex one for you, just looking for people who have been in the same boat as i am currently and if so what you did to get by?

So currently i live with my girlfriend, she has had her flat for 5 years and pays the mortgage accordingly i only moved in last year so it would be unfair to put me on the mortgage obviously so i just pay her rent every month.

So our plans this year include possibly buying a house and having a child, but we are unsure which to do first, if we were to have a child first we wouldnt be able to afford to buy a house but my girlfriend is concerned that while she was off work her income wouldnt cover all the monthly outgoings and we would rely heavily on my income, she is worried about the legal implications of me supporting the family while she is the one responsible for the mortgage/property.
Also we would be stuck for space as it is only a two bed flat.
Then if we were to buy a house first we would have a joint mortgage (my girlfriend would keep her flat and rent it out) but when it came to having a child again she would be on hardly any money for a long time and again we would rely heavily on my wage.

Currently my wage is £24k and she is on £19k, but after she had been on maternity leave she would only want to go back to work part time, so then our total income would be approx £34k if she were to get approx £9.5/10k per year. We would then have to put the child in a nursery 3 days a week again costing a fortune.

I worked out that if this were the case we would get £20 per week child benefit and £228 per year in tax credits, basically hardly anything. Im wondering if there are any other benefits available??
I know having a child involves a lot of sacrifices, which i am willing to make, i just wonder how other people managed to work things out with regards mortgage payments and working hours etc?

If anyone can relate and post their thoughts that would be great.

Oldernotwiser

Why not keep things simple and sell the flat and buy a small house or larger flat that you could afford on your joint reduced income? Unless you live in an incredibly expensive area, supporting a family on an income of £34,000 shouldn't be a problem, even if paying for childcare.

Kimitatsu

Sorry to be blunt but you want to be able to own two properties and have the state support you in bringing up a child. The benefits are being reduced not increased so no there will be no further help available to you.

I agree with ONW, surely if you are committed to having a child together then the best thing to do is to sell the flat so reducing the mortgage you will need to buy a house and your available income will be greater. If your GF is concerned about her lack of security you could explain to her that in the event you split up she would be entitled to a larger proportion of the house as she would have provided the deposit - or, you could just get married before having a child and then have the security of the law behind you......

brendcam

Thanks for replys

I understand i might be coming across a bit ignorant, i know people get by on far less money and are not in as good a situation as we are and still manage to bring up a family.

The only problem with selling her flat is that she is currently in negative equity as she bought her flat at the housing price peak and with them falling a lot over the last couple of years she would lose quite a bit of money.

I have looked into benefits this morn and it seems we are entitled to a small amount of tax credits and obviously child ben.

Kimitatsu

So if she is in negative equity then why not stay on in the flat? A baby doesnt need very much room and by the time he/she does you will be three or four years further down the line and house prices will have settled out a bit.

Its always tough starting out, but it makes you appreciate it later on! If you are worried about money then can I suggest you have a look at the old style money saving board? They have soem great ideas on how to stretch budgets and you will be suprised at just how much you can save in your normal budget

I do come back to the question though as to why you cant be on the mortgage? For me if you are planning the lifetime commitment of a child then you should be able to share her mortgage with her?

Oldernotwiser

If you stay in the flat (which, from what you say, may well be the best thing), surely the pair of you will be much better off than before you moved in last year when she was paying for everything on an income of £19,000?

Also, could you clarify what you mean by "she is worried about the legal implications of me supporting the family while she is the one responsible for the mortgage/property." ? This would make sense if there was a large amount of equity in the property but if it's in negative equity, what is she worried about?

Caz3121

the other thing to be aware of for your plan of keeping her place is that, due to the negative equity, she may well not be given approval from the lender to rent and to change it to a BTL mortgage (if you want it to be ignored for the new mortgage) you will normally need max LTV of 75% and rental of 110%+ of mortgage payment so there would need to be a large cash input + deposit for the new place

brendcam

Oldernotwiser wrote: »

If you stay in the flat (which, from what you say, may well be the best thing), surely the pair of you will be much better off than before you moved in last year when she was paying for everything on an income of £19,000?

Also, could you clarify what you mean by "she is worried about the legal implications of me supporting the family while she is the one responsible for the mortgage/property." ? This would make sense if there was a large amount of equity in the property but if it's in negative equity, what is she worried about?

She is worried about me covering a arge proportion of running costs towards the flat, she thinks if things go wrong and we split up then i can take her court to re-coup these costs. i dont really think this is an issue though tbh

brendcam

Caz3121 wrote: »

the other thing to be aware of for your plan of keeping her place is that, due to the negative equity, she may well not be given approval from the lender to rent and to change it to a BTL mortgage (if you want it to be ignored for the new mortgage) you will normally need max LTV of 75% and rental of 110%+ of mortgage payment so there would need to be a large cash input + deposit for the new place

Never thought of that tbh, thank you. We will be going to see a mortgage broker in the coming months to determine what everything will cost. We currently have approx 20% deposit ready for a house

nannytone_2

have you considered that even on your joint full time incomes, you may well struggle to get a mortgage to cover the cost of a larger property?
on the television a few weeks ago, there was a couple with a joint income of 70k. the best mortgage offer they got was 140k.
it all depends where you live, but, in my opinion, stretching yourselves financially now (while youre both working) knowing that things are going to fget worse financially and not better, would be lunacy.

Jowo_2

brendcam wrote: »

...
The only problem with selling her flat is that she is currently in negative equity as she bought her flat at the housing price peak and with them falling a lot over the last couple of years she would lose quite a bit of money.

.

The only way she will incurr 'losses' is by selling it when there is neg equity. You don't have 20% deposit because you'd have to repay the neg equity with some of it.

Be aware that lenders will not grant permission to let a property that's on a residential mortgage (as opposed to buy to let) when there is neg equity in it.

Your 2 property strategy when one is in neg equity and you are certain you will experience a loss of income and extra expenses is very risky. A non-paying tenant or long void will invariably lead you into repossession or bankruptcy as you would have to pay 2 mortgages on 1.5 incomes. Anyway, this is a non-starter - your GF won't be able to let out her flat in neg equity.

It's a 2 bedroom flat so I don't understand why it isn't big enough to raise a child there.

The issues/concerns your GF has about your potential interest in the flat should you have a relationship breakdown is something that should be easily sorted out with a quick trip to a solicitors to see if an agreement could be drawn up.

Stay in the flat, build up your deposit and perhaps when your child starts school and your GF returns to full time work, you will have a large nest egg and decent salaries to buy a bigger place.