Welcome advice on having a very large mortgage

ellives

...need to re-mortgage in May and thinking about being able to extend lending considerably as part of selection criteria......

Scenario...

Pretty secure jobs for wife and I

Joint income of £110k

About £100k equity

15-20 years + of work left in us!

2 kids - 10 and 13

Current house okay, but a bit small

Wondering about going for a very large mortgage circa £350k to buy a larger house....and although it would be a major commitment (£2200/month), I think it is just about affordable (as there are no other debts at all).

Anyone done this? ...or have a view about what might lay ahead?

Cant quite get my head around it......

Thrugelmir

Earning a £110k a year and only a £100k of equity.

Maybe you need to undertake a review of your personal finances first.

Particularly if finding £2,200 per month out of your income is a struggle.

slummymummyof3

Have you thought about extending your current house or a loft conversion or even both? That would save you on moving costs/stamp duty etc

originalmiscellany

A SOA would highlight where your finances are going. It could highlight areas where belt tightening would really help - e.g. if you have loads of take aways rather than cook ins or smoke loads, it could be an obvious area to tighten the purse strings. There are a lot of people here who have a lot less than you in monetary terms but who have a much smaller overheads.

The SOA is the way to go.
http://www.makesenseofcards.co.uk/soacalc.html

ellives

...sorry, should have added a bit more info clearly!

Only £100k equity due to divorce - not that limited equity in my books = not being financially astute....which is a nice link to the fact that I'd say I'm pretty astute at ways to save money...perhaps not how to stop spending it though LOL!

I guess saying £2200/m is just about affordable could indicate it being a struggle but I think I was erring on the side of caution.

Yes, extending further is out of the question.

Thanks for the feedback

Burridge60

ellives wrote: »

...need to re-mortgage in May

WHY would you NEED to?

Is your current lender making you leave?

Is your first born required for slavery or a nunnery?

Why would you want to be forced to pay more money to change lenders?

ellives

Burridge60 wrote: »

WHY would you NEED to?

Is your current lender making you leave?

Is your first born required for slavery or a nunnery?

Why would you want to be forced to pay more money to change lenders?

fixed term is up in May - nothing as exciting as you suggest....

somethingcorporate

I have been in a similar predicament to you OP with regards to income levels, amount of equity etc recently.

My wife and I are still young and haven't had kids yet so chose the risk averse option to prepare for a family and went for a relatively small mortgage that we should be able to demolish in a decade if we work hard.

If I were you and had no foreseeable large expenditure ahead (kids going to uni etc?) then I would go for it (probably!).

Good luck.

Burridge60

You need to ask your current lender what their follow on rate is if you do nothing. If it is really low maybe carry on paying the amount you do now and persevere rather than tie yourself to a new deal at the cost of maybe 900 quid. Then in 18 months if they wont do what you need them to do you can find someone else without an Early repayment charge.

Then ask them about moving, maybe as if you wanted to do it now? It wont tie them to doing the same in 18 months but will give you an idea.

It would be near impossible to find a lender now based on what you might want to do in 18 months. The lender might be out of business by then! and lots could happen to your own circumstances.

ellives

Burridge60 wrote: »

You need to ask your current lender what their follow on rate is if you do nothing. If it is really low maybe carry on paying the amount you do now and persevere rather than tie yourself to a new deal at the cost of maybe 900 quid. Then in 18 months if they wont do what you need them to do you can find someone else without an Early repayment charge.

Then ask them about moving, maybe as if you wanted to do it now? It wont tie them to doing the same in 18 months but will give you an idea.

It would be near impossible to find a lender now based on what you might want to do in 18 months. The lender might be out of business by then! and lots could happen to your own circumstances.

Follow on rate is horrible - almost 2% over the current fix....

Thrugelmir

[QUOTE=ellives;40514642
I guess saying £2200/m is just about affordable could indicate it being a struggle but I think I was erring on the side of caution.

[/QUOTE]

Then maybe defer the house move for a few months and build up further equity in your existing property.

In terms of the £350k mortgage. Say in 5 years time you still owe £320k and interest rates have risen by over 2%. A 2% increase would increase your monthly repayments by around £380.

That £380 is all interest. Or to put it another way, £91,000 over the following 20 years.

My personal view is that with a good income and minimal outgoings you are well placed to save money and take advantage of distress in the market in the years to come.