Advice on house move needed

bethuk1

My partners grandmother recently passed away and we were offered the opportunity to purchase the house from family members. We are interested in going ahead and purchasing but there are some issues I'd like some advice on before we even consider it:

1. We have debts of 28k but never once defaulted on a single payment and both have good credit ratings and the debt is affordable.
2. Our currently mortgage is unfixed and 2% above the base rate and never defaulted.
3. There's no equity in our home due to decrease in value but we could borrow deposit.

I earn 25k my partner earns 17.5k and we would be looking for a mortgage of around 85k.

Would our debts or any other factors make obtaining a new mortgage unlikely?

poppy10_2

bethuk1 wrote: »

3. There's no equity in our home due to decrease in value but we could borrow deposit.

A borrowed deposit isn't a deposit at all, it's another loan, to add to the 28k you already owe. You've got little chance of getting a mortgage with those figures

getmore4less

1. We have debts of 28k but never once defaulted on a single payment and both have good credit ratings and the debt is affordable.

But it does mean you have been spending more than you earn.
How long has it taken to buid up this debt?

If it has it increased in the last year then it has not been affordable.

Debt currently at around 85% of a years take home.

NO deposit

A house to sell with no equity, how do you pay the fees?

How big is your cuurent mortgage?

£85k might be a stretch with the debts, and no deposit is not going to help.

timbo58

Fwiw loan/mortgage companies look at debts at a minimum repayment per month of 5% (well they do for credit cards in any case!)
£28k means 1400 a month would be needed to be put aside just to service your debts and couldn't be used to assess any further loan.
If the £28k is not on cards it's prob different?
To be fair; I think if you are beneficiaries also of the will you're better off taking your share in the house sale and immediately getting shot of some of your debt.

Wh05apk

timbo58 wrote: »

Fwiw loan/mortgage companies look at debts at a minimum repayment per month of 5% (well they do for credit cards in any case!)
£28k means 1400 a month would be needed to be put aside just to service your debts and couldn't be used to assess any further loan.
If the £28k is not on cards it's prob different?
To be fair; I think if you are beneficiaries also of the will you're better off taking your share in the house sale and immediately getting shot of some of your debt.

NO. Lenders take the actual amount of the loan repayments, and most take 3% of credit card balances.

You haven't stated the potential price of the property, it may be you could get an 85% mortgage and still take out some of your share to clear your debts, if so then it could be do-able, otherwise as others have said, you seem to be struggling with your curent outgoings, so do not increase them anymore.

bethuk1

Ok thanks for your messages just to clarify

We have zero credit cards the debt is in 2 low APR loans with our own bank I have 11k which is my car and my partner has 18k loans which was built up by a mixture of things.

The deposit wouldn't be loaned from a bank it would be from a family member, my partners dad who is selling us the house, we have no substantial windfall from the estate, there was little actual money.

The cost of the house is 85k our current house is worth 87k so I can't imagine a huge increase in mortgage repayments.

We have around £1500 for fees in savings but we're hoping that as my partner previously worked at the estate agency and the solcitor is a friend we might get a deal....maybe!

With debt and mortgage it comes to £1000 a month we have around £1600 spare for bills, spending money etc.

I just need to know really if the mortgage company would dismiss us instantly for our debt.

Thanks

getmore4less

Your first call should be to your current lender and see what they will do for you as a port of the current deal. and how big a deposit they want

There is no way you will get base+2% with your numbers from anyone else.

More like closer to 5% unless you get a big deposit

How much can the family gift you?

You still have to sell your own place and that might not be at the price you think you can get.

How long will the family wait before wanting to liquidate the assets?

bethuk1

getmore4less wrote: »

Your first call should be to your current lender and see what they will do for you as a port of the current deal. and how big a deposit they want

There is no way you will get base+2% with your numbers from anyone else.

More like closer to 5% unless you get a big deposit

How much can the family gift you?

You still have to sell your own place and that might not be at the price you think you can get.

How long will the family wait before wanting to liquidate the assets?

Thanks for responding, our current mortgage is currently unfixed as our deal comes to an end about 2 years ago, previously we were at 5% and we are prepared for that once the interest rates start increasing. As far as I was aware you can only port the mortgage deal and not the mortgage itself?

We have discussed with the family that if this was to go ahead, we would move into the new house, carry on paying the mortgage on our empty home until it sells, pay off the mortgage (hopefully), the value of our house has dropped from around 110k so we should break even, other houses seem to be going for around the 85-87k mark. If it doesn't sell within a year we'll just move back home (there isn't an immediate rush for the sale of the house, they are keen to keep it in the family and therefore happy to wait a bit longer).

We could probably have a gifted deposit of around 10-15k would this be enough?

Just need to know really whether mortgage companies take on people with considerable debt??

thanks,

Thrugelmir

bethuk1 wrote: »

1. We have debts of 28k but never once defaulted on a single payment and both have good credit ratings and the debt is affordable.

The debt is only affordable as long as you maintain a steady income. Without any equity in your existing property you could be considered high risk as a borrower. Your credit rating is irrelevant in this context from a potential lenders viewpoint. What will be considered is the likely risk of default.

bethuk1

Thanks, I was just wondering whether we would be in the same situation if we moved or stayed in our current home?

We will eventually need to fix our mortgage once the interest rate starts to climb again, would we struggle to get a mortgage anyway?

I guess we're in for a hard time finding a mortgage for our own property let alone a new one…

getmore4less

You allready have a mortgage

Talk to your cuurent lender about what you want to do, with an injection of a gift reducing their liability they may consider a port.