Is it worth using a mortgage broker?

kr15snw

We're in a bit of a complicated situation so I'll try and bullet point it:

Currently own a house worth about 110k with a 20k mortgage (all in my husbands name, his name on deeds etc).

We have been offered our dream property on a private sale (neighbour of a friend) and house has been valued at 190k. We'll also need about 40k to develop it.

They want a quick sale and so have said if we're not ready to go through it now then they'll just put it on the market (and we know it will get snapped up as its a developers dream!).

We know ours won't sell quickly as they're are quite a few on the market in the local area.

We need to know our options. Hubby earns about 35k a year but is self employed. I earn 14k a year employed.

We're open to owning both homes at the same time and working on one while the other sits on the market, this obviously means a BIG mortgage. We also have the opportunity of living with the mother in law while we do the place up if we can sell this place quickly.

We don't have a huge deposit without selling this place, but think we could scrape money together from family if it meant getting the house. (For example if we got told a 25k deposit would get us the mortgage then we would try our dammed hardest to get it)

So we know we're a complicated situation so have wondered whether a financial advisor would be able to help us and give us all our options.

What do you think? Neither of us are very up on this as it's my first time buying and hubby has lived here for 15 years and just kept paying his tiny mortgage.

GMS

If you wanted to keep your current property you could look to rent it out. This would mean a Buy to Let mortgage from which you could raise the deposit to buy the new property, subject to rental income and criteria.

Does your husband have accounts?

A broker could certainly help you with this.

kr15snw

When you say accounts do you mean bank accounts?

GMS

Accounts for the business as submitted to Inland Revenue

kr15snw

Yep He's got 2 full years worth and nearly a 3rd now (obviously as it's march). We do it ourself so have all in comings and out goings listed.

Plus his way of doing it is he pays himself £2000 a month 'wages' and the rest (after putting tax into savings) stays in the account for big purchases.

delmar39

These are very rough estimates, but if you did this you'd have more or less the £40k to do the work, but you'd have a mortgage of £140k+, which isn't too bad. According to my calculations you could borrow up to £171k (or around this figure) so you're well within reach. Obviously you could increase the deposit, but this reduces the money you need to do up the property. You could however borrow more and retain more equity. Our mortgage was £155k and our payments were £867 per month to give you an idea.

Equity if sold at the £110k valuation = £90,000
Fees £6,000 (rough estimate, may be higher)
Remains £84,000
25% deposit of the £190k new house £47,500
Remaining equity £36,500
Mortgage required based on putting down a 25% deposit = £142,500 (leaves you with the £36,500 to do up the new place, play around with remaining equity and mortgage amount to get you in the right position).

You can do it!

herbiesjp

In theory this is possible.

However you would need to look carefully at whether the figures stack up and are affordable.

So you could indeed keep property1 and let it out, and raise funds against that property on a BTL mortgage.

You would then use those funds, plus any savings to purchase property2 and do any necessary work.

There will be lending criteria that you would need to be wary of, for both lenders on both properties, and it is easy to fall outside of criteria and get a decline if it is not positioned properly with them.

So you would be best off discussing with a good broker to see if 1) it is and possible and 2) what the figures work out on both fronts.