Please help, very frustrating situation

frank_butcher

Good afternoon,

I have just signed up and hoping to receive some good advice, so hello to you all.

I am in a very frustrating situation. I am looking to move house as my current has just sold (so not a first time buyer) and have a deposit ready and waiting of £50,000 for the next property. I am in a secure public sector job earning around £27,000 a year. My partner also works full time but is self employed. On paper she earns around £5,000 a year but in practise it is a bit more.

We have sat down and worked out our incomings and outgoings to the penny accounting for absolutely everything and have worked out that we can afford to repay a maximum of £800 a month on a mortgage and remain comfortable financially.

Now the problem is this. Looking at our figures on paper, a lender would only be prepared to give us a mortgage of around £120,000 and this has been the case over the three or four high street lenders we have had meetings with. In theory, I could afford to borrow around £180,000 at a rate of 4% interest which still works out at under £800 to repay a month over 35 years.

If I could borrow the £120,000 and find a property then I would, the problem is I live in London and have two children so £170,000 (including my deposit) really isn't going to cut it here in terms of a suitable place to live. However if I could borrow £180,000 plus my deposit then we could find something suitable quite easily.

Hopefully this explains my frustrating predicament.

I am not the experienced with mortgages and lenders, is there anyway around the above scenario?

Thank you in advance.

ILW

Basing you affordability on on a rate at 4% on a 35 year term is very risky.

Senior_Paper_Monitor

Over 5 1/2 times income (based on what can be proved), with two kids (even assuming no other financial commitments) is extremely unlikely.

frank_butcher

Lenders have been offering us between 3% to 4% fixed for the next 3 or 5 years anyway. And hopefully in 3-5 years our incomes will have increased a fair bit but I understand what you are saying.

frank_butcher

Senior_Paper_Monitor wrote: »

Over 5 1/2 times income (based on what can be proved), with two kids (even assuming no other financial commitments) is extremely unlikely.

I guessed as much. Was looking for some sort of magical solution but knew I was clutching at straws. Doomed to a life of renting then it seems.

beecher2

Realistically, you're going to have to look at cheaper properties, or rent. If you think your income will have increased substantially in 3 - 5 years, then hold off buying again until then.

Thrugelmir

frank_butcher wrote: »

I could afford to borrow around £180,000 at a rate of 4% interest which still works out at under £800 to repay a month over 35 years.

Interest rates aren't going to remain at 4% for the next 35 years.

In 5 years time on the mortgage balance still owing, your mortgage repayments would be nearer £1,100 at a 6.5% interest rate.

frank_butcher

Thrugelmir wrote: »

Interest rates aren't going to remain at 4% for the next 35 years.

In 5 years time on the mortgage balance still owing, your mortgage repayments would be nearer £1,100 at a 6.5% interest rate.

You are right, I have been looking at the short term really over the long term.

Still frustrating though as will be paying around £1000 a month in rent for a suitable property which I could be paying off a mortgage.

Conrad

Ok, you need a specialist lender for this, one that will still charge competetive rates. There are lenders available for this sort of thing. A GOOD and EXPERIENCED mortgage broker (not IFA) should be able to help you. Try and find one that really knows what they are doing otherwise your application may fail and cause a black mark as it were. Ask them lots of questions to try and figure out if they truly know what they are about. Avoid those that use stock standard lines such as'send me all your documents and I'll let you know' as that's a sure sign of a non expert approach.