Moving Up and Increasing the mortgage

Sulli

We are currently in a position where we can double our mortgage quite easily, and this will enable us to get our dream home.

Always being one to assess the risks involved, I want a perspective on repossession. If we move up to the house we want we are likely, with the equity we currently have, to achieve 45-50% equity in the new house, so LTV will be 50-55%.

None of that really matters if our employment situations stays the same, we can afford the mortgage payments. But, security of employment is a thing of the past. If the worst happens and the main earner loses their job and has to take a much lower salary, how likely is it that a bank would refuse periods of interest only, refuse to increase the term and ultimately pursue repossession to someone trying to play ball?

I am very comfortable in my current house, having 65% of it's current value in equity, with an affordable mortgage so I'm never really going to lose the house, ever, as i could afford the mortgage with a much lower salary. It's a nice house, but we want something bigger/better. If we move, that comfort level reduces, and in turn maybe stress levels rise - unless I convince myself that holding 50% of the new properties value protects me and the bank will be keen to be flexible to keep receiving whatever payments I can make should the worst happen.

Not sure what I am asking - but any comments or discussion would be nice

GEM1903

We did exactly the same 2 years and now we are putting our big house on the market and downsizing as realized living in a "dream house" isn't all it is made out to be. Just to give the whole picture, we have had a lot of problems (boring stuff like plumbing) and expense doing it up and hadn't really considered the increased running costs (or predicted the huge rise in oil prices!), together with me not being able to work for health reasons for a year, so lots going on, but luckily we have some savings - hence my advice would be to only move if you have enough savings to cover your mortgage payments and core bills for at least 12 months, to give you chance to sort out a new job or sell the house if things do go pear shaped. Having said all that, I would go for it - you only live once and I don't regret moving here because I would rather look back and say I have done it and it didn't work, than I have never done it. Good luck!!

Sulli

Sorry to hear that, thanks for the advice - not sure we'd have that amount of saving but probably not the likelihood of such extensive repairs.