3-way mortgage?

lombrozo

Anyone know where the best place to get a 3-way mortgage is?

Here's a few more details on my situation.

I already have a joint-mortgage with my brother, £180k, about £1190 a month with Northern Rock.

I want to get ANOTHER mortgage for a new property with two other people. I understand that my exisitng mortgage will just be considered a 'debt'.

I earn £42k (with £1190 debt per month)
second person earns £23k (with £250 debt per month)
third person earns £10k (no debt)

We have £95k deposit and we'd like to get a £300k mortgage.

Is this possible?

AndrewSmith

Your existing mortgage may or may not be considered simply a debt.

The majority of lenders will actually calculate your borrowing capacity based on your income then deduct your existing mortgage balance as you are jointly and severably liable for the det) from this as opposed to applying the unsecured debt calculation of monthly payment x 12 and deducting this from your income.

Depends on the lender you approach though.

I personally think that it will be tight and you may struggle to get near £300,000 however it is impossible to say without all the facts.

lombrozo

AndrewSmith wrote:

The majority of lenders will actually calculate your borrowing capacity based on your income then deduct your existing mortgage balance as you are jointly and severably liable for the debt

What does this mean?

AndrewSmith wrote:

I personally think that it will be tight and you may struggle to get near £300,000 however it is impossible to say without all the facts.

Event though we have a £95k deposit?

AndrewSmith

lombrozo wrote:

What does this mean?

It means that irellivent of how many people are on the mortgage, you are responsible for the entire amount outstanding not just your share. That is why a lender looking to offer a subsequent mortgage would take into consideration your full current outstanding balance.

Event though we have a £95k deposit?

Yes even though you have a healthy deposit of £95,000.

What has to be remembered though is that it is impossible within the scope of a forum such as this to interprate the why's and wherefore's of such a case, and impossible to draw a proper conclusion without all the case facts. It also depends on the purpose of buying the second property, ie will it be let out or is it simply as an investment or DIY development.

I am merely offering generic guidance based on how the majority of lenders will view and underwrite your case.

For specific advice based on your individual circumstances you should seek independant professional advice on a personal basis.

Andy

danjberry

is the property you currently own let out? if so for how long has it been let, rental amount, how long is tenancy agreement for? if not what is this property for?

will the property you are buying be your residential property?

lombrozo

AndrewSmith wrote:

It means that irellivent of how many people are on the mortgage, you are responsible for the entire amount outstanding not just your share. That is why a lender looking to offer a subsequent mortgage would take into consideration your full current outstanding balance.

I'm already taking the full amount of the mortgage into account, the £1190 monthly cost is the cost of the whole mortgage per month, not just my 50-50 share...

AndrewSmith

lombrozo wrote:

I'm already taking the full amount of the mortgage into account, the £1190 monthly cost is the cost of the whole mortgage per month, not just my 50-50 share...

But a new mortgage lender will not always necessarily look at the monthly cost, they will look at the outstanding balance, as the cost of the mortgage could change over time with interest rate fluctuations.

Again, as said in my previous post, it really depends on the specifics and the purpose of the properties you own and are looking to buy.

When calculating the amount you can borrow for a second property (assuming it is NOT a buy to let) the lender will generally calculate the maximum lending available on the income given by all applicants, deduct from that amount any current mortgage balances that will remain, then apply the monthly cost calculation to any remaining UNSECURED debt such as credit cards/loans etc that will be remaining.

If the property to be purchase is a buy to let or your current property will be switched to buy to let status then the calculations are completely different.

lombrozo

I see your point on the interest rate fluctuations.

AndrewSmith wrote:

When calculating the amount you can borrow for a second property (assuming it is NOT a buy to let) the lender will generally calculate the maximum lending available on the income given by all applicants, deduct from that amount any current mortgage balances that will remain, then apply the monthly cost calculation to any remaining UNSECURED debt such as credit cards/loans etc that will be remaining.

Your advice has been very insightful but I still don't quite understand. Using your furmulae above, would this mean -

X = (42k + 23k + 10k) - 178k

Where 42 is my salary, 23 is the second persons and 10 is the third, and 180 is my outstanding mortgage balance?

AndrewSmith

Not quite

X= (42+23+10) = £75,000

From X you must deduct the ANNUAL amounts of any UNSECURED loan / card payments that will continue through the mortgage.

Assume that there are a total of £100 of such payments.

£100x12=£1,200

Y= £X-£1,200

Y= £73,800

Mortgageable amount = Y x lenders income multiple (assume 3.5 x joint salaries)

Y x 3.5 =£258,300

Deduct from this the current mortgage of £180,000 to give the maximum additional borrowing available.

£78,300.

As said, it really does depend on what the property will be used for and the specifics of the case. What I have shown is the raw basic form of how the general calculation is made with the majority of lenders.

Andy

lombrozo

AndrewSmith wrote:

Not quite

X= (42+23+10) = £75,000

From X you must deduct the ANNUAL amounts of any UNSECURED loan / card payments that will continue through the mortgage.

Assume that there are a total of £100 of such payments.

£100x12=£1,200

Y= £X-£1,200

Y= £73,800

Mortgageable amount = Y x lenders income multiple (assume 3.5 x joint salaries)

Y x 3.5 =£258,300

Deduct from this the current mortgage of £180,000 to give the maximum additional borrowing available.

£78,300.

As said, it really does depend on what the property will be used for and the specifics of the case. What I have shown is the raw basic form of how the general calculation is made with the majority of lenders.

Andy

Oh right, I see now. You've been very helpful, thanks.

AndrewSmith

No worries