Getting a large mortgage

ventrood

I am looking to get a large mortgage within the next few months. I earn 23500 a year working for my fathers company with a 10% profit share which last year was £9000 and this year is £7500. My OH is a store manager and on £21500 and can get a bonus up to 25% of the wage however is not getting any bonus this year due to poor sales.

I have a 21000k loan with RBS paying 330 a month for the next 5 year
6000 on a mint credit card paying £200 a month
4500 on a morgan stanly card paying £150 a month

We have been paying rent for 3 year In that time we have spent 18000 on rent and now want to start paying a mortgage and not making someone else rich.

However to get the type of house that we would be happy living in we would like £250000 100% mortgage.

Does anyone no how we can achieve this type of mortgage. I understand that we are stretching ourselves to archive this level of mortgage. but our financial situation will only get better as time goes on.

As for our credit rating Im not sure how that is some payments have been late but have always been paid.

Many thanks in advance.

fivemice

That is a heck of a mortgage on that income. Could you really afford the repayments? What about if the interest rate went up?

As for your financial situation only getting better - what if one of you lost your job/fell pregnant/got ill?

tanith

I agree with fivemice you already have over £30000's of debt would it not be a better idea to get that debt down before you take on more... and as fivemice says think about what you would do if you were managing on one salary for instance....

ventrood

yes we could afford the repayment It will be a stretch to begin with but this is what we really want so will have to sacrifice other things like holidays and eating out etc.. I would like to get the interest rate capped for a few years which would allow us to budget correctly and give us the time to pay off the credit cards and loans thus leaving us with and extra £680 a month which would then cover in the event that the interest rates have a sharp rise. Our jobs are secure and a baby is not on the cards.

fivemice

A baby wasn't on the cards for me at 18 either! And illness is not something you can predict either, and you haven't said how you would manage if the interest rate goes up.

Just be very careful... living for two, three, five years on £680 a month isn't going to be much fun. I'm guessing you must live down south to need a £250K house?

ventrood

Yes I live down south and we are two guys so If one of us has a baby Im not going to have to worry about a mortgage cos the papers will pay me a fortune lol

olly300

There have been threads like this before so do a search, and you will probably get advise from a mortgage broker at some point.

However the general consensus will be to get rid of your credit card debts first and reduce your RBS loan as much as possible as you would get a better mortgage interest rate without those debts.

mjdh1957

Good advice on here - you really need to get rid of the debt before getting into a huge mortgage. Don't forget, you will need to budget for maintenance of your new home. So what would happen if the boiler needed replacing? Roof damaged in high winds? Interest rates go up? And what if two years down the line you need to move and prices have dropped so you're in negative equity?

Lots of things to think about before committing yourselves.

ventrood

Thanks for all your comments however one question is still unanswered...Is it possible?

LisaT186

To be honest you are going unlikely to achieve that level of borrowing without a deposit. Most lenders will take your salaries, 50% of the bonus you receive (based on latest that will be £3250, none for the OH as none being received) and then deduct your committed outgoings before applying income multiples.

Ie
£23500
£3250
£21500
= 48250

Less committments of £8,160 per year = £40,090

With this in mind you are asking for 6.23 times income to buy at £250,000 and asking the lender to take all the risk.

Some lenders will go to 5.1 times income on 100% borrowing if you have a fantastic credit rating but normally it is around 3.6 - 4 times joint income for an average to good score. Also there is the affordability issue a repayment mortgage over 25 years is likely to cost in the region of £1300 per month, is this affordable? (plus have you got money aside for fees like stamp duty, legals and valuation?)


Aim to pay off your debts as soon as possible and try and get a deposit saved up, there will be a lot more open to you and it will be more affordable.

Leighthal

ventrood wrote:

Yes I live down south and we are two guys so If one of us has a baby Im not going to have to worry about a mortgage cos the papers will pay me a fortune lol

Brilliant! :beer: