Buy a new house

oxp111

I want to buy a show home. the asking price is £430,000 I have a deposit of £200,000 when i sell my house, i have a repayment mortgage of 105,000, what should i do to secure this house, do i try and borrow another £125,000 on interest only? or just see if i can increase my current mortgate, our joint income is only 45k. Suggests please

vodkagirl001

oxp111 wrote:

I want to buy a show home. the asking price is £430,000 I have a deposit of £200,000 when i sell my house, i have a repayment mortgage of 105,000, what should i do to secure this house, do i try and borrow another £125,000 on interest only? or just see if i can increase my current mortgate, our joint income is only 45k. Suggests please

Just to confirm then that your house is on the market for over £305k so once you have sold it you can pay back your mortgage for £105k (if the balance is still this or is this what you borrowed originally) and pay moving fee's / EA Fees etc and then have £200k profit? OR do you mean you will be selling it for £200k then have to pay off the mortgage / fees and will only have an actuall profit of about £90k?

With the new build you will need to place a deposit to secure the house (obviously you wont have a huge one untill you sell your property) so you need to speak to them and see what deposit they want for them to secure the property as yours however check how long they will hold it for you. I know someone who put a deposit on a new build then his buyer for his house backed out, they only held it for him for 8 weeks and then but the new build back on the market, luckily for him after him being very nice to them, they gave him his deposit back as a good will gesture but they don't have to.

Usually if your moving house you would in effect 'pay' the lender back and take out another mortgage for the full new amount you want (if with the same lender the accout number is usually kept the same for example) so in your case, lets take it you will have £200k ACTUAL PROFIT (and lets ignore the fees & say you owe bang on £105k to your mortgage lender to make it easier for now) you sell your house for £305k, you would pay £105k back to the lender but then you need a further £230k for the mortgage, so they will change your account etc and under a new mortgage contract i.e change of C&I to Interest only and a change of product, and bumping it back up to the 25yr tear (or even extending and doing a 30yr tearm) for the full amount of £230k, you will pay your £200k profit to the new build (minus any deposit already laid down) and the lender will pay the other £230k for the rest of the cost and your new mortgage will be £230k a year. NB if I were to take it you would olny have a 90k actual profit you would obviously have to get a new mortgage for £340k)

TBH though I can't see you getting a mortgage with a reputable lender for 230k on a joint income of 45k as thats only a little over what we as a couple make and the most we can get is about £140k with a reputable lender on a normal (decent) mortgage deal however I could be wrong on this - but I do think £340k will be alot more unrealistic!

I think all thats right anyway although it is 2.37am lol

jyonda

Even with a 'deposit' (subject to sale) of 200,000 I don't see how you can afford to service an IO mortgage of 230,000 with a joint income of 45k. Do you have kids to support? Maybe you want more space for your family but you also run a very real risk of losing everything if you can't keep up the payments and go into negative equity.

You're not seriously thinking of doing this are you?

vodkagirl001

jyonda wrote:

Even with a 'deposit' (subject to sale) of 200,000 I don't see how you can afford to service an IO mortgage of 230,000 with a joint income of 45k. Do you have kids to support? Maybe you want more space for your family but you also run a very real risk of losing everything if you can't keep up the payments and go into negative equity.

I agree with you mate a mortgage of £230k on a joint income of only 45k is excessive even with no other debts (IE no Loans / Credit Cards) as remember if jumping up in house size then gas / electric / water / Council Tax will be more expensive and also Stamp duty with be a massive hike.

To give you a very rough idea ive just worked out £230k on an interest rate of 5.59% (just one I pulled of a lenders website and it seems a pretty average rate at present) your monthly payment would be £1423.23 on capital and interest over 25 years. I know this can be jigged about by finding a lender with a lower interest rate (not likley if your borrowing over your means) or extending the term but even if you did Interest only most lenders (well alot I have spoken to) will not offer an interest only mortgage on your max borrowing figure unless you can prove some sort of ''endowment'' type sceme running along side it. in my estimate mate even at a higher lending rate of 4 x the higher earning and 3 x the lower earnings I estimate you would only beable to borrow £160 ish k (thats on 4 X £25k per annum and 3 x 20k per annum) and I really wouldnt advise going with a lender that would lend you any above those lending rates.

**please bear in mind this is all guestimate figures and it would be best for you to visit a few lenders for advise or see a financial advisor**