Can we get a mortgage?? Need advice to help us make our mind up!

Homebirds

Hi everyone (particularly mortgage brokers and advisors!)
I'm posting to ask for your advice. I recently made an application to obtain some additional borrowing on our mortgage (currently at 55k) from our lender to do home improvements in order to sell.This was rejected due to 'lack of affordability'.
My salary is 28k per annum (permanent full time); my partner is self employed with variable income (last financial year 7k). I'm on mat leave at present. Did this fact influence the lender's decision?
The mortgage rejection was a shock as we want to improve our home with the intention of selling!
Ideally we would like to move to a property worth 150/160k but would certainly consider other properties of lower value. We would have our equity (current home worth around 120 - 130k) and a cash deposit of around 15k. If we went to another lender our redemption penalty will be around 1k.

Please, please help - we really want to move and want to know if this is possible? Can we borrow at all with these figures?

Thrugelmir

Why do you need to borrow £55k for home improvements in order to sell your property?

Sorry but a lender will know that this isn't the true purpose of the money.

GMS

Thrugelmir wrote: »

Why do you need to borrow £55k for home improvements in order to sell your property?

Sorry but a lender will know that this isn't the true purpose of the money.

It says current mortgage is 55k. No figure given for the amount applied for to do home improvements.

Thrugelmir

GMS wrote: »

It says current mortgage is 55k. No figure given for the amount applied for to do home improvements.

Thanks, misread!

Question still applies though.

GMS

Lender affordability is dictated by many things.

Do you have children now or will this be your first?

How many years accounts does your partner have?

Do you intend to, and are you able to return to work on the same salary as before?

Assuming a sale of 120k you would have a deposit of 65k plus 10k cash (deduct 5k to cover estate agents, legals etc) for arguments sake.

You would then need to borrow 75k assuming a 150k purchase price. Try a few lender websites affordability calculators.

Max loan will depend on credit commitments, credit score, number of children, amount of deposit plus many other variables. Without knowing your situation in full it is difficult to say.

Try a few lenders and see what comes up on the calculators. Which lender are you with now?

Homebirds

* Our current mortgage is 55k; we wanted to borrow 5k for improvements
* We have one child
* I will return to work under the same pay and conditions and can obtain confirmation from my employers
* Current lender is Nationwide
* Debt £2,400
* Partner has 2 years accounts but as I said, fairly low income
* Childcare costs will be £85 per week

We tried several online calculators (all projections were 80 - 100k), as well as discussing with our lender before attempting to borrow. In the event, I couldn't obtain an additional 5k!!! They wanted proof of additional income; we lost our motivation for a time and did not proceed with the application. We're determined to establish if can/can't move, one way or the other.

Should also have noted that the application was made in my name only...Should we be making it in both names given our financial circumstances?

Dave_Ham

Hi all,

If a client spoke to me about this, I would obviously need more details to be sure but I would be confident of finding a solution given the equity and therefore deposit...

Just for your information, Nationwide have a good reputation and typically provide good rates although are well renown to be quite inflexible.

There are lenders that will consider your post maternity leave income, although you may have to get confirmation from work and additionally confirm yourself you intend to go back full time.

I certainly would not give up hope here.

Get your credit reports, probably someone has said this although definitely prudent..

All the best

GMS

Are you both on the mortgage now? Are you married?

Why apply in your sole name? Is there an issue with credit for your partner?

ACG

Your not looking for an extra £5k your looking for £60k - thats the lenders perspective.

£7k with 2 years account and maternity pay is what is causing the problem. As has been said there are lenders who will look at your usual income but it sounds like you went to a lender who doesnt.

To be honest, ive never come across this situation so i would just be speaking to all the lenders from scratch. However there are more experienced advisors than me, such as Dave who have come across this situation before and would have a better idea on where to go. You might be best looking for an advisor to help you out.

Homebirds

Thanks all, sorry, should clarify:
* Our current mortgage (55k) is in both of our names
* We're not married
* Our application was made in both names but using my income only
* We decided to apply in this way as we felt my partner's income wouldn't contribute to the application
* Partner's income is complicated; can supply 18 months self employed proof of income (total income less than 16k) prior to this was employed full time


Nationwide were helpful to a point; explained that this was not a refusal but needed to see proof of additional income to consider lending. We declined to proceed.

I'll definitely be looking into credit reports (we haven't had any CCJ's/missed payments/bad debt) as well as booking an appointment with an advisor. We value your opinions about what may be possible. We have relatively little debt and a large stake of equity as well as a deposit which is surely attractive to some lenders?!

GMS

Speak to Nationwide again to see if they will accept your partners income and if this would mean you could borrow the additional funds.

At th same time check if the mortgage is portable as you are wanting to move and ask for a maximum borrowing figure based on what you have in terms of yours and your partners income. That way you will know (in theory) what you could reasonably expect to be able to port to a new property and therefore be able to do your calculations for the new purchase.

You did say you had 15k cash deposit. Could you not use 5k of this to do the improvements prior to selling? Another thing to consider would be to repay the debts prior to a new application. Although this will reduce your deposit for the new place your equity should still be sufficient to not make too much difference to the rates you could get.

Although you are looking for 3 x income it is not as blunt as this. You have £350 mth child care costs, will be 2 dependants, some debt if not repaid, all of which you are trying to carry on one income. If your partner is not showing income to the lender then he will also be classed as dependant on you. Although you say his income is low it is surprising the difference it can make.

Could you also look at extending the term maybe? This may increase your borrowing power.

An adviser would definitely be worth a chat. Don't go applying to lenders at random as this can cause harm to your credit score. It is important to get to the correct lender which may not necessarily be the cheapest one.