Complicated Mortgage Help!!!

pink123_2

I would really appreciate some advise for my sister from any mortgage advisors out there.

She currently has a mortgage with A & L and is tied in until April 2007 (4.5 K redemption fee). She & her OH has found a new built house which they would like to put an offer for £260K together.They have gone to A & L and ask for bigger mortgage to add her partner on to the mortgage but would only offer 185K because he is self employed. She earns 40K (a teacher) and also gets about 1K a year in child tax credits. The problem is that after they met he decided to leave the army and start own business. He has been self employed since May 2006 but has accounts for 2 years. He brings home 2K per month but accounts dont show that ( account only shows profit of 10K last year). He has a loan of 15K (for business) and a 7K loan (personal). My sister has a 8K loan and 10K on cc. Is there any mortgages out there that may be suitable/consider them and at what rate?. Any advise from any experienced mortage advisors will be greatly apprciated!!!

herbiesjp

The property price is £260, but what amount of deposit do they have to put down.

There may indeed be other options available but it would need careful consideration of the figures in the whole scenario, as if they decide to leave A&L they will have to pay £4.5k.

Do they both have clean credit history?

pink123_2

hi. yes they both have excellent credit history. they can put down max deposit of 35K (as rest saved for stamp duty, solicitors etc)

herbiesjp

What does your sister pay each month on the loan , and each month on the cards?

What does her OH pay each month on the £7k personal loan?

YOu are looking at 4.5 times your joint income (without taking your credit commitments into account) so overall I would think they will be at the upper limit of what they could potentially borrow.

If looking at this level of borrowing I would urge extreme caution and advise them to look carefully at their monthly affordability. Being self employed appears to give them a little more flexibility with your income, and so may not be as tight as it would appear based just on the £10k net profit.

Have a word with a fee free whole of market adviser and let them do some research for your sister and OH - this way you will see what the monthly mortgage figures would work out to be.

HTH

pink123_2

thanks, will tell her!

MarkyMarkD

Herbies

The A&L penalty ends in one month's time, so I don't think that you need to worry about the £4.5k.

herbiesjp

MarkyMarkD wrote: »

Herbies

The A&L penalty ends in one month's time, so I don't think that you need to worry about the £4.5k.

Indeed it does :beer:

pink123_2

sorry I meant April 2008! my mistake. They each pay 350 on their out goings but for my sister's loan the business pays for it every month so really she doesnt pay for her loan!

MarkyMarkD

OK then, I think that it's pretty much a given that you are going to have to pay A&L the £4.5k unless you can appeal their decision about the loan. I would certainly go down the appeal route.

Have they actually applied, or just asked a branch/call centre what standard amount they can get based on their income? I would not be surprised if you can get slightly more than that on appeal.

Having said all that, though, they are looking for over 5 times joint income and they have other financial commitments. Is it really realistic for them to expect to buy a house needing a £260k mortgage, in those circumstances?

pink123_2

Hi, No they need £230K mortgage as they have around 30K as deposit. Also some of their outgoing is paid by the business ( a business loan) but bank wont aknowledge this. They called the bank/call center and have not officially applied.

MarkyMarkD

£230k is still well over four and a half times joint income (of £50k) which is a very big multiple. And £25k of personal loans (excluding the business-related ones) is also very significant. I don't see that many regular lenders being happy with the combination of those circumstances.