New buy??

trooperdog

Hi,

I have a house worth around 130k with a mortgage of 90k (18 years at 670pm ish) left.

I want to buy a newbuy house for 259k. Im not sure how this works with the 5% deposit. I have enough to match 5% deposit so would need a 90%LTV mortgage of 233k

To make things even more impossible Im just about to finish my job 35k pa to go self employed in the private sector I will easily earn 40k-70k (possibly tax free depending how long i work abroad for)? But for arguments sake im basing this all on worst case scenario of 40k pretax income.

My wife brings in 14k pa.

I don't want to sell my house if possible, I would much rather rent it out. would this be taken into account as extra income when applying for a new mortgage or would it be classed as a commitment???

What I want to know is
A. is it affordable in the eyes of a lender??
B. What are the issues with going self employed (how long do they need to see the income prioir) etc.

I know selling up and incresing my deposit makes more sense at the minute but i would like to keep my house for my long term plans.

Timing is no issue here im in no rush and purely just toying with the idea to find if it would be feasable.

Any help or ideas would be apprecieated.!!!

Thanks

TD

Conrad

A couple of lenders can ignore the existing mortgage debt if the rental income is some 20% greater than the monthly payment. One lender will ignore the existing mortgage alltogether.

No, the rent income wont be counted.

If they find you've just gone slef employed you will no chance at all.

trooperdog

Thanks conrad, ignoring the new buy thing then what is general criteria regarding self emplyed what would a lender need to see to consider lending?

kingstreet

Two years' accounts or SA302s are the minimum. On Newbuy with a limited deposit, it may be more.

trooperdog

Thanks so far!!

to look at it from another angle if i have another 3 months left of my current employment could i get a mortgage or would i have to declare that i am leaving???

Typhoon2000

It's best that you have no plan to leave your employment when applying for a mortgage. You can reasses your position after you have obtained the mortgage of course.

trooperdog

I agree however they already have my notice, worst case would be 3 months left. I will be earning much more (extra 20k) in my new job but would be classed as self employed/contracted.
would they check with my employer or if i just didnt mention it would they find out??