Moving to 2nd home, high LTV help

marcusnye

Hi All,

I would like some advise on my situation, i am pulling my hair out and think there may be limited options left to me other than sell up, call it quits and go back to renting.

Back in 2009 my wife and I brought a 2 bedroom apartment for £165,000 from house builder Crest Nicholson, until then we had rented for 7 years or so, but got fed up with being moved on every time the landlord wanted to sell up. Everyone advised us that we were throwing our money down the drain and to buy, yet only had funds of about £10,000 available at the time so had limited options and ended up on a scheme called "Easybuy", this is where we brought 85% of the apartment and crest nicholson give us interest free the other 15% via a second charge to be paid back in 10 years.

Situation today - we now have a 6 month old baby and my wife has given up work, thus the amount I can save per month has dropped, however are desperate to move due to real lack of space and estate being overtaken by undesirables.
Problem is getting a new mortgage moving forward, my bank has advised they have no issues giving me up to £166,000 mortgage however when I discussed this all with them I don't think they fully took into account my situation:


Here are the facts:

I have £128,761 settlement on mortgage
I owe the house builder on their "easy buy" scheme, 15% of the sell price which will be around £20,625 based on a realistic sell price of £137,500
This makes total debt on property £149,386
That means, if we sold, we have £11,886 negative equity to put somewhere (i.e. on the next mortgage)

Available savings - £15,000

So

If we brought a house with a value of £150,000
would we add on the £11,886 making upfront cost of £161,886
90% of this amount is £145,697, with a deposit of £16,188.60 - certainly possible to achieve and based on my discussion with their mortgage advisor and these facts, I chose to place my home on the market either this week.


HOWEVER, last night I was going over the numbers again and the way i'm reading it is, that makes it 97.1% of the property value.. which i'm assuming I can't have?
So - 90% of a property value of £150,000 is £135,000

So this means then, we would need to bring the mortgage down to £135,000 by increasing deposit by another £10,697 to a total deposit of £26,885.60 - not possible and unlikely any time soon given reduced savings amount, even though I can afford the monthly payments on their £160k mortgage at £908pm (not too much different to what I pay now if you factor in the service charge/ground rent)

My current bank, mortgage lender and investment funds are all with the Halifax, when I search online on sites like money.co.uk it suggests Halifax offer higher than 90% LTV mortgages however the lady I spoke with on the phone did not mention this (even though she said i was in their highest credit bracket)


Thanks for listening and I openly welcome your feedback and advice, mortgages websites are making my head spin.

Marcus

Caz3121

I don't believe you will just be able to add the negative equity to another property as you have now realised

You would have £12k negative equity to clear and £15k savings.

I am guessing the options would be to see if you can convert the negative equity to a loan and, if this is possible, see what affect that has on your ability to get the numbers you need for a mortgage

Alternatively, use the savings to pay it off and rent for a while whilst you build them up again

guruchelles

I don't know if this helps, but the Nationwide have just extended their 95% mortgage scheme to 'next time buyers' (previously it was just FTB).

You have to open a Save to Buy account and save a minimum of £50 per month for a minimum of six months before you are eligible to apply for the mortgage, which you will need a good credit history to get.

marcusnye

thanks for the responses, going back to renting feels like a step backwards but if i had rented for the past 3 years i wouldn't have lost £30,000+ but thats life.

the 95% mortgage for NTB sounds interesting, i'll look into that as well i'm trying to find a broker at the moment which might unlock some deals available.

Have you heard of the up to 100% LTV mortgages available if you're willing to secure part of the mortgage on a family member's property? My parents are happy if it would help my situation to have a mortgage guaranteed against their property - its fully paid for and worth over £200,000.. not sure if this might unlock some options or better rates given the lower risk to the bank.

Thrugelmir

What rate of interest do you pay on your mortgage?

marcusnye

Originally about 6% in the first two years but now down to 3.99%

Morgage_Confused

Are you sure its 15% of the sell price which will be around £20,625 based on a realistic sell price of £137,500.

And not 15% of the purchase price which was 165,000 which would be 24,750?

marcusnye

Yes I have it confirmed by the Crest Nicholson that on the Easybuy scheme i'm in, when you sell the settlement on their part is a percent of the value rather than the fixed original amount - their hope being that the property gains value but they confirm that even if the value goes down its still 15% (their only stipulation is 2 separate valuations)

kingstreet

Talk to Halifax about its negative equity product.

You can borrow over 100% to cover the negative equity from your first property.

http://www.guardian.co.uk/money/2011/jan/27/negative-equity-mortgage-lloyds

You will not be able to borrow more, so it may be of limited help.

Thrugelmir

marcusnye wrote: »

Originally about 6% in the first two years but now down to 3.99%

Use your savings to overpay the mortgage.

marcusnye

Thrugelmir wrote: »

Use your savings to overpay the mortgage.

Hmm if i did this though i'd have zero deposit available for the next mortgage.

When i spoke to halifax about higher LTV mortgages they said they were only available to those in negative equity on their mortgage (which i'm not, just on the mortgage+easybuy share combined)