Mortgages for new-ish consultants

Maibel

Hi,

I'm looking for a bit of advice please....

My husband and I bought our current home in 2005 for £117k with a mortgage from Northern Rock which was done as a 90% mortgage and a 10% loan over the life of the mortgage.

We would now like to move to a bigger house, but I now only work part-time as we have 2 young children (I'm currently on mat leave), and my husband is now working as a consultant through his own ltd company, and come April will have completed his first full year doing this. Would we be able to get a mortgage to do this? Our combined income now exceeds what it was in 2005, but I think the way the accountant has set it up means that my husband's salary is quite low with the rest of the income coming as dividends.

Are there any mortgage lenders that would give us a mortgage with only a years worth of accounts and taking into account both my husband's salary and the dividends he receives?

If this is unlikely, would it be better to sell our current home and pay off any outstanding debts with any profit (not sure the value of the house has risen very much), then seek to re-enter the market a few months later (move to rented in the meantime) - as I understand it we wouldn't be able to re-enter the market as first time buyers, but how would we go about it?

Sorry if this is a bit waffly, we're just starting to look into options and don't really know where to start.

Thanks in advance
Maibel:)

Thrugelmir

Do you have debts additional to the monies owed to NR ?

Maibel

Hi -Yes, we have about £12k on credit cards and a loan of about £23k.

kingstreet

What is he earning, what do you need to borrow and what's the deposit/loan to value?

Maibel

he's on around £200/day, so about £50k gross?

We're not sure what we want to borrow yet, we've not seen a house we want to buy, but wanted to start looking and wanted to have an idea of what the amount we could borrow up to was, and what the repayments would be.

As for a deposit - we've not got alot at all - it would most likely be whatever came out of the sale of our current home - maybe £10-15k if we are lucky....

PS - thank you both for responding!

Thrugelmir

Is the mortgage on a repayment or interest only basis?

Maibel

Our current mortgage is on a repayment basis.

kingstreet

As the minimum deposit you'll need is 10%, that would put you in £100k to £150k property territory. In your circumstances, the deposit is going to be the determining factor in what you can look at.

You'll also need money for selling fees, legal, mortgage and possibly stamp duty.

I don't think you're going to be able to move in the very near future. I suggest using some of that income to reduce the current mortgage, increasing your future deposit and reducing the cost of your mortgage.

The income you've given is turnover. Lenders use net profit for the self-employed, or a combination of salary and dividends for employees/directors.

A 25 year repayment mortgage of £135,000 at 4% per annum would cost £713 per month.

I suggest a conversation with a broker to map out a plan for a future move.

Thrugelmir

The only way forward is to reduce and repay your unsecured debt. Start by tackling the credit card debt.

Maibel

Thanks to both of you for your responses - looks like we might have to stay put for a bit then barring a windfall, which is a shame as we could really do with somewhere bigger. It's kind of the answer I was anticipating though.