We want a bigger mortgage than our salaries allow

MikeRB_2

Hi,

I'm hoping someone can help. My wife and I are on a fairly poor combined salary of £33,150.

We are currently 2 years into a 30 year mortage on a property with a market value of £165,000. This property has £36,000 of equity in it. We also have savings of £6,000. We owe £129,000 on the current mortgage.

However, we have approched the bank and there say with the equity and the savings, we can look at houses of £200,000 at the maximum.

This is around £25,000 away from the property type we would like. I haven't approached anyone else as yet as the bank we are with, HSBC were the most generous when we bought this property.

I do have a loan of £5,400 outstanding but we have no other debts.

I also understand the banks safeguard the borrowers by not lending too much but we can easily afford a bigger mortgage even taking into account probably interest rate rises. We don't spend much money and are happy to spent a bit more on a mortgage to buy a house we can settle in.

Any advice on what lenders would be best to approach?

AndrewSmith

If you are looking at houses around £225,000 how much deposit are you going to put down/mortgage needed, allowing for stamp duty, solicitor fees, estate agency fees etc etc?

To be honest I think you will struggle to get any more than has been offered by HSBC but lets see the exact figures first.

MikeRB_2

Thanks for your reply.

We'd need a mortgage of £183,000 taking into account our profit from the current house and the £6,000 savings we have. Realistically though, we'd probably need £4,000 for fees, so lets assume we have £2,000 savings.

In that case, we'd need £187,000 mortgage. This is £58,000 on top of what we currently have.

Again, thanks for looking.

AndrewSmith

It works out at 5.6x your joint income without allowing for the loan repayments.

This in a time of rising interest rates and potentially stalling housing market is actually not a good idea. However it is of course up to you what you do but I do actually think you will struggle to find a lender to agree to that amount without charging you either hefty entry fees or loading the interest rate for the pleasure.

MikeRB_2

Ok, Andrew. Many thanks for sharing your opinion. We want to move from our 1 bed flat, and I'd ideally like to move to a 3 bed semi we can settle in. There are many two beds available in a near by town for the £180,000 mark.

We are determined to move so I think I'm going to have to set my sights a bit lower. Your help has been very much appreciated.

AndrewSmith

No problem,

It is difficult via a media such as a forum to portray the best message without sounding patronising, thanks for not taking my comments the wrong way.

Best of luck

Andy