Mortgage advice - putting my mind at rest?!

BristolExile

Hi forumites

My wife and I are looking to move house but I am concerned that we will not be able to get the value of mortgage we are hoping for, (around £170-180k for a £230-240k property).

We are about to put the house on the market so may still be some way off but I wanted to get an idea of what we might expect. I have tried the mortgage calculators online but I know these may be more optimistic than they should be.

Details are below - what do you think? Might give those London & country people a call too for their views. Has anyone else used them?

Hoping to sell for - £210k
Current amount left on mortgage - £145k
Kind gift from 'bank of mum and dad' - £30k
Salaries - £33k p/a + £15k p/a (Total - £48k p/a)
No missed payments in the last 5 years, drifted over overdraft limit once in last 2 years.

However...
Credit card debt of £10k, (payments around £120 a month) and overdraft of £1k.
Disposable income - practically zero as we "break even" each month.

Although...
Debts will be repaid on completion to the new property (I know Nationwide at least would therefore not count this as a current debt).


Any thoughts?
I know the equitity is good which will go in our favour but worried that the debts and lack of disposable income will worry lenders!



Darren

amnblog

If your disposble income is zero how can you afford a mortgage 25 to 35K higher than your current one?

BristolExile

Sorry, probably didn't explain myself. Original mortgage was around £170k but what we owe has since dropped to £145k.

We currently pay £870 a month and certainly not looking to increase that. If anything we'd like to to drop a bit.

amnblog

You want to borrow more and pay less?

BristolExile

£170k would be the same as the original mortgage agreement an we are currently on a stonking 5.49% interest rate so I think it is possible to surely find a new deal with a lower interest rate that would mean lower / the same monthly payments even if we borried slightly more. Unless I am getting my sums wrong!

amnblog

Perhaps you should restrict your purchase to £230,000 and mortgage to £150,000.

Getting a 2.5% rate on today's market is fine but leaves you exposed in the future if rates go back up again.

BristolExile

I think we'd certainly settle for that if offered. Thanks for the advice amnblog.

BristolExile

A quick additional question folks...

Do underwriters frown upon credit cards being used to take cash out or is this a minor consideration?

Thrugelmir

BristolExile wrote: »

A quick additional question folks...

Do underwriters frown upon credit cards being used to take cash out or is this a minor consideration?

Debt is debt. Lenders scoring systems digest the 84 months of available data analyse utilisation and levels. Overdraft and high credit card balance will be flagged up.

As and when interest rates rise you will be at severe risk if your income is already stretched.

BristolExile

Hello helpful people.

Childcare costs - do we have to declare these in a mortgage application if we only have to pay them for the next 6 months?

Thrugelmir

BristolExile wrote: »

Hello helpful people.

Childcare costs - do we have to declare these in a mortgage application if we only have to pay them for the next 6 months?

If you are asked the question then yes.

Dependants i.e. children, will impact affordability calculations. Even without childcare costs.