Will we get a mortgage?

colink24

Hi All

Me and my wife are expecting our first child early next year. As a result, we need to move to a bigger property.

We purchased our first home 6 years ago on an interest only mortgage. Our house is worth roughly what we paid, maybe a little extra but not by much. I would much prefer to buy our next house rather than rent, just because we will want to settle with our baby.

We are both currently in full time employment. I earn 55k, her 22k. She will obviously take maternity for a year at statutory payments, and likely return part time once her year is up.

We don't have much in the way of savings, mainly because we have enjoyed holidays, cars etc. In the past year we have worked hard to reduce debt, though given our income it isn't high. We planned for the baby so now have total debt outstanding of just under 10k. This will be paid in the next 12 months.

As we do not have that much in the way of savings, in order to buy we will need to look at the governments scheme next year. Our credit files should be ok (we have overdrafts facilities, mortgage, credit cards, car finance etc).

Our monthly outgoings total £2,000, so usually have around £2,500 surplus each month. I plan to clear up our current debt with some of the surplus each month.

Do you think we will find it hard to obtain a mortgage? I understand the lending criteria is quite tight for this scheme but I see it as our only option if we wish to buy.

Sorry for the rambling! Hope it all makes sense!

Thanks

ch3101

To be honest I think the scheme is tailored to suit people who couldn't save a large enough deposit, and primarily for FTBs.

How much equity is in your current home?

Would you be able to live there for a couple more years to clear the debt and start saving again?

colink24

ch3101 wrote: »

To be honest I think the scheme is tailored to suit people who couldn't save a large enough deposit, and primarily for FTBs.

How much equity is in your current home?

Would you be able to live there for a couple more years to clear the debt and start saving again?

Thanks for the reply. It will be tough, as its only one bedroom and we have already lived here far longer than we had hoped (bought at 2007 market peak).

I am just worried that renting will be our only option.

sulphate

You don't consider a 77k income to be high?

You will need a 5% deposit (at least) for the help to buy scheme, although the more the better.

How much are you looking to borrow?

colink24

sulphate wrote: »

You don't consider a 77k income to be high?

You will need a 5% deposit (at least) for the help to buy scheme, although the more the better.

How much are you looking to borrow?

No I meant having 10k debt with that income isn't considered a high amount of debt.

We can get 5% together. Well combined income mortgage calculator suggest £330,00 mortgage but we will likely look for something around £230,00 max, as my wife will only return to work in a part time capacity, so earning will be closer to 12k

amnblog

If your wife is taking MP for the whole of 2014 many lenders will ask you to provide you have funds aside to replace her reduced income.

In the absence of this they may be underwriting on your income only.

In you are looking to use the Help to Buy scheme the affordability calculation will allow for the 20% equity loan as well as your 75% mortgage.

You may well find that your maximum purchase range is just above £250,000 so given the SDLT ranges, £250,000 could prove to be your maximum practical purchase price.