New Mortgage

lackingwedge

Hi All
Want some advice, I am currently looking to but a new property in the 300 to 400K range.
I already have a 4-bed property with about 10K left on the mortgage (worth around £300K) that I am not willing to sell.
I have my own limited company (of which I am the sole employee) and my company has earned approximately 200K in the last 3 years.
However, I have paid myself a lot lest that this (for tax reasons) and have taken a bit more in dividends.
I have about 50-60K that I could put down as a deposit (money resides in business account).
Six months ago, I queried my current mortgage provider just to see what they would give me and the DIP was 205K. They told me I had recently taken out a new line of credit that revised downwards what they were prepared to offer. This new line of credit was upgrading my T-Mobile phone to their 4G network, which unknown to me seemed to have had a negative effect on my credit rating (EE showing as a different company to T-Mobile on my credit report).
I was advised to try again in a few months.
I just wanted to know a ballpark figure, how much they would realistically lend me and if it is worth my while clearing my current mortgage before I apply (admittedly with a 10K less deposit).
Also is it worth my using a broker as I am Self-employed I know I am a higher risk. In addition, I fear repeated applications may damage my credit rating.
I credit file is clean and besides my mortgage, I have no outstanding debts and my credit cards are paid on time.

ACG

What was your income over the last 3 years? Can you break it down year by year? (Both wage and dividends).

kingstreet

What are you planning to do with the current property?

It would seem sensible to raise a let to buy mortgage on it, if you intend to let it?

You should be able to get the lower of 75% of the property value, or the mortgage amount calculated from monthly rent / 125% x 12 / 6%pa.

This is because lenders will typically lend to you based on the rental income being 125% of the monthly mortgage interest, assuming a rate of abut 6%pa.

Then you use that to fund as much of the new purchase as you can, leaving you needing to borrow less on your personal income.

amnblog

A number of things you have said suggest to me you have to proceed with a broker.

'I am not willing to sell'
'I have my own limited company'
'taken a bit more in dividends'
'deposit (money resides in business account)'

all of these issues could trip you up and as you say..

'repeated applications may damage my credit rating'

Use a mortgage broker who is experienced with the self employed

Thrugelmir

lackingwedge wrote: »

that I am not willing to sell.

While a property may make a great home. Worth considering if a better return could be made by investing elsewhere.

lackingwedge

Hi my Wage over the last 3 years was about 15k in wages plus another 15K in dividends per year.

I plan to rent out my current property and use the money to offest some of my mortgage payments on my new property.

I still have 6 years on a 20 year mortgage to pay, but I have been overpaying a fair bit since about 2007 as I feared the financial crisis my affect my job prospects so paid off as much as I could whilst I had money. My rationale being that, if I lost my job, I could stack shelves in Tesco's and still be able to cover my financial outgoings.

I don't want to sell my current property as I promised I would leave it to my teenage kids when they come of age and I wanted to hand it over to them debt free. This is why I am reluctant to take a loan based on it.

Do I have any other options?

Dave_Ham

You have many options, but you will need to discuss your specific situation with a broker.

You are highly likely to have to make concessions on your wish list though. You are likely to need to lower your expectations price wise on the purchase, or raise money on the existing property and your income is not close enough.

Alternatively, await your year end and declare higher figures (if feasible) which whilst paying more tax, your numbers may be more achievable.

All the best

lackingwedge

Ok, thanks for that.

Is there a list of MSE recommeded brokers in the london or wolverhampton areas by any chance?

Dave_Ham

Not really, everything the site promotes goes through London & Country as they are fee free and imagine there is a commercial arrangement there too..

You cannot beat a recommendation from friends or family and your situation does not sound too tricky, just need to talk it through and ascertain your options.

Best of luck

getmore4less

summary

You are borrowing money to give to your kids.

lackingwedge

getmore4less wrote: »

summary

You are borrowing money to give to your kids.

How did you come to that conclusion?