part time working = not mortgageable???

spreadsheet_2

Sorry this could be a long post, but just wanted to find out if there is anyone out there feeling somewhat miffed like I am about mortgages and those lovely providers out there?

My circumstances are that when I took out my last mortgage (2nd mortgage) I was in full time employment (5 years or so ago) living with my partner (who is not on the mortgage). This mortgage was to extend my current home so between original mortgage and this second mortgage and I put approx £7k on credit card as part of the costs of the extension work I had and things were all fine have been paying everything back slowly but surely. Home got extended so new extra bedroom and shower room added, and as I thought property now has higher selling rate if and when I choose to sell the property.

Fast forward several years to now. My circumstances have definitely changed. I'm now a single mum, working part time. What infuriates me is that I am now appear to be unable to get a new mortgage deal because of this decision about having children and working part time and and separating from my ex. You see the fixed rate deal I was on (when I was full time employed) that I was on within both mortgages has long since ended so have been transferred onto the base rate +2%. (That's a great rate now -yeah, but what about later). I went to enquire with my own provider if I could get a new deal, ie roughly the same rates as I'm paying on the base rate just now perhaps fixed for another 5 years (so that I know where I am with my outgoings and I've never missed a payment and I also overpay my credit card debt)???and NO they wont give me a new mortgage at all. So ask a couple of other providers and got pretty much the same answer. Because I have credit card debt to repay and because I have nursery fees to pay out I cant get a new deal. SO I decided to try and have a play around with several online mortgage calcalulators and put in the assumptions for futher down the line (ie that i've paid the credit cards off....the little one is now at school so no nursery fees to pay out),....can I get a mortgage?? well yes but nothing like what your looking for or need.

Why oh why cant providers treat their current customers fairly and take tax credits properly into consideration. I feel trapped because as it is, even when I am mortgageable I can't get what I'm looking for and I can't sell the house, I can't buy a like for like valued house or even downscale because the mortgage offers are pathetic. Yet my house currently probably has £50K equity in it. All I want to do is bring my little one up and be there at home as much as I can yet for doing this I can't get a new mortgage deal because I work part time!!???

I've never missed a payment with my mortgage provider or any credit card provider, in fact I overpay the credit card debt, I switch my credit card debt around every time to balance transfer free deals, so that I'm not getting hit by big interest rates. My credit score is fantastic - yet my current provider treats me in a manner that makes me feel like I'm unemployed even though I get a good wage and tax credits that probably match up to what was once my full time wage it feels because of my change in circumstances.

Sorry I've got it off my chest but am certain that I am not alone on this matter, so there new money for new home owners, current owners just not if you work part time??

ACG

I will be completely honest i havnt read all of that. I scanned through it so i will answer as best i can...

Tax credits - theyre unpredictable depending on the govt in charge. You could argue theyre more guaranteed than a wage but hey ho. So some will get taken into accounts others wont - depends on the lenders view.

As for the equity and the fact you havnt missed any payments - great you have done what you have to do - paying your bills on time is nothing special (i dont mean that in the arsey way it reads, im just making a point that its nothing over and above what you should be doing).

As for looking to the future...
You can get a mortgage, whether its enough for what you need is another matter. Generally speaking you can borrow upto 4x your income. That may be less based on the fact that your in receipt of tax credits and have other debt.
In order for us to help you and say whether it should be possible or not we need to know the following:

Income (from employment):
Income from tax credits - which ones and how much:
How old your child(ren) is/are:
How much is your property worth:
How much is your mortgage:
What other debt do you have:

Again, i dont mean my post to sound arsey, i would rather just get straight to the point instead of beating round the bush and then look to see if we can move forward and resolve your problems.

spreadsheet_2

Dont worry your not being arsey, to just an issue that banks and governments haven't looked at. Mortgages for part time workers

Income (from employment): 8606 (dont pay tax)
Income from tax credits - which ones and how much:
8856 (combined £170 per wk work & child tax),
1055.60 child benefit
How old your child is: 4, starts school next year
How much is your property worth: 120,000
How much is your mortgage: 61,000 over 18 years currently pay 2.5%
What other debt do you have: £6k on credit card which I pay £200 each month and pay £555 each month on childcare

ACG

Thats £9k a year on credit card/Childcare.
It basically wipes out more than your wage or tax credits.

So your remaining income is say £9k (just to be on the generous side), multiply that by 4 as most lenders will do 4x income and the most your going to get is £36k. If im being honest i dont think you would get a mortgage for that amount.

Getting a mortgage isnt an issue, getting the size of mortgage you want in your circumstances is the issue.

Look at this from the lenders perspective, interest rates are at an all time low. They need to ensure you can afford the mortgage now and in 2-3 years time when interest rates are likely to have risen.

Its all well and good to say i will get a full time job and/or the card will be paid off and your child will not need childcare but that is all case of ifs and buts... Life doesnt always go to plan, so the lender needs to be as comfortable as they can be that you can afford it both now and in the future.

I know thats probably not the answer your after and i would love to come back and say such and such would potentially look at this but hopefully it gives you an answer with a reason behind it.

Thrugelmir

Lenders will be assessing affordability on interest rates at the 6% -7% level as possibly that's where they will return once financial stability returns.

You are currently on a great mortgage interest rate (2.5%). So make the most of it and pay down that credit card debt. As the current honeymoon is going to last forever. In fact it's already lasted far longer than people envisaged.

freyamae

It isn't just part time workers its low wages and high house prices in general im afraid me and my husband both work full time £15,000 and £16,000 respectively 2 children but we never be able to buy a whole house at this rate. At the end of the day these are businesses and they can pick and choose who they lend to, it sucks but that's the way it is.

spreadsheet_2

It just annoys me that as earlier post have said, we are currently on low interest rates so trying to prepare for when that's not the occasion. I think that current providers would surely prefer to offer ALL their customers a bit of stability than leave them hung out to dry so to speak, therefore putting the lending at risk further down the line. Surelythey would rather tie someone like me in at a 5 year deal at 2.5/3% interet rate where I then know what im paying and am comfortable at those repayment amounts than have me on the variable base rate to which may theorectically be say 6% and I'm not so comfortable and surely at bigger risk of defaulting