Advice needed re: joint/single application & borrowing extra

lolamancity

Apologies for the length of the post but I'm trying and failing really hard to find answers to a million questions I have before the next step in my house selling and I've got a young baby so finding time for lengthy phone calls is proving difficult/impossible so I've not had much finding an IFA to advise me so far.


Basically i'm enquiring whether anyone would mind giving me a bit of advice on an impending house sale/purchase? I'm normally quite financially savvy & have sorted my own mortgages out in the past but a few things have cropped up recently & I'm finding it hard to calculate my situation/potential.


I've had my house on the market for 18 months... 18 months ago everything seemed peachy, although a surprise pregnancy came up, I decided now would be the time to take the plunge and buy a house with my partner together - especially as my small terrace has a 2nd bedroom the size of a shoe box and my 4 yo son was still in a cotbed as the room didn't fit a single bed, but I had a decent job of 11 years on an ok wage and then was as good a time as any.... 18m on, he's still sleeping on my bedroom floor in a room with a damp problem and I've literally only had 1 offer on the house in the whole time which I have just accepted today (slightly below valuation) because I desperately need out of the house (been here 10 yrs & it's starting to need some major work, plus obv I've no room for both my kids) I owe £43,500 on it (had to buy my ex out of it 4 yrs ago), sold it for £71,000 but I'm expecting the buyers to try & chip me further after the survey. So as it stands I have 27.5k equity. My partner isn't on my mortgage & is effectively a FTB. He has 6k saved but we'd envisaged most of that would go on my EA fees, stamp duty, legal fees, survey fees etc. We are seeing a few houses on Weds, one of which needs a fair bit of work (but we can ing it for a while...apart from it needing full new windows, and a bathroom by the looks of it) and we need to know whether we can even afford it & what we need to be offering for it in terms of what mortgage we can get, especially as the buyers of my house are insisting on a rapid sale strictly before the end of May.


However, typically, just before i was due to return to FT work, I've recently been made redundant from my job whilst on maternity leave, so I'm not going to have my previous 20k salary to apply for a mortgage with even though i'm the one with the existing mortgage. My partner is a lift engineer on a newly promoted 27.5k basic but with substantial overtime (earned 33k last year, likely to earn 34/35k this next tax year).


As an example, the house we are looking at as a very early potential property to buy, is up at £145k. Taking into account the obvious things it needs doing without seeing it properly, we would hope to pay no more than 135k. We would however, really need to borrow an additional 10/15k on top of whatever the purchase price was, to do the more urgent improvements.


I'm a big fan of fixed term mortgages, so would be looking for a 2 year (minimum) fixed product with low arrangement fees... In terms of rates/repayments, we need to keep them around £550-£600pcm but I'm also keen for a product with a maximum 85% LTV. Would this even be possible? or would the need for the money we need to make it liveable take away the benefits of having a decent deposit? And would we even get offered a mortgage with me not earning at the moment (am furiously job searching but even when I do get a job, a large part of my wage will go on nursery fees... I'm just a desk monkey and will never earn big bucks) And, even if we did get offered a mortgage jointly or solely... would we be lent the extra money we need for building work?


(final note, I do have (well, will have by mid-March) over 10k from redundancy pay off/notice pay, but obvs MAY need that to live on if I can't get a job quickly - it would've ticked me over for a good while in my current house as my monthly mortgage payment is tiny and I don't have any huge outgoings whilst on Mat leave- obviously wouldn't be the case in a new house though. Not sure if this would affect any part of the overall equation.




Hope someone can help offer their thoughts... Sorry for chucking a million figures at you all but I'm furiously sending a million emails during baby naptime where I can actually half concentrate!

kingstreet

lolamancity wrote: »

We would however, really need to borrow an additional 10/15k on top of whatever the purchase price was, to do the more urgent improvements

Which is not possible. You'll be able to borrow 95% of the purchase price or valuation, whichever is the lower.

lolamancity

Ah, really? in my naivety I thought you could borrow up to the value (therefore if securing at an amount lower than the valuation, borrowing up to it)


Well, that's stumped me a bit then

kingstreet

The best you can do these days is have part of the purchase price deemed all or part of your deposit if you are buying as a sitting tenant or from a family member at undervalue.

Then, you'd use the cash from your sale to do up the property.

Not an option in your case though.

lolamancity

So, the 27k equity in my house... if I purchase for 135k... can I use 10k of it for what we need to do, and the other 17k as deposit (meaning borrowing 118k and taking a hit on the 90%'ish LTV) Or am I still being dense?

kingstreet

If you buy for £135k and put down a minimum 5% deposit, you would then have a mortgage of £128,250 having put down £6,750 deposit. The rate would suffer, as a result.

That would leave you more money to spend on the property.

TBH you're going to have to find a whole market broker for your case. There's too much going on in your opening thread for most people to handle...

AndyT678

lolamancity wrote: »

So, the 27k equity in my house... if I purchase for 135k... can I use 10k of it for what we need to do, and the other 17k as deposit (meaning borrowing 118k and taking a hit on the 90%'ish LTV) Or am I still being dense?

I was about to suggest something along those lines. It seems to just about work out. You should also have a bit left over from your £6k savings assuming about £1.5k in EA fees and £1.5k for solicitors (just guessing at those numbers though).

Whether anyone will lend you £118k is a different question though...

lolamancity

Thanks both, much appreciated, I know I waffle on a lot. Looks like this is gonna be a tight call whatever happens, need a few extra grand asap. Might start selling my ravaged body