Help me I'm in despair....

Katieandiggy

Ok this could take a long time but I'll sum it up in as short as possible.

I currently have a mortgage for 85,000

There is £40,000 of equity in my house.

I want to buy a bigger house and borrow more money, I now have 2 kids.

I have just applied for a mortgage from my own bank where I have had my current account for 15 years.

So, I have a deposit of 80,000 (50k savings and 30k from house sale)

I want to borrow 160,000 on a tracker mortgage, the repayments are the same for the mortgage I'm paying now as I'm on a high rate currently.

My yearly wages are £33,500, monthly that is £2,000 .

I've just sat on the phone for an hour only to be told the most they will lend me is £75,000. I'm dumbfounded!! I had a mortgage for £100,000 almost 10 years ago when I was on a lower wage......
I went through all monthly outgoings and the woman said it all looked fine to he.
The monthly payments would be less than 1/3rd of my wages.

Now, credit score you ask, well I have ALWAYS had a great credit score, so I payed £14,99 on experien to check, surprise surprise it's 998 - excellent, I have 7 positive factors, 0 negative. No late payments and only 1 outstanding loan. I've had 15 previous loans/credit cards all settled.

I just don't get it!

My bank will lend me less than what I had 10 years ago.

Any ideas,anyone?

kingstreet

Which lender?

What outgoings do you have? Credit? Childcare? School fees? Maintenance? Student Loan?

On £33,500 with two dependents you should be able to borrow about £159k over 25 years.

Without knowing a lot more, it's impossible to say. However from 26 April, lenders will be factoring a lot more of borrowers' expenses into affordability, so it's hard to say if they are using current models, or the new ones.

A whole market broker is your logical next step, as perhaps it should have been at the outset if only to establish options other than your existing lender, which won't tell you if anyone else has a better deal.

Nebulous2

You might need to shop around. The common advice on here is to check with a whole market broker.

Some thoughts though - dependents reduce the amount you can borrow, as do credit commitments. Might be worth using some of that £50k to clear your loan. How much is it for?

Who is your current mortgage with? Might be worth trying them.

£160k on a salary of £33k is quite a stretch.

Katieandiggy

Thank you for your reply.

The bank was HSBC

I have the usual outgoings, council tax, gas, electric, TV licence, car insurance, water fees, I receive tax credits towards childcare as a single working person so she didn't been count that.

She said my outgoings looked fine to her. She said she had no idea why it came to that conclusion, I asked if someone could look into it but she said it wasn't possible because they wouldn't be able to tell me if it was something like my credit score as it's third party information (I know it's not credit score)
Could my wages be too low?

kingstreet

I suspect this is HSBC as they tend to concentrate on shifting trackers as their fixed rates aren't great.

I'd question why a tracker with rates at the bottom of the cycle and the only way is up, unless the rate is so much lower than an equivalent fix.

HSBC is also one of the tightest lenders on affordability too...

Katieandiggy

My loan is for 6,000.

I just don't understand how they are willing to lend me less now even though I have a higher wage... My current mortgage is 86k and they will only lend 75k, I find it all very strange.

Katieandiggy

Thank you kingstreet. How do I find a whole market broker?

kingstreet

Well if you'll forgive my frankness, you either dwell on a lender which doesn't appear to want your business, or find one that does.

Plenty have online affordability calculators you can use to estimate your likely borrowing power. Here are three, as an example;-

http://www.halifax-intermediaries.co.uk/tools_and_calculators/mortgage_affordability_calculator/default.aspx

http://www.nationwide-intermediary.co.uk/calculators/aff_calc

http://intermediary.natwest.com/tools/calculators/calculator.asp

Katieandiggy

Thank you, I'm just in a depressed state after that call lol

I'm going to have a look around...

How do I find a whole market broker

kingstreet

Katieandiggy wrote: »

Thank you kingstreet. How do I find a whole market broker?

Ask friends and relatives for a recommendation. Failing that try;-

https://www.unbiased.co.uk

switching off the "sponsored ads only" option so you get a full list for your area.

Call a few and talk to them. Get a feel for how they operate and ask them to email you their IDD (Initial Disclosure Document) so you can see what service they offer and how they get paid.

As an example, we are paid commission by the lender, typically 0.32% of the mortgage on a high street case and charge £249 broker fee. We're towards the bottom end of the fee chargers. We specialise in affordable housing and our average case size is pretty small. A case I'm doing on Sunday, the commission is £177, so even with the broker fee, the case earnings are £426.

Get a feel for who you will be working with for two or three months and make sure you establish upfront what you have to pay and when...

shortchanged_2

Katieandiggy wrote: »

I want to borrow 160,000 on a tracker mortgage, the repayments are the same for the mortgage I'm paying now as I'm on a high rate currently.

My yearly wages are £33,500, monthly that is £2,000 .

Don't forget that although your payments may be similar now the fact that you will be taking out a mortgage nearly twice the level means that any future interest rate rises are going to be much more significant.

Personally I would say that borrowing £160K on your income with dependents etc is very tight.

A £160K mortgage over 30 years at 3% is going to set you back around £680 a month. At 4% it goes up to around £770 a month and 5% you are up to around £870 a month. These are not particularly high levels of interest rates.
Would you be comfortable at these levels factoring in all your other expenses? Also bear in mind you should factor in putting money away as well for a rainy day fund.