Need 50K desperately

baggie29

Hi - hope some clever person can help. This is a house moving dilemma. My wife and I have a joint income of around 22k. She is not working at the minute as she is looking after our 3 year old son. Her occupation however is a teacher so she has quite a good earning potential.

We currently owe 78k on our home which is valued at around 148k. We are a 5 person family and need a bigger home. We have found a home for 200k. However my earnings of 22k come nowhere near to 135k mortgage that we require.

We have had our financial advisor round and the long and the short of it is this. We need 50k. This would enable us to get a buy to let mortgage. No proof of earnings is required. We could keep our present 3 bed semi and rent it out for around 600 to 650 per month. This would pay the mortgage on our new property which we would then move into.

One option is equity release on my parents 200k property which they may consider. However, after having looked into this it seems like a very very expensive way to get 50k. The compound interest over 25 years would be roughly 3 times the 50k! Not fair on my sister who is entitled to half my parents house when the time comes.

My wife is 43 so our window of opportunity to get a new mortgage is getting smaller and smaller. If she can't get a job in the next year or two then we may be stuck in our present house forever and that is not a good thought.

Does anyone have any other suggestions as to how we could get 50k? I don't want to be paying anything like the 6.6% interest rates charged by the equity release plans.

In hope more than expectation

Mike

Thrugelmir

baggie29 wrote: »

I don't want to be paying anything like the 6.6% interest rates charged by the equity release plans.

Lenders assess affordability at 7% interest rates. As that's the region that they would be in more normal times. So don't base decisions on today's abnormal levels. Interest rates were lowered to save the financial system from collapse not to provide cheap credit.

Pete9501

Mike, sorry to say this but I don't believe you should be taking this on. You and your salary are responsible for looking after 5 people.

What happens if you loose your job, the rented out property has a tenant who doesn't pay for a year etc........ you could loose the lot.

Your income just isn't sufficient to support this. You should become a house husband and your wife go back to work, she will earn far more than you.

amnblog

It sounds like your advisor has not put much thought into this.

Your income it too low for all but a handful of buy to let lenders, and affordability on the extra £50k sounds questionable.

baggie29

Thanks for replies guys. Pete - ideally my wife would get a permanent teaching job starting next september 3 days a week. This would coincide with my youngest starting pre-school every morning. She would them be making roughly the same as myself and then we would be able to get the mortgage. I am self employed so there is a great deal of flexibility in my earnings and the tax liability.

However this is very much dependant upon whether she can get a job. If not then we could well be stuffed. Just feel like the time to move is in the next year or two or it will probably never happen

baggie29

amnblog - The advisor was saying that the 50k needs to be either gifted or come from equity release from either my parents or my wifes. He wasnt saying we should borrow an extra 50k. Long term if we could find an extra 50k right now it would benefit us and our children for possibly generations to come.

I was just astounded at the cost of the equity release plans to be honest.

theoretica

baggie29 wrote: »

Thanks for replies guys. Pete - ideally my wife would get a permanent teaching job starting next september 3 days a week. This would coincide with my youngest starting pre-school every morning. She would them be making roughly the same as myself and then we would be able to get the mortgage. I am self employed so there is a great deal of flexibility in my earnings and the tax liability.

However this is very much dependant upon whether she can get a job. If not then we could well be stuffed. Just feel like the time to move is in the next year or two or it will probably never happen

A lot of people's lives would be changed if someone gave them £50k - few of them have someone able and willing to do so.

In the next year or two your wife should be back in a job. Do you have any scope for promotion or getting a higher paid job? Did you mean to say that your wife working 3 days a week would earn the same as you do working full time? Have you considered whether it would be better for the family if you were the one to go part time? Or could you work a day at the weekend to get time off when she is at work? Would your finances be better off paying for more childcare and both working full time? I think you need to balance your finances and desire for a bigger house against your child care desires and decide which is the more important to you. Could your parents help out by child minding rather than financially?

stephenni1971

Your adviser is an !!!... It's as simple as that. The advice he has given you is full of holes and very very risky.

amnblog

stephenni1971 wrote: »

Your adviser is an !!!... It's as simple as that. The advice he has given you is full of holes and very very risky.

Whatever happened to xmas cheer Steph?

stephenni1971

amnblog wrote: »

Whatever happened to xmas cheer Steph?

I dont think my xmas cheer extends to dodgy advice suggesting a client get a BTL on their current house - beg or borrow 50k from family and then get a mortgage on a new home based on the rental income from the first one!!!!!!!!

Paully232000

Even I, as a non-mortgage professional, can see how this is fraught with dangers. Why, although not ideal, wait until your other half is in paid employment and then work from there looking for a house and mortgage. That would then. i would guess, based on 3 days of teachers salary, practically double your income and make this move much more affordable and less likely to end up with you on the streets.