What to do for the best??

ginger789

Hi,
First time poster so I'm hoping for some help.
We got a mortgage in 2010 for 112k and put down £12000 and lent 100k. At the time I had a sales job with a basic of 12k, but bonuses of up to 20k, but bonuses obviously weren't guaranteed, my partner earns 12 k a year. We had loan and CC debts of around 20 k and managed to get a mortgage no problem, we have never defaulted or not paid any credit on time.
Fast forward 6 years, 2 boys aged 5 and 3 and we are looking to move as our oldest son has started school and the only half decent school we managed to get accepted for is a 28 mile around trip (school placing is a totally different topic lol).
Our house has been valued at 135k and we owe just under 91k with other our loan and CC debt of still 12k (getting married aint cheap). I now earn 30k basic with OTE of 57k, my wife has dropped some of her hours so is earning just over 10k. The debt is getting my wife down and she just wants to pay if off by selling the house, move us all in with in laws, pay the mortgage and debts and buy a new house in 6 months time where we could have a deposit of around 35k. However where we are looking, house prices are more expensive (between 185k - 225k).
A - Can you just sell up, pay off your mortgage and other debts and keep the equity in the bank until the right house comes along?
B - Based on our wages do people think we could get a mortgage for around 200k?
personally, I don't want to come off the property ladder, but we do need to be closer to the school and I really don't want to rent for a few months.
Any advice or ideas would be greatly appreciated, I'm confused?

agrinnall

A - yes, try to find somewhere that will pay you some interest.
B - I'd suggest that you meet with a good mortgage broker to see what they think, you may be able to borrow that much but you might have to seek out specific lenders.

bouicca21

You would be better off concentrating on ridding yourself of expensive cc debt. Get yourself over to the debt free wannabe board and do a money makeover.

Selling up and paying the debt will not help unless you change your spending habits (and have insight into just how the market will change in your area).

As I remember it, getting married is cheap. It's the faff about how you do it that costs.

Pixie5740

I wouldn't recommend turning unsecured debt into secured debt. It could also work out more expensive to repay your debt at a lower interest rate but over a much long term than just repaying the credit cards as they are or possibly doing some balance transfers to get it down to 0%. If you don't tackle the root cause of your overspending you'll just continue to do it.

ginger789

I appreciate the comments, the CC and loan debt come from overspending in our late teens/early twenties and we have just never managed to get it fully paid. Whilst we don't over spend, we always pay more than the minimal amount and as we are approaching our mid thirties, our money goes on our living costs. We had a simple wedding which didn't cost a lot of money and we haven't put anything on CC cards for well over 2 years, however I can appreciate all the comments on overspending and money makeover etc.
Including our mortgage and debts out our goings are £1000 a month before Gas/electric etc.
It seems simple to me (which is why it probably isn't) sell up pay everything off, have 30 - 35k in the bank, save for a couple of months and move in with in laws, then look to buy a house for 215k? Deposit of 35k, mortgage for 180k and look to get a payment of £1000 which we know we can afford. Has anyone been in the same position before??
We are thinking of going back to our previous mortgage advisor in January to see what options are available, so we are not in a major hurry, all though our fuel bill has went up significantly with the school run. Thanks for the advice so far, it is appreciated.

bouicca21

Your sums don't make sense. You have a basic income of £40k but OTE of £67k, with outgoings of £12k plus utilities. Yet you cannot pay off a £10k debt? You really, really, really have to get over to the debt free board.

glasgowdan

Based on 40k income with my recent dealings with numerous mortgage providers, and a 35k deposit, I think you'll be able to buy a house in the 200k range, but you need to go out there and get mortgage agreements in principle! We can't give you answers on that.

G_M

ginger789 wrote: »

....
We got a mortgage in 2010 for 112k and put down £12000 and [STRIKE]lent [/STRIKE]borrowed?100k.

At the time I had a sales job with a basic of 12k, but bonuses of up to 20k, but bonuses obviously weren't guaranteed, my partner earns 12 k a year.
so an income of £24K for mortgage purposes.

We had loan and CC debts of around 20 k and managed to get a mortgage no problem,
I'm surprised, but well done

we have never defaulted nor not paid any [STRIKE]credit[/STRIKE]debts? [STRIKE]on time[/STRIKE]late?.

[STRIKE]Fast forward 6 years, 2 boys aged 5 and 3 and we are looking to move as our oldest son has started school and the only half decent school we managed to get accepted for is a 28 mile around trip (school placing is a totally different topic lol).[/STRIKE]irrelevant

Our house has been valued at 135k and we owe just under 91k on the mortgage? with [STRIKE]other[/STRIKE] our other loan and CC debt of still 12k (getting married aint cheap).
what's the interest rate on these? Why have you not paid them off?

I now earn 30k basic with OTE of 57k, my wife has dropped some of her hours so is earning just over 10k.
What!? So why have you not paid off the £12K debts? Should be easy!
The debt is getting my wife down and she just wants to pay if off by selling the house, move us all in with in laws, pay the mortgage and debts and buy a new house in 6 months time where we could have a deposit of around 35k.
Well that's one option. A better one is to use your joint £67K pa to pay off your £12K debt!

However where we are looking, house prices are more expensive (between 185k - 225k).
A - Can you just sell up, pay off your mortgage and other debts and keep the equity in the bank until the right house comes along?
Of course. Or invest it. Or give it to charity, or me. It's your money to do with as you wish. (I'll be happy to look after it for you if you wish)
B - Based on our wages do people think we could get a mortgage for around 200k?
£40K jointly?
Check online below
personally, I don't want to come off the property ladder, but we do need to be closer to the school and I really don't want to rent for a few months.
Any advice or ideas would be greatly appreciated, I'm confused?

Are you wanting to move because of the schoolw, or because of the debt? The answer to this determines the best advice.

Check mortgage options (or see an independant adviser) here:

http://www.moneysupermarket.com/mortgages/calculator/

http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml

or use google for more

ginger789

Thanks for your help, appreciate the directness!!
I should have mentioned that I have only just had by package increased 6 weeks ago, so its not like we have had 67k coming in over the last 3 years, in the last 2 years all our surplus money has went on getting the credit cards reduced, hence it will be a lot easier to pay off with the extra money that is coming in. We have 24 years left on our current mortgage which is fixed for the next 2 years at 2.89%.
The main reason to move is to be nearer the school, but house prices are a lot more expensive there which is why I have come on here asking for advice to see if there was a chance to get a bigger mortgage on my new income where we would be able to move to a bigger house in a nicer area than where we live now. The other option is we could stay where we are and my loan will be paid off in 3 years and the credit cards will be paid for well before them, we arnt going to do anything till after Christmas so the 12k debt will be less by then, how much depends on bonuses etc. Thanks for the replies, I appreciate it.

Kynthia

Your best bet is to see a broker before selling up, to see whether you can buy where you want on your current earnings and debt. If you can then you can move and either buy straightaway or save with family for a few months.

You've had 2 children and reduced your debts, plus your income has now increased. They're all positives. Perhaps check all three of your credit reports just to ensure there's nothing on them tgat would impact a mortgage application.

ginger789

Thanks for the reply Kynthia.
We have checked our Experian credit reports and we are both classed as "Good" (900's). We are going to arrange to see our mortgage advisor early next year and ask him what he thinks but we do need to get closer to the school so in the meantime we are going to try and get more of our debt paid off.
Are loans and credit cards classed as the same to a mortgage lender, or is it more beneficial to have one or the other paid off, as the credit cards are on 0% interest till the middle of next year and the loans are obviously interest bearing, Would it be better to overpay on the loans??
Thanks for any replies.