£55k income, only £98k mortgage????

11cocopops

Had a meeting with Halifax re a joint mortgage, had the shock of our lives when she said the max we could borrow would be £98,000. We must be going seriously wrong somewhere - any advice MASSIVELY appreciated.

- Joint income £55k + I get around £1-2k commission monthly on top.
- We have never defaulted on any payments, credit rating should be perfect.
- We have a 1 yr old and another baby on the way, we did the application as if we had 2 dependents with £800p/month childcare (which we will have when I go back to work full time). - Could this childcare cost be the issue?
- We both have cars on finance, mine £150p/month £9k outstanding, partner £200p/month £11k outstanding.
- Partner has credit card which he uses and pays off monthly & we both have overdraft allowances but don't use

What are we doing wrong in life?

Could it just be this bank? Is it worth going to a different one?

We currently pay £550 rent & put away £400p/month into our HTB ISA on top, but the mortgage they've offered says our affordability is only around £513 p/month repayments? None of it makes sense, I'm completely baffled.

We see other people who are on lower incomes, or friends in masses of debt who own their own houses yet we are left now looking at shared ownership as the only option.

Sorry to waffle, I just can't believe the news we have been given and feel we will be renting forever!!!!!

PLEASE PLEASE PLEASE HELP!!!

Thesimdude

Hi,

I work in the industry, hopefully I can help.

I've had a read through your post and it absolutely sounds like the childcare is the issue. That is a fairly large outgoing for childcare, and it will be having an impact. Also your car finance balances (not necessarily the payments) are on the high side (Well, your income can certainly cover it). It's also going to be bank related stress testing - the bank won't work out what it thinks you can afford at today's rates, they will be working on a higher rate like 6.5% or above.

It's absolutely worth trying other banks, just make sure they aren't running recorded credit searches or you'll harm your credit score.

Hope this helps!

clairebeth

Someone wiser than me will know more, but there are a couple of things that may have affected your affordability.

1. The fact you have a baby on the way (I have five months left of maternity leave and some lenders won't consider my income, while others require an official letter from my employer staying I'll be returning on the same pay and conditions).

2. Yes, childcare costs will be taken into account, this takes £9600 a year out of your available income (although someone may be able to suggest a lender who won't ask about childcare costs).

3. That you are paying £350 onto your car debts and have £20,000 debt outstanding. On an a combined income of £55k where one of them is about to have a baby, I imagine that is quite a lot of debt to be in.

However, I'm not an expert, but thought I would comment due to my recent experience with the maternity thing! Are you both claiming childcare vouchers, and if so, does your combined income include this?

amnblog

You have said not how much you do need to borrow.

The childcare cost is the barrier here. Without it, Halifax would likely lend you over £200,000.

In this case they are not the lender for you. You need a lender that does not factor in child care costs when calculating affordability.

Consult a good mortgage broker.

11cocopops

Thanks for your replies.

I was conscious of writing even more of an essay... but I should of said we did a "soft search" in branch with Halifax. We did the search based on our circumstances when I return to work full time after baby no.2 so that maternity leave/reduced pay had no effect on the application.

The Halifax employee kept saying she was "not a mortgage adviser" even though we booked a mortgage application meeting - so it's fair to say she was unhelpful (not her fault). She was unable to suggest where we were going wrong or ways to increase the maximum borrowing amount.

With regards to childcare, my partner works shifts which means the kids don't actually have to go into full time childcare. £400 per child is so cheap compared to what I know other people pay in childcare so I didn't expect this to have such an impact? Other people I know pay £1000 for one full time place!

We have only very recently got the cars hence the total debt amount. Mine is on finance, my partners is a bank loan. We know the sensible option would have been to get the mortgage first but with two babies we needed bigger family cars (I had a mini!!!!).

11cocopops

amnblog wrote: »

You have said not how much you do need to borrow.

The childcare cost is the barrier here. Without it, Halifax would likely lend you over £200,000.

In this case they are not the lender for you. You need a lender that does not factor in child care costs when calculating affordability.

Consult a good mortgage broker.

They didn't ask us anything about how much we need, how much deposit we have, or how much we have in savings (we both have ISAs and savings accounts). These weren't taken into consideration.

We had our name down on a new build house which is £180,000 as an independent mortgage adviser (linked to Barratts Homes) advised we could borrow up to £258,000 so we felt we would definitely be safe with £180k.
The cheapest houses we can get in the local area with a 5% deposit are these £180k so we are completely priced out the market now.

Thrugelmir

11cocopops wrote: »

They didn't ask us anything about how much we need

That's not how lending works. Given the option. Most people would prefer to borrow more. To buy that dream house. Rather than making do just to get that one step up onto the ladder.

The Halifax employee kept saying she was "not a mortgage adviser" even though we booked a mortgage application meeting - so it's fair to say she was unhelpful (not her fault). She was unable to suggest where we were going wrong or ways to increase the maximum borrowing amount.

Lenders will have criteria set at a high level within the organisation. There's no flexing of the rules unfortunately. The plain facts are reduce your outgoings, increase your income, or save more deposit.

11cocopops

I know the common sense answer is earn more spend less, I guess I came to this forum to find out if people thought this was a realistic figure for our circumstances or whether people thought we should be offered more (like I did).

If it comes down to the childcare it means we could look at applying for a mortgage sooner during which time my mum will be providing childcare and therefore eliminates that cost - for example.

If it came down to the car loans there's not much we can do in the immediate future.

I just want to be realistic, and increase our chances of a mortgage otherwise we will be renting forever and it's just dead money!

glosoli

The child care, combined with the £350 car repayments are definitely contributing to the problem.

If they said the maximum mortgage repayment would be £500 ish, then without the above then this could rise to £1,650, which presumably would provide you with more of a mortgage for what you are looking for.

It would be wise to contact a mortgage broker, rather than applying directly in this instance, as you may encounter the same problem no matter who you apply with.

Caz3121

11cocopops wrote: »

We had our name down on a new build house which is £180,000 as an independent mortgage adviser (linked to Barratts Homes) advised we could borrow up to £258,000 so we felt we would definitely be safe with £180k.
The cheapest houses we can get in the local area with a 5% deposit are these £180k so we are completely priced out the market now.

agree a broker is probably the best way to go
with a 5% deposit and a new build I expect there will be very limited number of lenders
looks like Halifax only goes to 80% LTV on new builds so you would need a 20% deposit with them
Did the independent mortgage advisor know you had a 5% deposit?

Polly05

You say your credit rating 'should be perfect'. Check it? Just in case there is a mistake on it?