Am I missing something blindingly obvious?

jolester

Sorry for the lengthy post! I've just had an appointment with a mortgage advisor tonight and am awaiting his results. Whilst waiting I have decided to take a look on line tonight and just see what roughly is out there.

I have looked only at Santander's website so I know these aren't guaranteed figures for me, but could someone explain if I have missed something blindingly obviously here. I know the end result is having a higher mortgage balance in 2 years but that's not an issue to me buying a house today.

I do have one other question before posting figures below for my initial reason for posting (and the reason I have decided to look at Santanders website)

The mortgage advisor knows I am a director of a company so I have my salary paid as part PAYE, part dividend. He went onto Santanders site and put in my husband's gross annual income, he then entered (and there didn't seem to be anything indicating that this was a special area of inputting income where it took my type of salary into account) my take home income off my SA302 in the box below asking for the second applicant's income, now, unless I'm mistaken (and I didn't think at the time apart from wondering why Santander's max borrowing figure was so much lower than Accord who gave an AIP in August but we weren't ready to buy then) this would be taking that figure and presuming that it would be a gross salary subject to tax and NI where it obviously wont. Does he need to either gross up the amount that is on the SA302, or use a separate/different method of entering my salary?

Now to my original point!

I know not guaranteed but based on the information provided by Santander's website... (and this is me "grossing up" my salary as above, for ease)

They would borrow a max of £45300
The purchase price of the house is £455000

Two deposit options:

10% deposit = £45500
Borrowing £409500
2 yrs fixed = £1486 monthly payment

5% deposit = £22750
Borrowing £432250
2 yrs fixed = £1970 monthly payment
£22750 cash sat in the bank

Current mortgage payment is £884
If me and my husband put additional £600 between us out of our income this will cover the £1486 monthly payment for 10% deposit

If me and my husband go for the 5% deposit option and still pay the £600 we were going to pay for increasing the mortgage this will leave £484 per month additional to fund. If we do £484 x 24 (length of fixed rate) this = £11616. Take the £22750 cash in the bank, minus this £11616 and there is still £11134 cash in the bank

or

Take the £22750 cash, divide by 24 = £947
Add £947 and £884 (current mortgage payment) = £1831
Take the £1970 monthly payment (based on 5% deposit) minus the £1831= £138 = what we have to find additional out of our salary each month

Like I say... is there a blindingly obvious reason we wouldn't do the 5% deposit option whilst understanding that in 2 years we'd have a higher mortgage balance but this wouldn't be an issue for us.

Thank you so much for taking the time to read all this and I appreciate any input

Thrugelmir

What's your actual question?

jolester

Does it appear mortgage advisor has put my net income as gross

Why would I not do 95% mortgage based on the information I have provided

getmore4less

Work out the interest you pay on each deal.

Smurf86

In short to your question, yes you are mistaken.

Your mortgage adviser is completely correct. Your SA302 shows your gross income and therefore is the amount that should be used.

The SA302 shows your gross salary and gross dividends.

What have you calculated to !!!8220;gross up!!!8221; your already gross income from the SA302?

jolester

Smurf86 wrote: »

In short to your question, yes you are mistaken.

Your mortgage adviser is completely correct. Your SA302 shows your gross income and therefore is the amount that should be used.

The SA302 shows your gross salary and gross dividends.

What have you calculated to !!!8220;gross up!!!8221; your already gross income from the SA302?

I have just taken another look at my sa302 and can assure you the figure on the top of there that he typed in was what I took home

jolester

I have just rechecked the figures on my sa302, it shows my taxable income and also the tax paid, but my query is, if the MA is using the same software/calculation etc to calculate figures, and they take my husbands gross, and my net, won't the software be assuming my salary is subject to the same deduction as my husbands whereas it's already been deducted?

getmore4less

Back to this question.

Why would I not do 95% mortgage based on the information I have provided

work out the interest paid on each two year deal.

you have not given the rates for the two deals 95% and 90% could be very different.

getmore4less

Based on amounts owing and and payments we can guess a term and rate
(asuming they are both based on the same term)

30 years looks right(ish) for 95% and 90% LTV rates available.

in 2 years what you owe and what you paid in interest

£409,500 @ 1.865% £388,742 £14,906
£432,250 @ 3.620% £415,698 £30,728

Does that not tell you why the 10% deposit is better?


AS it happens whatever term you use based on the payments it comes out at around £15k anyway

jolester

getmore4less wrote: »

Based on amounts owing and and payments we can guess a term and rate
(asuming they are both based on the same term)

30 years looks right(ish) for 95% and 90% LTV rates available.

in 2 years what you owe and what you paid in interest

£409,500 @ 1.865% £388,742 £14,906
£432,250 @ 3.620% £415,698 £30,728

Does that not tell you why the 10% deposit is better?


AS it happens whatever term you use based on the payments it comes out at around £15k anyway

Thanks for breaking this down for me

The term would be over 32 years (initially)

The rate for 90% was 2.2%
The rate for 95% was 3.89% + 250 Cashback

jolester

UPDATE: MA called, I was correct in my thoughts on the gross/net/calculation on SA302 info, he changed the figures, we're good to go

We decided on 10% deposit

Thanks for your help