Is this mortgage amount possible?

Michelle1992

Hi

We are looking at upsizing and just wanted to see if a mortgage of £250k would pass lenders affordability on our circumstances before we start talking to the sales advisors !

The property we are hoping to get is £350k and we would being using the 20% HTB equity plus put down a additional £30k to give us £100k deposit

My income part time is £18300 plus I get child benefit for our 1 year old which totals £1076 per year. My husbands basic is £24k and he gets commission which on his last P60 was a additional £7000 but this year it’s looking more like £9000. We have a car on finance which is £295 a month and I can clear our 0% credit card and sofa finance before doing a mortgage application

At the moment we do pay childcare cost however on completion we would not pay these as our parents have said they will either look after our son or pay our childcare costs whichever we would prefer so I presume we could take these out of affordability??

Thanks in advance for any help!

ACG

Help to buy means you are capped to 4.5x income.
So even if you could get the full 7000 taken in to account and ignore the car loan, childcare and anything put in for HTB, you are going to be some way off.

Thrugelmir

Michelle1992 wrote: »

We are looking at upsizing and just wanted to see if a mortgage of £250k would pass lenders affordability on our circumstances before we start talking to the sales advisors !

The £70k equity loan likewise needs to repaid and will incur interest in due course. This needs to be considered as well.

Michelle1992

How much impact does the car finance have? If it’s 4.5x income that would take us to just over £226k, would it drop drastically with the car?

Michelle1992

I know the equity loan would need repaying but I would be back at work full time then so it wouldn’t be an issue

Thrugelmir

Michelle1992 wrote: »

I know the equity loan would need repaying but I would be back at work full time then so it wouldn’t be an issue

Lenders will base decisions on the case as presented and their internal criteria at the time. Future events cannot be factored in unless guaranteed in nature. Increasing regulation has removed their ability to be as flexible as in the past in terms of discretion.

ACG

It would vary from lender to lender. Some will reduce the loan amount, others may not.

As for the HTB (I do not do HTB equity loan mortgages) my understanding is that lenders would assume a percentage of the loan amount as a commitment regardless of whether or not you plan on paying it off at the end of the 5 years.

RunningKatie

With the cap of 4.5 x salary with HTB, your mortgage amount is capped at £226k


But the company will factor in the cost of the car finance and also the costs associated with repaying the HTB loan.
As the HTB loan is £70k you would likely struggle to prove that this could be repaid on top of the mortgage payments.



The company will also stress test your application so you will need to be able to prove that what you have on paper now can pay the mortgage if interest rates rise.


so with the £100,000 and £226,000, you would have £326,000 not taking into account any stamp duty that would need to be paid or any legal costs - around £2-3000 (assuming these are not being waved by the property company).


The increase in commission for your partner is not guaranteed and so will not be taken into account, neither will the fact that you plan to return to full-time work. They will also take into account the fact that childcare costs may increase when they perform the affordability stress test.

ACG

I disagree with the below.

There are lenders who will use 3/6/12 months payslips when assessing bonuses, there are lenders who will assess what was on the latest P60 and lenders who will average out the last 2 P60s. Some will use 0%, others 50% and others 100%.

So the commission may be taken in to account with some lenders in varying degrees. Unless it is something to do with HTB Equity loans which specifically exclude commission income I am not aware of?

But in any event the sums do not stack up.

RunningKatie wrote: »

The increase in commission for your partner is not guaranteed and so will not be taken into account, neither will the fact that you plan to return to full-time work. They will also take into account the fact that childcare costs may increase when they perform the affordability stress test.

RunningKatie

Sorry for any confusion ACG, I merely meant that those going off the P60 would see the £7k commission and not the £9k so would only accept the confirmed commission as £7k but of course if you have 3 months of payslips showing that you have earnt in line with the £9k so far then they would take it into account.