Mortgage Advice.

E.B

Hi.

As the title suggests, we are after some advice regarding mortgages.

We are currently homeowners, we have a mortgage outstanding of £110,000 against our property valued at £145,000

The house value we are looking to move to is £289,995

It is a new build property, and we will look to use the Help to Buy Equity Loan; therefore we would be looking at a mortgage for £217,000

We earn £82,000 combined - we have 2 dependants (18yrs & 15yrs).

We have combined debts of £24,000 which we repay monthly, comfortably, but we would possibly pay a chunk of this - maybe 50% - during the purchase using some of the equity we have.

I know lenders don't really use our credit score and look more into our whole credit file, which means that although our scoring isn't great they will see that the debt we have is being paid back and reducing, and we have no defaults or missed payments.

What would be the best course of action? A Mortgage broker?

We don't want to apply - get rejected and possibly ruin our chances for a mortgage.

Any advice would be greatly appreciated.

csgohan4

mortgage broker all day for this scenario, they will match you to a lender

foxy-stoat

With £82K combined income and the new mortgage of £220K you should be making plans to save for the equity loan and settle it before year 6. If you can save £1000 a month then go for it, as it is the cheapest interest free loan for 5 years you will get. Just make it a plan to pay it down as soon as the interest free period is over.

amnblog

A broker with H2B experience is your best option.

We spoke to a borrower this month who had a mortgage application in with a lender via a broker yet had been offered no assistance with the H2B loan. On speaking to them we released they would not get the H2B loan as they did not meet criteria.

Their Broker had not even checked this even though the H2B loan should be offered before the mortgage application is submitted.

kingstreet

Recently, when asked "what about the output from the HTB affordability calculator?" another broker trying to get the business in preference to us replied "what HTB affordability calculator?"

amnblog

A definite grey area in the market KS.

Brokers working in areas they don't understand are a constant worry.

getmore4less

£80k income net around £4k-5k depending on pensions.

We have combined debts of £24,000 which we repay monthly, comfortably

Relatively small mortgage and £24k of debt.

Are there likely to be a need for repeat borrowing
eg. they were for cars and they will need replacing.

What rates are the debts?

How much are you putting towards this each month.

You say comfortably but how much free cash flow is there for this new borrowing.

On a £290k HTB purchase you can go
£14,500 deposit
£58,000 H2B
£217,500 Mortgage


Costs to buy and sell will be heading towards £10k

Equity <£35k lucky to have £10k left to put towards the debt.

Using 25y loans

current £110k probably around £450pm

£217k HTB 75% will be around £900pm

Then you have a hanging £58k interest free debt to think about in 5y time.
It may be a lot more in 5y as it's 20% of the property.

What can you change in your budget to free up cash to pay for over doubling your debt.

Thrugelmir

Not clear as to whether you have you sold your existing property yet.

We have combined debts of £24,000 which we repay monthly, comfortably

Why comfortably? I'd feel uncomfortable with that of unsecured debt given the household income. Targeting a sizable reduction should easily be achievable.