'Second Stepper' Seeking Advice

Senna82

Hello all,

Long time forum lurker here that could use a little advice regarding moving from our first property (2 bed flat in Bromley, South East London since late 2012) to - ideally - a 3 bed semi house still in the South East.

My numbers:
Approx value of flat: £324,000 (source: Zoopla estimate)
Remaining sum on mortgage: £152,000 (approx)
Equity in flat: £172,000 (approx)
Deposit/savings: £33,000
No debts other than student loan or finance taken out

Income: Soon to be only myself as my wife is finishing maternity leave soon and we are considering our options as to her not returning to her 5 day a week job in London and instead finding part time work locally to us due to our first child coming along last year and weighing up nursery school costs etc. My income is the equivalent of £31,500 gross (I receive £25k net through a mix of dividends and salary) but with the majority of my earnings being via dividends.

We are hoping to find a 3 bed semi for example in Tonbridge, Sevenoaks or possibly Maidstone later this year but are a little unsure if my being on dividends will hold us back
with many lenders, for example is it still possible to still get a x4 or x4.5 multiple of my salary with me being on dividends? We are of course considering waiting until my wife has secured a part time job in order to have a greater figure for the multiple.

It would be good to know what if anything I'm missing in the below sum based on my income alone for a very rough idea of what kind of property level we could possibly afford before stamp duty etc is taken into account:
£29,000 (my income) x 4 multiple of my income = £116,000 + £172,000 equity = £288,000 + £33,000 (deposit) = £321,000.

I'd be very grateful to know if I've missed anything obvious out of the above sum to find a rough property level. Being second steppers this is all new to us so any help is much appreciated.

Thanks.

Retired_Mortgage_Adviser

As a Ltd Co Director, there are two ways in which lenders assess your income -

Most lenders - Salary + Dividends (so 29k in your case)

Some niche lenders - Share of net profit for your company (??)

If you are retaining cash in the business, the latter might be more appropriate and allow you to borrow more.

Mutton_Geoff

Senna82 wrote: »

My numbers:
Approx value of flat: £324,000 (source: Zoopla estimate)

That's your first (and most serious) mistake. Get comparable figures from sold prices and local agent realistic estimates for a "fire sale", not a figure they hope will glaze your eyes over to sign their contract.

Senna82

Thanks for the advice both, if there is anything which may give a very rough indication of property level though that would be great.

RelievedSheff

You need to look at sold prices via the Land Registry or Rightmove or similar to get an understanding of what your current flat is worth. The Zoopla estimates are woefully inaccurate for most properties.

Senna82

Point taken again regarding an accurate price being absoutely key to an accurate figure here, but if I hypothetically worked on the idea that the current property value WAS around £324k (for the sake of argument) I'd appreciate some idea of an answer to my question if possible. Thanks.