As a couple, what type of mortgage can we get if only one of us is a 1st time buyer?

jediphil

Me and my partner haved live together (unmarried) for around 5 years in her mortgaged house.

I have never owned any property and have never paid her rent. Instead, I've saved the amount that i used to pay in rent, from when i used to live alone (its split between a LISA and an ISA).

We wish to buy a house together, but because we only want to move for the right property, we weren't thinking of putting her house up on the market until we find something we liked and got an offer accepted. We thought this might also give us better chances of getting offers accepted as we wouldnt have a chain.

Instead of using her house as collateral, we would use both of our cash savings as a deposit (100k+). We would be using the new home as our main residence and she would be looking to sell her current property as soon as we had signed contracts on the new one (although we may use it temporarily while we renovated the new one before we moved in). This sale would definitely happen within the 3 year time limit that we have to claim back the 2nd home stamp duty. And i hear we would also need to inform HMRC of our intentions so we dont get caught with CGT.

We're looking at buying a property in the region of 300K, so we'd be putting over 30% down, but we're unsure which mortgages would be available to us.

I wish to use my LISA and I'm a first time buyer, but she would technically be a 2nd home buyer.

Would we be limited to 2nd home mortgages? Or would we be able to get better rates as we'd basically be putting down a 3rd of the house as a deposit?

Affordability-wise, together we earn just over 80k, and debtwise she has roughly 60k left on her current mortgage (@500pcm), and i have a low interest car loan (2.9%) to run for the next 4 years (about 12k left to pay @ 270pcm).

She currently owns 100k of a 160k property, but is tied into a fixed term mortgage for another 2.5 years, so there will be early redemption charges too.

Can someone let us know what our best options may be?

Many Thanks,
Phil

GoingOn30

My understanding is that yes you can still use the LISA savings and qualify for the bonus even if your partner is not a first time buyer.

You're proposing that for a while, your partner will be named on 2 mortgages whilst you are waiting on her property to sell after buying one jointly. Do you think her income is sufficient to be able to service mortgages on 2 properties st once? 
Have you looked into how big the early repayment fees might be?

jediphil

Thanks for the quick reply!

I'm not sure whether her wage alone would cover both monthly repayments in full (hers 38k, mine 43k). But my wage would cover the new house while she continued to pay for the old one. Then we'd split it once the old house was sold and have extra left over.

The idea was that together we can more than cover the 2 mortgages. Especially with both our cash deposits together.

We did also think that i could just buy the next property as a first time buyer, then she could buy into the house a year later,  but i dont have enough of a deposit and income to get the houses we're after.

I believe she has a 4% rate as an early redemption charge up until dec. Then it goes down to 3%. I think that equates to around 2.5k now, or 2K from december.

I should also add that we're both coming up to 40 over the next 12 months, and when she got her mortgage last time, the bank said they wouldnt lend to her for more than 20 years due to her nearing retirement (so we'd be looking at 20 years or less, rather than the standard 25).

Thanks again!

fewcloudy

jediphil said:

I should also add that we're both coming up to 40 over the next 12 months, and when she got her mortgage last time, the bank said they wouldnt lend to her for more than 20 years due to her nearing retirement (so we'd be looking at 20 years or less, rather than the standard 25).

I'm not sure that is correct.
I mean, it might be the policy of her particular bank, but there are many lenders (most?) who will lend money way beyond age 60...
It would depend on her income beyond age 60, and her ability to pay the mortgage. 

GoingOn30

jediphil said:

Thanks for the quick reply!

I'm not sure whether her wage alone would cover both monthly repayments in full (hers 38k, mine 43k). But my wage would cover the new house while she continued to pay for the old one. Then we'd split it once the old house was sold and have extra left over.

The idea was that together we can more than cover the 2 mortgages. Especially with both our cash deposits together.

Thanks again!

You may think that between you both mortgages are affordable but its what a lender thinks that matters. If you are both on the mortgage for the second property from the outset then you will both be financially responsible for the repayments. 
I think you'll need to see a broker to find out if your plan is feasible and crunch the numbers.