Part & part mortgage? Advice needed on what to do next.

Nickitree30

Hi, thanks for reading this. I'm looking for advice. My partner and myself split end of August ( thankfully a mutual and amicable split). He's buying me out of our house, I have had an offer accepted on a flat of £109,000. Shortly about to have £28k of equity as a deposit so wasn't anticipating any difficulty getting a mortgage, how wrong was I?
Affordability check by Nationwide said they'd loan me £74,900 based on what I thought my earnings would be of £17,500.
Tried a mortgage broker, they came back with £73 (ish)k (his words) then suggested I try Halifax/ Bank of Scotland, their affordability check was even worse, £37k!
I work 32 hours a week at £10 an hour, so I think they are all basing their calculations on a figure of £16,640, whereas last year I was paid £16,909 (did some overtime). This year,  if I didn't do any more overtime between January & April it should be £17,745. I take overtime when available.
I have another £1.5k in savings although will need most of that for solicitors fees. My parents have brilliantly, loaned me £10k. 
I have one dependent child (other one is a young adult and living elsewhere). My credit score is excellent now ( thanks to this site!).
Just received the sellers acceptance letter today, closing date is 15th of January.
About to start receiving maintenance money from ex-partner ( currently still sharing house & all costs so wasn't necessary until now)
Applied for Universal Credit yesterday, will get a payment by 10th of January but I think it may be too late to have UC & maintenance counted as part of my income.

Each time I have had an affordability check done it has been on an capital & interest mortgage, I've been doing some Googling and found that Leeds Building Society do part & part mortgages where a percentage is Interest only and the rest is Capital & Interest. Has anybody any experience of this type of mortgage?
Am I mad to be considering it?
I really don't want to lose this flat, it is absolutely perfect for us. 

I have tried to be as brief as possible and hopefully have given all the relevant details but if I've missed anything out please ask me, and thank you for reading if you've made it this far. Any advice is gratefully received.

getmore4less

Even at £18k  4x would be £72k
Probably need to get the finances sorted if you need £81k with £28k deposit.

£10k parental loan won't be helping, you are mentioning this and not calling it a gift. 

K_S

@Nickitree30

First off, generally speaking, mortgages with an interest-only component are usually only for low-LTV mortgages, high value properties and high income borrowers. So I wouldn't get your hopes too high on that front.

Correct me if I'm wrong, you situation basically is -

- income of £17,500 (including overtime): your basic will be considered 100%, but whether the overtime will be (and to what %) will depend on the specifics

- deposit of 28k (equity from current sale) and 10k (from parents). Importantly, do understand that there is a big difference between a loan from your parents and a gift from your parents. Most lenders will be fine with a gift, but not a loan, even when it's from family.

- property price of 109k, so looking to borrow 71k.

I'm not sure how any broker gave you a borrowing figure of 70k+ and that's quite unrealistic. The things driving it down are the relatively low income and the fact that you have a dependent. Plus, with a flat you also have the monthly service charge as an outgoing commitment which reduces affordability.

Based on the limited information in your post, I don't really have much useful advice with regard to buying this flat now. All I can suggest is you need to get the maintenance and UC (or at least the maintenance) to be factored into your income so you need to tell the broker about this so they can see if there is a suitable lender. There are a handful who may factor in both maintenance and UC.

Good luck!

angela110660

We had a split mortgage with Cheltenham &Gloucester that became part of Lloyds Group eventually. It came about because the endowment mortgage policy we had taken out for our original IO mortgage was not going to pay it off. We split the loan balance into 2 parts of interest only and repayment and paid extra off the interest only part to clear it quicker then overpaid on the repayment part. When the endowment paid out at its end it more than covered what was left of the mortgage which was a huge relief after our earlier panics. Hope you can sort out something suitable too. Best wishes. 

Nickitree30

Thanks for the replies. @K_S there is no monthly service charge, it's an ex council four in a block ( two downstairs, two up ) with an external front door. 
So, I've been shooting myself in the foot calling it a loan rather than a gift, bu**er!
Should I go back to Nationwide or go to a different independent mortgage advisor? I've been recommended one that helps women after relationship break ups. 

Nickitree30

Forgot to mention, I have less than £600 of debt. Don't need a car as I'm within walking distance of work/shops. I live quite frugally, no expensive hobbies, rarely eat out etc.

K_S

Nickitree30 said:

Thanks for the replies. @K_S there is no monthly service charge, it's an ex council four in a block ( two downstairs, two up ) with an external front door. 
So, I've been shooting myself in the foot calling it a loan rather than a gift, bu**er!
Should I go back to Nationwide or go to a different independent mortgage advisor? I've been recommended one that helps women after relationship break ups.

@Nickitree30 Yes, if it's a gift (ie your parents don't expect it back) and your parents are willing to write a letter confirming the same (if needed by the lender), then that will be acceptable to most lenders.

I doubt Nationwide will be able to help as they currently don't accept overtime income and normally only consider maintenance and UC as income if there is a 3 month track record.

Imho, you would be best off talking to a whole of market broker. I'll be honest, without some evidence of the maitenance and Uc being paid to your bank account, it will be an uphill climb to find a lender willing to consider the same.

Nickitree30

Thanks @K_S, I really appreciate your help.