Remortgaging after starting a family and losing one income

Geob

We got a mortgage with Aldermore last year at a rate of 4.1%. It’s fixed for two years and this ends in Nov 22. We have since had a baby and I left my job to care for her with no current plans to return. We are hoping to also have another child by the time we come to remortgage. My partner ears around 33k a year and we live comfortably on that and have no trouble paying our current mortgage of £795pm. The mortgage amount to repay at the end of the two years fixed will be around £163k I think. 

My question is are we likely to really struggle to remortgage with our new circumstance? I’m worried we will be stuck on a high rate and struggle to save anything? It’s very unlikely I will be in employment at the point of remortgage as childcare is so expensive it’s my preference that I stay at home during these early years. 

Thanks for any advice/ answers in advance!!

K_S

@geob With 33k income, a loan size of 163k (just under 5 times income) and effectively 3 dependents it is very very unlikely that you will meet affordability to remortgage to another lender.

However, you will still have the option of switching products to a new fix with Aldermore. This will ordinarily involve no income or affordability checks. If you house has gone up in value sufficiently, you might even be lucky enough to go down an LTV band and get a better rate based on that.

If you are able to overpay and bring down the outstanding loan close to 150k or so by Nov 22, you may (depending on the specifics, numbers, age, etc) be able to remortgage to another lender.

Geob

Really appreciate your response, thanks! I’ll have to look into overpaying. 

Would we not potentially be eligible for a mortgage on affordability checks ? We pay the mortgage no problem and comfortably save too, so it’s frustrating! If I were to get another job, it wouldn’t be cost effective because childcare is so expensive.

Thrugelmir

Geob said:

Would we not potentially be eligible for a mortgage on affordability checks ? We pay the mortgage no problem and comfortably save too, so it’s frustrating! If I were to get another job, it wouldn’t be cost effective because childcare is so expensive.

Lenders are required to assess affordability if interest rates were to return to more normal levels.  Make the most of the low interest rate era. 

K_S

Geob said:

Really appreciate your response, thanks! I’ll have to look into overpaying. 

Would we not potentially be eligible for a mortgage on affordability checks ? We pay the mortgage no problem and comfortably save too, so it’s frustrating! If I were to get another job, it wouldn’t be cost effective because childcare is so expensive.

@geob I hear you but the affordability checks will be as per the lender calculations, which includes stress testing at higher interest rates as well.

csgohan4

lenders usually stress test +5% at least to your interest rates

enthusiasticsaver

As others have said £163k on an income of £33k with 3 dependants will be judged unaffordable given they calculate at higher rates too so you will struggle to remortgage with a different lender. 

Your best bet is to stay with Aldermore and go for their best product next November until you return to work. Or delay your second baby and go back to work earlier to get the higher income. I had the same issue with my children who were just 18 months apart so childcare costs would be high. I went back to work when the youngest was 18 months  but gave more than 50% of my income to the childminder. On reflection we should have waited. It soon improved though once they started school. 

At least now you get free hours when your baby is 3 and schemes like the tax free childcare scheme.