Shared Mortgage

paulant1803

Hi all, looking to pick the brains of you clever people!
My daughter owns a property equally with a friend and they have decided to sell.
My first thought was, could she afford to take on the mortgage (or more appropriately would a bank).
They owe £166k and the property is worth about £230k. 
They currently pay £556pm at 3.5%.
Her income is £1800pm and her current outgoings about £650pm.

Any questions or advice appreciated.

BoGoF

Has the property increased in price since they bought? If so how would she pay the friend the share of any profit? I'm assuming it's a fixed rate with that  interest rate? When does that end. Could your daughter afford the mortgage at current, higher, rates?

secla

max is usually around the 5x annual salary. 1800 is roughly 30k a year ?
so max borrowing would be around 150 but obviously there are other variables that can change that.

166 + half the equity assuming they purchased with even shares etc. = 198k so looks unlikely


Also the repayment vs outstanding amount doesnt seem to calculate unless they have a very long repayment period or interest only

paulant1803

secla said:

max is usually around the 5x annual salary. 1800 is roughly 30k a year ?
so max borrowing would be around 150 but obviously there are other variables that can change that.

166 + half the equity assuming they purchased with even shares etc. = 198k so looks unlikely


Also the repayment vs outstanding amount doesnt seem to calculate unless they have a very long repayment period or interest only

Sorry, you're correct, it doesn't add up, my mistake! The repayment is actually £655 over 37 years!

kingstreet

£1,800 pm? Gross or net?

Lenders use gross annual basic salary in affordability calculations, then any variable earnings on top, also gross annual.

paulant1803

kingstreet said:

£1,800 pm? Gross or net?

Lenders use gross annual basic salary in affordability calculations, then any variable earnings on top, also gross annual.

Hi, that would be net pay. 

kingstreet

paulant1803 said:

kingstreet said:

£1,800 pm? Gross or net?

Lenders use gross annual basic salary in affordability calculations, then any variable earnings on top, also gross annual.

Hi, that would be net pay. 

In which case, gross annual basic salary should be entered into lender affordability calculators, long with gross annualised overtime etc from latest three months payslips.

Try this;-

https://www.halifax-intermediaries.co.uk/tools-calculators/mortgage-affordability-calculator.html