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What credit crunch?

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Strapped
Strapped Posts: 8,158 Forumite
in Mortgages & endowments
We keep hearing about the "credit crunch", but my sister has just secured an £80k mortgage, despite being a single parent of 3 kids, earning around £6,250pa. (+ WFTC + CTC, + CHB for 1 child but no child maintenance). They were prepared to lend her up to £100k. Is it just me, or is this complete madness? :eek:
They deem him their worst enemy who tells them the truth. -- Plato
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Comments

  • MortgagesInc
    MortgagesInc Posts: 156 Forumite
    It depends really on the amount of the benefits, and her credit history. Are you concerned that she can't afford it?
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Strapped
    Strapped Posts: 8,158 Forumite
    MortgagesInc wrote: »
    It depends really on the amount of the benefits, and her credit history. Are you concerned that she can't afford it?

    Yes, I am!
    They deem him their worst enemy who tells them the truth. -- Plato
  • MortgagesInc
    MortgagesInc Posts: 156 Forumite
    Maybe sit down with her and work through a proper budget with her. Take it to account all the benefits, and how long they will be paid for. You say she only gets child benefit for 1 child, are the other two out working? Will the contribute to the household? Can she work more hours when the kids get to a certain age? How much is the mortgage compared to her current rent?
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Strapped
    Strapped Posts: 8,158 Forumite
    The trouble is, it's impossible to sit down with her. She doesn't listen to anyone where her finances are concerned. Very "head in the sand". The mortgage is to buy her ex-husband out of the marital home, but I am very surprised that the mortgage company are willing to lend to her, as her credit history is poor and the mortgage is already in arrears, as her ex is supposed to be paying half but hasn't paid for the last 4 months. I guess they were willing to take the risk as there is enough equity in the place should they need to repossess. I am convinced it will all end in tears though.
    They deem him their worst enemy who tells them the truth. -- Plato
  • dunstonh
    dunstonh Posts: 119,624 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Have you found out what she put down on the application to persuade the lender that she can afford it?

    The figures you have posted would not stack up by themselves so there has to information that we dont have here.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Dan_Collins_2
    Dan_Collins_2 Posts: 1,377 Forumite
    She would have to earn or declare over 20k!
    :confused:
  • Strapped
    Strapped Posts: 8,158 Forumite
    Well, I spoke to her about this, and she reckons that, with tax credits, she earns around £23k! So mystery solved. (I am obviously doing something very wrong, and will be kicking DH out and going part-time...!)
    They deem him their worst enemy who tells them the truth. -- Plato
  • Adebisi
    Adebisi Posts: 142 Forumite
    Strapped wrote: »
    Well, I spoke to her about this, and she reckons that, with tax credits, she earns around £23k! So mystery solved. (I am obviously doing something very wrong, and will be kicking DH out and going part-time...!)

    23k! WOW!! I wanna piece of that action, time to leave work and get a kid
    When the bloody hell is nelly coming back?
  • TwelfthMan
    TwelfthMan Posts: 66 Forumite
    WTC, CTC and CB are all received by the applicant as "net of tax" as well. Some lenders will gross these figures up to increase maximum borrowing.
  • Strapped
    Strapped Posts: 8,158 Forumite
    Wonder what happens when there's a change of government and they change the tax credits scheme though!
    They deem him their worst enemy who tells them the truth. -- Plato
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