frustrated with mortgage offer

nzmegs

I have a mortgage of 180,000 with northern rock which we were hoping to increase by 20,000 in order to move to a larger house (we have two children and only two bedrooms).
I have just got off the phone from Northern Rock who we have our current mortgage with (it is a good fixed rate so we don't want to change banks) and due to changing markets and my husbands chnage from employeed to self employed we have only been offerred £160,000! This is less than our current mortgage which we pay without any problems. This amount is the absolute maximum they will lend and does not even take into account our debt payments - so the real figure is likely to be less.
We would have 30,000 to put down (from the sale of our house) but that still only gives us £190,000 which will never get us three bedrooms anywhere within 3 miles of our current house...
What a nightmare. We feel we could afford it but due to my husbands self employed status we seem to be non starters. My husband left a £60,000 per year job to go self employed and now is lucky to get £25,000. I work part time and earn £9300. I know it sounds like we cant afford it but we put our home as a priority and always manage to pay it without any problems.
Our current mortgage payment is £930 and an extra £20,000 would only be £1011 which we could easily cover. they just won't let us have it.
Do we have any other options? i guess the obvious one is to stay put and wait till I can work full time( 5years!!!). Ho Hum

sarkin

Is that interest only or repayment mortgage

Gorgeous_George

I'm surprised that they will offer £160K on a combined income of £34,300. That is 4.66 x joint income!

Maybe, if you shop around, you will find someone who can offer more but it is not a good time. Be sure that you could handle a few IR rises.

Sorry, but as a part owner of NR, I am pleased that they are being prudent - at last


GG

Richard_Webster

Sorry, but as a part owner of NR, I am pleased that they are being prudent

4.66 x joint income!

Prudent????

Kez100

You may want to move but, if it were me, I would spend time getting the self employment successfully off the ground and accept that this is a price to pay for the choice of change in status.

They way things are going if you can afford to pay more, get rid of those debts you mention first.

chriz1000

Well being that one of you is self employed and you have over a 10% deposit you should be eligible for a self certified mortgage.
The rate won’t be quite so great (probably about 6-6.5%), but you might be able to borrow that bit more if your wages fluctuate as you don’t actually have to prove your income. You really need to speak to a true whole of market broker and explain the whole situation. Bristol & West are still doing some good fixed rate self cert mortgages.

tomstickland

Doesn't seem wise borrowing more when

My husband left a £60,000 per year job to go self employed and now is lucky to get £25,000.

BobProperty

Richard_Webster wrote: »

Prudent????

OK, slightly more prudent than before.

carolt

It sounds very risky to be borrowing more in the current climate; as others have said, I am very glad that some of the more risky loans are no longer being offered out of my (taxpayers') money.

Sorry, but when your husband made that decision, presumably you discussed it and went into it with open eyes.

If you can't afford a bigger house because of that you have 3 choices:

1. Stay put.
2. Your OH gives up self-employment and goes back to higher-earning job.
3. You work full-time.

Don't moan about not being able to get a high enough mortgage. You have made your bed and have to lie in it.

There is always option 4. Sell your house, bank the equity, and rent a much larger place for the same or less money. Then buy when prices have fallen further.

So which one will you choose?

nzmegs

You are all absolutely right. Of course the bank is being sensible and I can see where they are coming from. My main frustration is that we simply need a bigger house and despite 30,00 equity we are unable to get one.
When my husband changed jobs he estimated he would earn the same as before, which i accepted. We were probably a little naive but I never imagined it would impact us in this way.
I realise now we have to clear our debts and wait until the busniess builds up. I just wish we didn't have to....
Thankyou for your words of wisdom!

Kez100

30,000 equity isn't that much! Especially as you say you have debts and moving costs a pretty bob or two.

Try and consolidate for a bit. I understand you might like to move to a bigger premises but you can live in a two bedroom. You need to know you can live within your means for the next few years as your husbands enterprise takes off. Bigger houses are not just bigger mortgages they are higher on other household bills too.