Help: reduced income, huge mortgage, end of deal

the_weasel

We have a 130k mortgage with the Derbyshire,, two thirds of the way through a 3 year discounted, which reverts to Standard Variable 6.75 next June. Since we took out the mortgage, my wife stopped work to have kids, now our joint basic salary (Excl benefits/bonus) is only 23k.

How can we get a good deal next year? Some friends tell us about getting parents to 'guarantee' the morgtgage against their own equity, but how does this work. Would we be better borrowing a smaller amount from a new lender, and the rest from parents?

jonesMUFCforever

You may not like what I have to say but I think the best thing you can do now is put your property up for sale and downsize or rent. By doing this now you have a chance of salvaging something without getting in over your heads in debt.
Is your wife likely to re-start work?
Can / will your parents lend you the money?
Eric

meanmachine_2

That's rubbish advice.

Presumably you've worked out what your monthly mortgage payment will be should you go onto the SVR?

I'd pop in to see a broker and ask them to outline your options.

23K on a 130K mortgage with an int rate of 4.5% is more than do-able.

You'll just have to tighten your belt.

Remember, you'll get tax credits when you drop a sprog. So that'll help.

Certainly no need to move.

Spendless

No use me trying to help you with mortgage advice, but meanmachine is right when he says you should be getting tax credits. You can check your details out here.

https://www.entitledto.com

jonesMUFCforever

It may well be do-able but £130k mortgage with a salary of £23k = 5.65 Times salary, which in my mind is financial suicide especially with added costs of child.
Eric

nearlyrich

meanmachine wrote:

That's rubbish advice.


Not really they will be spending MORE than half their income on the mortgage

Presumably you've worked out what your monthly mortgage payment will be should you go onto the SVR?

Using What's the cost it will be £898 assuming 25 years and still £130K on the mortgage


23K on a 130K mortgage with an int rate of 4.5% is more than do-able.

You'll just have to tighten your belt.

You don't say!

Remember, you'll get tax credits when you drop a sprog. So that'll help.

£17 Child benefit plus £1096 per year based on entitled to and £23K

jonesMUFCforever

£23k = take home pay of what £1550?
Interest only at svr of 6.79% = £8827 pa or £736
Council tax bill = ??
Gas and Elec. = ??
Any o/s loans and credit cards??
Water bill ??
Food ??
Clothes??
Entertainment money??
Child expenses??
Running one and possibly 2 cars ??
Life Assurance policies and or a means of repaying mortgage capital??

Figures don't add up to me and I would'nt be confident of landing a re-mortgage at 4.5% with your present salary.
But what do I know///??
Eric

Spendless

The OP does mention that the £23K excludes bonus and benefits, though this extra income may knock down the tax credits to the family element of £545p.a, he also mentions kids (in the plural) so may get more and more than one lot of child benefit.

We probably need a bit more detail from the OP to help/advice

jonesMUFCforever

Spendless wrote:

The OP does mention that the £23K excludes bonus and benefits, though this extra income may knock down the tax credits to the family element of £545p.a, he also mentions kids (in the plural) so may get more and more than one lot of child benefit.

We probably need a bit more detail from the OP to help/advice

AFAIK bonuses and benefits which are not cast iron guaranteed as part of your salary will not count towards the sum of money that a bank or building society will lend against.
Eric

Spendless

ejones999 wrote:

AFAIK bonuses and benefits which are not cast iron guaranteed as part of your salary will not count towards the sum of money that a bank or building society will lend against.
Eric

Which is exactly why we need more detail from the OP instead of just telling him to sell his house-do you not think?

herbiesjp

Some lenders will indeed take into account a portion, if not all (depending on the lender), of the bonus and benefits.