Looking to re-mortgage

edited 30 November -1 at 1:00AM in Mortgages & Endowments
12 replies 868 views
KRS230776KRS230776 Forumite
5 Posts
edited 30 November -1 at 1:00AM in Mortgages & Endowments
Hi Everyone,

I'm new to these boards, and am looking for advice on whether it is possible, given my circumstances below, for me to re-mortgage my current property.

Current Situation

I own a 2 bed property jointly with my partner, which we've had for around 6 years now. Unfortunately, we are separating :(. Before we go ahead and put the place on the market, I first want to explore all possible avenues to taking the mortgage on myself if at all possible.
I will go into more detail on the figures in a moment, but based on what we think the property is worth, the balance on our current mortgage and the additional funds I would need to buy my ex-partner out, I would be looking to borrow in the region of 88% of the property's value. From the limited research I have done up to this point, most providers won't lend anywhere near this kind of ratio. Rather than waste time scouring comparison sites etc, I thought it best to come on here and use the knowledge base to find out if I'm simply wasting my time, or if not, how best to go about this.

Now for the figures:

Current Mortgage Details

Provider: Nationwide
Mortgage Type: Fixed Rate
Repayment Period: 28 years
Current Term Ends: May 2012
Current Interest Rate: 5.63%
Current Balance: £120,000
Monthly Payment: £779.96
Early Redemption Penalty: £3,583.66
Any other costs: £90 admin fee

My Income/Employment

Employment Type: Permanent, Full Time
Basic Salary: £38,500
Bonus: 12.5% of basic salary
Note: If I were able to successfully re-mortgage my current house, my brother will rent the spare room for an additional income of £300 p/cm, which is slightly below the going rate for an equivalent room in my area, being family and all. I've heard that if he were to sign a tenancy agreement to this effect, some lenders take the additional rental income into consideration. However, the ones I've spoken to thus far will not, so this may be bad information. Some clarification here would be appreciated!

Unsecured Debts/Credit Cards

Loan 1:
  • Provider: Northern Rock
  • Amount Outstanding: £12,227.82
  • Monthly Payment: £185.27

Loan 2:
  • Provider: Northern Rock
  • Amount Outstanding: £6,522.81
  • Monthly Payment: £73.29

Credit Card:
  • Provider: Virgin
  • Current Balance: £7,003.44
  • Monthly Payment: £75.81

Bank Overdraft: £486.76

Total Debt: £26,240.83
Total Monthly Payment: £334.37

Property Details
Estimated market value: £190,000. We have not had an official valuation yet, but this figure is based upon properties on our development, of identical size and type, that have sold in the past few months.

Details of additional borrowing
  • My ex-partner's 50% share of the equity: £33,163.17. This is based on a valuation of £190,000 minus the balance on the mortgage plus any early redemption charges and other costs (see current mortgage details above). The resultant figure is then divided by 2.
  • Debts attributable to myself, but in my ex-partner's name: £14,000

Total Additional Borrowing: £47,163.17

I think that's all the relevant information that hopefully you'll need to form an opinion and give any advice. Of course, I'm happy to answer questions or provide additional information if this will help.

Many thanks in advance!

Keith
«1

Replies

  • herbiesjpherbiesjp Forumite
    8.5K Posts
    Is that bonus guaranteed?

    How long have you been in your current job receiving that bonus?

    The information about the rental income is wrong.
    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.
  • I'll have to refer to my contract, but I believe 5% of it is depending on whether the company meets profit targets, and the remainder is based on my own performance. I've been there for over 3 years now and they've never not paid the full bonus, but no, it's not guaranteed.
  • herbiesjpherbiesjp Forumite
    8.5K Posts
    Based on the basic salary alone it will not be possible.

    You would need a lender who would be able to take into account part, if not all, of that bonus that you have received each year.

    If you are 100% certain you want to go down this route, you would be better off discussing with a good whole of market adviser, in order to see 1) if there is a lender, and then 2) if the deals available are affordable to you.
    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.
  • ThrugelmirThrugelmir Forumite
    82.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
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    Seriously consider this as an opportunity to clear your debt and get your finances under control.


    How you intend repaying your ex partner £14,000 of debts and £33,000 of equity without selling the property?

    Without wishing to sound harsh. You need to take a reality check before the situation worsens and becomes a nightmare.
    It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." — George Soros
  • KRS230776KRS230776 Forumite
    5 Posts
    Apologies for my belated reply, but I have been without internet most of the day.

    Thanks for the replies so far. They are appreciated, if a little unhelpful and negative. I appreciate my situation is far from rosy, but I've had two good friends in the know recommend this site, as it has apparently helped people is much worse situations than myself.

    If anyone has any more advice out there, it would be much appreciated!

    Many thanks!
  • ThrugelmirThrugelmir Forumite
    82.2K Posts
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    KRS230776 wrote: »
    Thanks for the replies so far. They are appreciated, if a little unhelpful and negative.



    Appreciate that these are difficult and stressful times for you. So turn the negatives into positives.

    So start with a blank canvas. Work out how to erase the debt. Then work forward from there. In the current market do not expect lenders to allow you to consolidate debt. Your new life should start with zero debt.
    It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." — George Soros
  • herbiesjpherbiesjp Forumite
    8.5K Posts
    There was a positive in there I thought.

    It was it can be done, as long as you find the right lender.

    The only caveat being, before venturing down this route to make sure that it is all affordable - but you could only work that out once you have found a lender and seen what rates/monthly mortgage payments that would equate to.
    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.
  • ThrugelmirThrugelmir Forumite
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    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭✭
    herbiesjp wrote: »
    There was a positive in there I thought.

    It was it can be done, as long as you find the right lender.

    The only caveat being, before venturing down this route to make sure that it is all affordable - but you could only work that out once you have found a lender and seen what rates/monthly mortgage payments that would equate to.

    I was struggling with numbers as House (£120k) , Total Debt (£26k ) and Pay Partner Off ( £47k) . Totals £193k .

    The property is only valued at £190k........

    The fact of the matter is that even after selling the house the OP will still have debts of at least £10k.

    So a period of renting and repaying debt is more advisable. Than trying to service a huge debt burden.
    It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." — George Soros
  • edited 2 July 2010 at 9:48AM
    KRS230776KRS230776 Forumite
    5 Posts
    edited 2 July 2010 at 9:48AM
    Thrugelmir wrote: »
    I was struggling with numbers as House (£120k) , Total Debt (£26k ) and Pay Partner Off ( £47k) . Totals £193k .

    The property is only valued at £190k........

    The fact of the matter is that even after selling the house the OP will still have debts of at least £10k.

    So a period of renting and repaying debt is more advisable. Than trying to service a huge debt burden.

    I agree, my personal balance sheet is looking a bit grim, but I am in this for the long haul. As crazy as this sounds, I'm happy to service a huge debt mountain if it means keeping my current house; I've been doing it for the last 5-6 years so I'm pretty used to it. Doing as you have suggested (e.g. renting and paying off my debts) is certainly a consideration if all else fails.

    I went on moneysupermarket.com and that came up with about 18 products, most of which were with The Post Office. The best of these is detailed below:
    • Provider: Post Office Mortgages
    • Actual cost over 2 years: £25,552.72
    • Initial Interest Rate: 5.45% then 3.49%
    • Initial Monthly Payment: £1,050.53
    • Mortgage Type: Fixed
    • Until: 31/07/2012
    • Overall Cost For Comparison: 3.9%

    I haven't progressed this further yet. How do people rate Post Office Mortgages?
  • BatchyBatchy Forumite
    1.6K Posts
    post office mortgages were great for me...
    All depends LTVs... they would be more careful with 90% deals. but good luck
    Plan
    1) Get most competitive Lifetime Mortgage (Done)
    2) Make healthy savings, spend wisely (Doing)
    3) Ensure healthy pension fund - (Doing)
    4) Ensure house is nice, suitable, safe, and located - (Done)
    5) Keep everyone happy, healthy and entertained (Done, Doing, Going to do)
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