Buying our next house

[Charlie_D]

We want to buy a bigger house but we are not sure how it works. We bought this house last year for 70,000 with a 63,000 mortgage. It is now worth about 110,000. The houses we are looking at are around 130,000 so we would like to increase our mortgage by 20,000. Question is do we need to have the required extra income to cover the increase or will the increase in capital do instead? Also is it possible to buy a house for a similar price that needs work, increase the mortgage and use the profit from this house to carry out the work and to pay the fees on the next one?

[Kos]

The amount you can borrow is calculated thus:- Mortgage:- �63,000 Sell house value:- �110,000 Cash in pocket:- �47,000 You now have a �47,000 deposit against a house worth �130,000, meaning you will require a mortgage of �83,000. So you're right you're income must enable you to borrow �83,000. With regard to the second point, you can normally borrow for whatever you want up to your maximum allowance.

[Hammer]

The mortgage company will probably be a tad more flexible because your deposit is much bigger, hence their risk is lower, so they may lend you slightly more than is usual. This is particularly true if you stay with the same company and have been well behaved in the past.

Why not make an appointment with them and talk it through in principle? At least then you'll know for sure where you stand.

[FTVS]

definitely talk to a mortgage advisor - you can get free advice from them - i'd go to a couple of different ones even. A lender will assess your income when consdering how much to lend you. Mortgage sales are now regulated by the FSA and "affordibility" must be tested. 

[richfo]

The Woolwich offer a non status mortgage for up to 75% of the value, so your income would not be relevant. I took out a mortgage last year with them with a fixed rate for 5 yrs at 3.9%. No earnings were even discussed.