Super critical
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We are currently finalising plans for a planning application for a self build on a site on the family farm. My wife is on maternity leave until the end of the year (statutory only as her previous contact ended prior to going on maternity) but despite this we are keeping up decent savings (around 900 incl the child benefit) and paying a mortgage on current house.
Deposit is more than sorted already, we won’t be using all of it for the house by any means but we have around 100k in savings/investments plus should net around 25k from sale of current house.
We can’t really apply for the mortgage until my wife is back working as I won’t be able to borrow enough on my income alone (very much need 3.5 times two salaries). We would be looking to borrow around 300k at a guess which we will be just about doable on the 3.5 times my salary and the expected salary my wife will be on.
The complication has arisen that some land has come up for sale adjacent to our family farm and we are very interested in purchasing it. Having thought it through there would be advantages for me to buy it in my name. I won’t go into details as it would be long winded but it would be good to get started with stuff in my name (I will be inheriting the full farm eventually) and there is basically incentives and additional grants etc available for young farmers that would make reclaiming the land cheaper etc.
So what was suggested was I get a loan and buy the land (it would be around 50k) in my name but my parents would be actually paying the loan (structured in a way to take full advantage of the small gifts exemption between my parents and my wife and I so not as to use any Group A threashold).
I’m really just wondering how badly will having this loan impact on a mortgage application next year (I have a feeling it will mess it all up). I know it’s always said to clear debt but it’s usually people with credit card debit or car loans not for land. Are they very reluctant to even consider giving mortgages to those with a hefty enough loan, I’m not sure will I be able to class it as a business loan or if it would be personal? Also it will be fairly obvious when they look at finances that I’m not actually paying it at all but I know it’s very very unlikely they will consider this so the reality is they will be looking at me as having the loan repayments and a dependent (our child). It’s possible but unlikely that there will be any income from this piece of land in time for the mortgage application.
Anyway I know it’s a long post and not really any clear question in there but just wanted to start a bit of a conversation on things to see what are the pitfalls here. Basically is a mortgage of 300k, loan of 50k and childcare (though that would be too bad given it will be rural and not everyday) an impossibility?
Deposit is more than sorted already, we won’t be using all of it for the house by any means but we have around 100k in savings/investments plus should net around 25k from sale of current house.
We can’t really apply for the mortgage until my wife is back working as I won’t be able to borrow enough on my income alone (very much need 3.5 times two salaries). We would be looking to borrow around 300k at a guess which we will be just about doable on the 3.5 times my salary and the expected salary my wife will be on.
The complication has arisen that some land has come up for sale adjacent to our family farm and we are very interested in purchasing it. Having thought it through there would be advantages for me to buy it in my name. I won’t go into details as it would be long winded but it would be good to get started with stuff in my name (I will be inheriting the full farm eventually) and there is basically incentives and additional grants etc available for young farmers that would make reclaiming the land cheaper etc.
So what was suggested was I get a loan and buy the land (it would be around 50k) in my name but my parents would be actually paying the loan (structured in a way to take full advantage of the small gifts exemption between my parents and my wife and I so not as to use any Group A threashold).
I’m really just wondering how badly will having this loan impact on a mortgage application next year (I have a feeling it will mess it all up). I know it’s always said to clear debt but it’s usually people with credit card debit or car loans not for land. Are they very reluctant to even consider giving mortgages to those with a hefty enough loan, I’m not sure will I be able to class it as a business loan or if it would be personal? Also it will be fairly obvious when they look at finances that I’m not actually paying it at all but I know it’s very very unlikely they will consider this so the reality is they will be looking at me as having the loan repayments and a dependent (our child). It’s possible but unlikely that there will be any income from this piece of land in time for the mortgage application.
Anyway I know it’s a long post and not really any clear question in there but just wanted to start a bit of a conversation on things to see what are the pitfalls here. Basically is a mortgage of 300k, loan of 50k and childcare (though that would be too bad given it will be rural and not everyday) an impossibility?