Mover options and likelihood of mortgage approval - own home outright currently.

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Poppy3650

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Background
Married couple, one child. Early 30’s.
Purchased own home with cash savings in 2015 for 110k. Now worth approx 210k.
He works full time, she works part time. No childcare costs.
He is in current role 2 years, she is in current role 10 months. Maternity leave in 2017.
Combined income: 45400 plus bonus 20k but understand this isn’t guaranteed so cannot be used.
Have been paying 500 per month to repay a loan to parents for the last 3 years. This is now paid in full. Finished repaying 300 per month on a 3 year car loan last September.
Both have healthy current accounts.
But- no regular savings - save on a monthly basis but no set amount just keep current accounts.
Looking at moving to a bigger place we have fallen in love with and time is of the essence. It is not something we planned for as we had been very comfortable with our current set up but it’s sort of just happened!
From what I can see, there are three options.
Option 1 - sell current house and will need approx 60k mortgage after the sale of our own house. This is provided we sell our house within the time frame necessary to secure the other house.
Option 2 - keep our current house as investment and use gift from parents to purchase another property. Would need mortgage of approx 160k in this scenario.
Option 3 - as per option 2 but leave current house on the market and pay off mortgage using the proceeds of the sale. We would not rent the house out in the scenario.

What options do we have seeing as we own the current house outright? Is there a way of keeping the two houses on our current incomes? Can lenders use maternity leave as a reason not to offer a mortgage if one is in current role less than 12 months? Will the car loan and personal loan being paid back recently help towards our affordability criteria?

Opinions welcome.

Thanks for reading!
 
Can you summarise:
Cost of new house?
Do you have any savings?
His salary (quaranteed & bonus)
Her salary
Net monthly income to household
 
New house 250k
Savings of around 15k
His salary 26k + approx 20k bonuses
Her salary 19k
Net monthly income inclusive of bonus is approx 5000 with bonus or 3300 without bonus.
 
Can't see any options other than you outlined. Income isn't high enough to get more than 160ish mortgage.

Option 1. You'd be making an offer to buy, subject to sale of your own house. If there's already interest the seller wouldn't entertain this. Plus ideally you need a cash buyer so you can close sale quickly. Talk to the agent, and see what kind of interest there might be in your home. Agent might help convince sellers to wait if they are getting commission from sale of your home as well.

Option 2. You should be able to get a mortgage for 160. Banks treat bonuses differently - I'd go to a broker to work through the best option. You've also got the potential rental income on a debt free property.
You'll need parents to sign a letter that the funds are a gift - needs to be made to their child, and not the couple, to avoid tax leakage.
If you rent house, since there's no mortgage you've no interest expense for tax. But you've some headroom to earn rent at lower tax rate.

Option 3. Really as above.
 
We have made and had our offer accepted subject to sale of our house, we had a buyer for our house but it fell through due to their finance issues so back to the drawing board we went so now time really is of the essence.

Like I said, hearts set on the new house so I am afraid we aren’t thinking logically!

Would banks use the potential rental income on the current property in their calculations if we decide to keep it?
Yes 160k is the max really based on income, we have the option of a 90k gift from parents if we keep the current place, plus our own savings so it would get us across the line.

Going to see a broker tonight. We have been approved in principle for 160k and have an application in with a bank but I’m afraid that there will be some issue when it comes to the business end of things based on my being in current job less than a year and the maternity leave also.
 
Are you using the seller's estate agent to sell your house? As Red Onion has pointed out, this should help things along if your house can be sold reasonably quickly.

A bit of a long shot and unlikely. But could your parents get a mortgage to buy your house? It's worth €210k. They have €90k. Let's say that they buy it for €200k so they need a mortgage of €110k.

You have €210k + €60k mortgage approval to buy your dream home.

In the meantime, if a buyer comes along and closes on your home before you need to, to close the purchase, then sell to them instead.

Brendan
 
We are not unfortunately, but have considered switching to him as our current agent is less than satisfactory to be honest.

We are looking at having a relative but our house as a plan b and will hopefully know more on that later this week but I don’t want to put all my eggs in that basket either.

Probationary period has finished and I’ve provided all the necessary documentation.
 
Poppy3650 said:
..but have considered switching to him...
Click to expand...

Check the contract with your current agent prior to moving. Contracts I've seen include a clause that their commission remains payable should you sell within 6 months of terminating their sole agency.
 
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