Help!! Wanting a mortgage.

SarahRob · 18 October 2017 at 11:15PM

Hey guys,

I'm new here, so sorry if this isn't where to post.

Basically me and my partner are currently renting on the outskirts of London, our current tenancy is ending in January 2018, however, after this we will then go onto a rolling one month contract. We have been saving a little while now and have around £14k saved, however plan to have £3k more by Feb 2018.

My partner has been employed by his current employer for just over a year now, however I recently left my job due to personal circumstances (which we could afford), I'm looking for a new position however not much luck on that front yet.

We are looking to buy in Essex (that's where I'm from), to be closer to my family and as we would never be able to afford in London or Surrey (where my partner is from).

I understand we won't be able to get a mortgage until I have a job, however what I'm wondering is how long roughly will I have to have had said job for? Also would I be able to take on a temporary position and still be eligible for a mortgage?

Also, how many months worth of bank statements do you usually have to provide to the bank. We might be looking at a 5% deposit scheme, however we might do 10%, does the 5% change anything?

Does the fact that we are moving areas and will HAVE to change jobs have anything to do with it, or do we just not tell them that?

I hope that all makes sense and someone can help us! I'm wondering when we can apply for a API, as I believe you don't have to submit the bank statements until you want to go ahead with it?

Many thanks in advance,
Sarah

Hutchch0920 · 18 October 2017 at 11:51PM

Hi Sarah

I can't say I have all the right answers but a few thoughts from me:

1. Have you checked property prices in your desired location? £17k will not get you very far in Essex when you consider stamp duty, legal fees etc

2. You are likely to have more choice with a 10% deposit, from
What I understand 95% mortgages are not very common, you are also likely to pay more in interest.

3. Have you looked at the Government's Help to Buy scheme or shared ownership?

4. Have you worked out how much you are likely to be lent, and does this give you enough money for the properties you are interested in?

enthusiasticsaver · 19 October 2017 at 12:15AM

You can apply for an AIP any time.

Normally 3 months statements and payslips are sufficient but it depends on lender. This would mean you have to be employed for at least 3 months before applying.

Some lenders will accept temporary or fixed term contracts.

The biggest issue with changing areas and jobs is how are you going to afford the payments if you don't get a new job straight away after moving in? Once you have an offer though there is nothing stopping you changing jobs.

I would urge caution with your plan. First because having a small deposit and fairly small savings means you may not get a low interest rate and money will be tight initially. Secondly as you plan to buy outside the area and will have to change jobs presumably because commuting is too far means you may have to settle for lower salaries making the mortgage unaffordable.

Why can't you look for jobs in Essex now and rent there until you have built up a bigger deposit and won't need to change jobs. Presumably renting in Essex would be cheaper too.

SarahRob · 19 October 2017 at 1:16AM

Hey Hutchch0920 and enthusiasticsaver

Thanks for your reply's!

When I say Essex, I'm from Colchester so north Essex.. Were looking at a 2 bed small ish house, just to get onto the property ladder, so we've been looking online at houses around £160k plus. Also were thinking of maybe going a little further out to Ipswich and a nice 2 bed house is around £150k.

My parents are prepared to help out with all costs of moving, stamp duty and other fees. So we literally just need to find the money for the deposit. My partner is due a £4k bonus in March (we haven't taken this into account, in the case it doesn't get paid), however we are weighing up whether its worth staying in London for it or moving back to Essex/Ipswich before then- (our rent atm alone is £1100 PCM).

Based on what I should achieve salary wise we could borrow £200k+ however we don't want to borrow that much.

When do you pay the deposit, it is once you secure the house? Or the move in date?

If I was to get a job in central London, where I was working before I COULD commute, however it would just be a very long day (which is doable short term)... So it I guess then it would only be one of us without a job. I'm assuming the lender doesn't have to know about this change, if we have been accepted and brought a house?

I understand in the ideal world it would be saving longer, however my partner is 30 now and getting a mortgage is very important to us, as we've had enough of paying someone's mortgage. However like you said, we may have to go down the route of renting somewhere in Essex now and getting a job there.. then applying for a mortgage (worst case scenario).

If we were to buy a £150k, I believe with an income of around £23k for me and £28k for my partner we would comfortably be able to afford that mortgage, am I correct?

Hope all that made sense.

Again thank you for your replies. Things to think about!

Sarah

saajan_12 · 19 October 2017 at 10:42AM

Few things you / lenders might consider:
1) For a residential mortgage, do you have jobs in the same area / within commutable distance

2) Held job for >3/6 months and out of any probation period

3) Max loan limited by the lower of
- mortgage < 4-5x annual salary
- mortgage < 90-95% of purchase price

4) SDLT, solicitors costs etc are added to the completion statement and often paid to the solicitor with the balance of the purchase price. So if parents are paying a chunk of this, it may be hard to distinguish from deposit funds. The solicitor / lender may demand parents provide a letter to say this is a gift and don't expect it to be repaid.

chappers · 19 October 2017 at 10:45AM

Yeah you don't seem to be planning to overstretch yourselves too much, you say location is based upon wanting to get on the ladder, but bear in mind that the reason you can find a better property in Ipswich may be because the housing market is very sluggish there, you might find that when you want to move on that Ipswich is where you will have to stay.
Also is there the work there and I don't just mean initially finding a job, but is there enough should you want to progress or change job.
There is a reason why house prices are significantly lower out there.
Think about where you ultimately might want to be.
Given a choice I would always buy the worst house in the best street rather than the best house in the worst street. It might mean pushing yourself at first but would probably pay off in the longer term.

On the subject of deposit it depends, your deposit isn't a deposit as such in the usual terms it is your contribution to the cost and will be come payable at one of two instances.
Either you exchange contracts leaving a period in between before you complete the sale in which case it will required at that stage. Or you exchange and complete at the same time in which case it will be required then.
Just a question where do you have your money saved? If you are sure that the sole purpose is going to be for a deposit on a house then have you considered a HTB or lifetime ISA as the government will contribute a further 25% on top of everything you put in. But be sure that is what you are saving for there are restrictions on what you can do with the money. Essentially it can only be used for a house deposit or withdrawn upon retirement.

ACG · 19 October 2017 at 10:53AM

The longer you are in the job the more options you will have. In theory as little as one month, butb3-6 months and you will have more options.

Lauralou79 · 19 October 2017 at 12:23PM

30 isn't that old. You have time to gather more savings. We've just purchased at 37/38.
I would advise you to be stable in your jobs and save for a little longer if possible, maybe moving somewhere cheaper to rent which enables you to save more?
Moving house costs more than you think. The bigger the deposit the better your mortgage deals too.

SarahRob · 19 October 2017 at 6:12PM

Ipswich does have a fair amount of job opportunities, I've lived there before and I've worked there. I'd say it has more than Colchester, which is where my family are.

That is a valid point regarding the best house in the worst street. At the end of the day it won't be our forever home, we will most likely only stay for around 5 years or so.. So we need to be able to sell it for a good price in order to get our next bigger home.

I have a help to buy ISA, but only have a few grand in it. I got 10k from Dad when my Nan passed away, it was his inheritance which he gave some to my sister and I. I don't actually have that money in my bank, as he doesn't want to give it until we have found a property, to ensure it goes on just that. So would I need to get the £10k soon, so it shows in my bank? Also I'm guessing the bank will ask questions about it.

If we don't complete until say April/May 2018 time, then we have more months to save so maybe looking at around £20k deposit.

However, after what you guys are saying, I'm thinking that holding out for another year and moving into rented accommodation in the area we want to live first is the best option. That way we'll be in our jobs for a year by the time we get our mortgage and I guess we can save more.

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Help!! Wanting a mortgage.

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