Chances of getting accepted for a mortgage in current climate. Mort. £80k, earn £15k

A_little_stressed!!

I know lenders are not giving out mortgages like they used to, but what are my chances of an £80,000 mortgage, £10,000 deposit put down on a flat being sold to me at £90,000 but has been valued at £110,000.

I earn £15,000 a year, no debts, no missed payments and £2,000 credit limit (which is almost full) on a 0% credit card that doesn't end til mid next year (which is why I don't class it as a debt yet)

I'm 22 and on the electoral roll.

Do I have a chance in hell?

Thanks

Wutang_2

unlikely - you are looking for a large income multiple and rates (80k / 15k)are high so you probably wouldn't afford the monthly payments

ixwood

You owe someone money, so it's a debt.

5.33 times your salary, so you might be struggling in the current climate. I'd wait a while for prices to drop further and keep saving.

lisyloo

but has been valued at £110,000

Who has valued it at this?
surveyor? estate agent, the seller or your auntie?
Seriously that's quite important.
Surveyors are valuing low at the moment due to the market.
Estate agents usually value too high to beat other estate agents to get the business.

But nevertheless from an LTV point of view you should be OK, even if it's valued at £80K.

The problem however is that your income multiple is 5.33333 which is quite high.
I think people have managed before on these multilples but it's been very hard.

Have you actually worked out whether you can afford it?
Where do you live now? rented or parents?

The debt is a little bit of a worry, it's not huge but it indicates that you are maybe not living within your means.

When you purchase a house you have to pay for insurance, maintenance (in addition to rent).
If you are living with parents there are a whole host of extras you'll have to pay for - coucil tax, water, phone line, electricity, gas, tv licence etc. and that's before sky and broadband.

What about insurance for death, sickness, accident and unemployment?

Have you worked out whether you can afford all this.
I'm not a broker but my own vew is that you won't get a mortgage and you probably couldn't afford it anyway (unless you live like an absolute hermit).
Sorry.

Also, are you aware that prices are dropping like a stone at the moment?
Won't it be in your interests to wait and get a better bargain?

A_little_stressed!!

It has been valued by 3 estate agents, I have taken the middle value.

I will be sharing with a relative whose rent will cover 50% of the mortgage (ones I've seen are £550ish, so rent at approx 225month)

I know prices are dropping, but they will go back up. Also the council are spending alot of money doing up the road, parking and lighting etc, they have already started this and issuing owners with compulsary 'paint and clean' orders so the price is expected to rise when this has finished (+obviously when market picks up again)

It's something I will have to think about alot, but I wanted an idea if I could possibly get a mortgage first before I look into the pros + cons. I could spend hours going into all the details only to find I earn nowhere near enough to get a mortgage while things are this bad.

Thanks for your advice.

maninthestreet

What savings do you have?

A_little_stressed!!

Also the debt on CC - I have more than this in my ISA, but keep it there to earn interest while spending on CC as 0%, I can either pay it all off at end of 0%, or transfer to another 0% for approx £60 fee which I get in less than 3 months from ISA interest.

happybroker

some lenders have pulled out of family purchases also. To avoid getting loads of pointless searches done you may be well advised to speak to a decent whole of market broker who will have a better idea of who to avoid applying to.

I think you will find it difficult givn the income mulitples however

lisyloo

I know prices are dropping, but they will go back up.

Probably, but it could take a LONGGGGGGGG time.
They've been rising for about 15 years and falling for say 6 months, so don't expect it to be back up within 2-3 years as it could be MUCH longer.
There is a graph here that shows you where we are in the "cycle".
http://www.housepricecrash.co.uk/
That website is higher biased but I believe the graph is accurate and up to date.
You can see from the graph that prices could fall a long way.

It's good that you have someone to help with the mortgage (although they could get sick, die etc. so it's not guaranteed) and it sounds like a good purchase and you are only using debt to your own benefit, however my own feeling is that the timing is still bad.

Prices could easily fall 40% IMO and that's £36K.
I know people fall in love with houses but it doesn't sound like you couldn't get a similar house again in future and don't forget that if prices do fall 40% then you will probably be able to get it for a lot less or alternatively buy a much nicer house.

If the people in that area need compulsorary orders to keep their properties up together then it probably is always going to be a bit run down to be honest.

A_little_stressed!!

Thanks, I'm glad I came here first before spending too long looking into it. I don't want to lose the money I've worked hard to save up, I just also don't want it sitting there tempting me to blow it on cars/holidays other lovely things that are worth nothing in the end.

If I did buy, I'd want to keep it for at least 5years.

The compulsary order is to have them painted the same colour and the council is paying 70%ish if you do it within about a year.

space_rider

I got a mortgage with Abbey that was based on affordability. It was 5 times my incoming which did include tax credits and I had/have no debt . My fixed rate runs out in December so will be interesting to see if I can get a remortgage with another lender. I can afford to go on the SVR as I actually read the bit on the mortgage offer that told me how much it would be per month when the rate went to SVR!