How much information to Give Lenders?

brownjl

Hi,

Where in a bit of a pickle, we would like to apply for a mortgage, my partner is on £16,089 and I am on £13,023, giving us a combined income of 29K. Looking at the housing prices, the majority of asking prices for a suitable house are around 110k.

I am currently working part time for the university whilst I finish my PhD, however this job will end October 06, where I will be unemployed until I finished my PhD (due to time constraints) which could be as late as June 07.

We currently have 13,500 saved for deposit which quickly drops to about £11,500? after buying fees. Our plan was to go with a 7K deposit (slightly more than 5%) leaving £4.500 to be used to subsidies us whilst I am unemployed.

We figure this 4.5k on top of my partners wage with a fixed rate mortgage for 103,000 (+ mortgage fees) of about £510 per month + bills and our usual living costs could easily last us a year to a year and half after I loose my job, so the risks are not to high, plus I should be fairly guaranteed a 23K+ a year at the university after I finish.

How much of this should we tell a lender?

Cheers,

James

Heth_2

Hi,
I am also doing a PhD and trying to buy a house. Mine is funded so i get a maintenence grant (12K) but we are having great difficulty finiding lenders who will accept that. I think that abbey is going to (if not no house buying for us now) and they will want to see evidence of the grant, which runs for another year and a half. I guess if yours is a job at the university then they will want to see payslips, and i think we have had to tick boxes saying we don't know of any reason why are circumstances will change. Apart from that, if they don't ask how much longer you will employed for then you could not tell them, after all with a normal job you don't know if they could make you redundant etc...

AndrewSmith

You will be asked by the lender (especially with just over 5% deposit) if you are on a fixed term contract, if you know any reason why your current employment may not continue, and dont forget they will more than likely write or phone your employer for an employment reference in which they do ask if the employment is permenant or contract and when the contract is due to end.

Also, if you go via a broker he will specifically ask the same questions.

Lenders have lending criteria for a very good reason, not just to be a pain. They have no obligation to lend anyone money and do so at their discretion. If they discover you have been less than completely open with them you are likely to be refused immediately. Also by not stating (if asked about contract terms etc) that your current contract will cease in October 2006 you may be committing mortgage fraud, obtaining money by deception. This is being ever more taken seriously and investigated these days especially with the high level of Self Certify cases and the new regulations governing mortgages which came into effect in 2004.

The other reason for their lending criteria is that they do not want to be left with a property to try and sell if the end up reposessing it from you because you couldn't afford the repayments.

There is no guarantee that you will find employment after October after all.

I think it is unwise knowing that your employment is short term to be considering entering into a long term commitment such as a mortgage. Any reputable mortgage broker will tell you the same.

Andy

brownjl

Thanks for you advice Andrew, no I wouldn't consider not telling when asked, was just curious to know what my options where really, but as you sugest it may be the wrong time to buy!

Yeah where just in a sticky position. Unfortunatly the university funds reseatch staff via project money, and the project I am on ends in October, by all probability a new project could start and I could be employed from that but as I mentioned above there is a possibility that worst case I become unemployed until I complete.

Where fairly sensible where money is concerned and shown this through our spending/saving history, and thats why we calulated we could afford a mortgage of this size for a longer enough duration to cope with the posibility of unemployment, its jsut rent in a university town works out quite often higher than what a mortgage and the associated costs of ownership.

Thaks again for you advice

James

brownjl

Further to my last message,

If we are willing to commute (25mils), we have seen a number of houses around the 85K mark, with a 10k deposit taking this down to a loan of 75K. According to charcolonline.co.uk, the Alliance and Leicester would be willing to borrow us this figure, on my partners salary alone @ 16k.

I am a little dubious of this quote, so what would happen if we applied in joint name, but only put forward my partners salary since mine for the moment is unstable. How would I be treated? As some form of dependant and reduce what the bank is willing to give us?

Also can anyone foresee us running into any difficulty with only using my partners income, she has work in her current job for 15 months which is a permanent job but she is on a 12 month temporary contract, however she have been working for her current employer for 20 months (first 5 months was covering maternity leave), her employer will endorsement this.

Lastly, although we could afford a repayment mortgage, if we decided to take a interest only mortgage for the first few years, can any one foresee any difficulty in switching to a repayment mortgage after our promotional period once I have better job security?

Cheers,

James

Jo_anne_2

brownjl wrote:

Unfortunatly the university funds reseatch staff via project money, and the project I am on ends in October, by all probability a new project could start and I could be employed from that but as I mentioned above there is a possibility that worst case I become unemployed until I complete.

I am a post-doc but on a fixed term contract. We recently took on a mortgage advance to buy a BTL property and I wasn't asked if my job was permanent or a fixed term, and I didn't volunteer the information. When we took out our first mortgage (20 years ago mind), my husband was doing his PhD and some lenders (such as the Halifax) did not accept his grant as an income, but others would, so it is worth shopping around. I have never had a permanent job, having worked in science and it has not been any real problem in getting a mortgage whenever we have moved.