what order do things happen?

pavlovs_dog

ok, so its going to be about a year before we go fora mortgage, but im trying to start swotting up so im fully armed and ready for when the time comes.

when we go to buy a house, what order do things happen? do we go to the mortgage people to find out how much we can lend, do we look at houses first and see if they are prepared to lend us up to that amount, do we get a mortage agreed in principle...?

if it makes any difference, we're FTBers, and when we do finally go for it, we hope to be able to put down a deposit of between £12-20k, depending on cost of the house, fees, surveys and so on. we would be looking at a small-medium house at around the £100k mark, and from the research we've done so far i think the maximum mortgage we would get based on our current modest income would be around the 80-90k mark.

thanks for any advice, comments etc

p_d

Joe_Bloggs

Pedant Alert! (I mean myself). You do say how much we can lend. You are lending your savings already to a financial institution that pays interest back for the deposit of your funds. You have things figured out by suggesting requesting a decision in principle for how much you can borrow.
My first mortgage deal lasted 13 months. It became 6% SVR withiin six months. Short term headline interest rates that rot into lousy SVR are prevalent. My latest mortgage will last 5 years at BOE +0.24% .It is not the best but I am making constant penaly free overpayments to shorten the term.

Any deposit mentioned on this site by a FTB seems a rarity. Check your own statutory credit reports for nonsense. I wish you every success in finding a place of your own. There are sites that mention the registered selling price of properties for a particular post code. The only one I can remember is http://www.upmystreet.com/ there are many others.

Regards J_B.

pavlovs_dog

cheers joe, appreciated.

is SVR standard variable rate?

good idea about the credit report, hadnt thought of that. have no bad credit, lack of credit history if anything, so have applied for a credit card and store card (which i use like debit cards) to build up a bit of history and show i am trustworthy

any ideas as to how they would view money from a student loan as income? OH is in full time employment, im full time student but work part time and earn a fair wage. doing the sums using ballpark figures from the budgetting board and so on suggests that on income alone, we cope cope with mortgage payments in region of £300 per calenadar month (although there wouldnt be much left for partying at the end of the month lol), and taking student loan into account gives us about an extra £400 to play around with each month. (EDITED TO ADD - HAVE LEFT £2K INTEREST FREE OVERDRAFT AND ANY MONEY AVAILABLE FROM CREDIT CARDS OUT OF CALCLATIONS, AS WE WANT TO STAY IN THE BLACK DOING THIS, BUT IF PUSH CAME TO SHOVE, WE DO HAVE FURTHER MEANS IN SLIGHTLY INCREASE OUR WEEKLY INCOME)

we could in theory put down an even bigger deposit, but we are hoping to have £3-5k saved for initial furniture and decorating costs, as well as a few k gathering dust in a bank account in case the roof falls in or whatever. would be able to prove that we have saved seriously and sensibly for our house make them lend us that bit extra (without pushing ourselves into the realms of repayments we cannot afford?)

pavlovs_dog

bumped to see if anyone else can offer any pearls of wisdom

Simon_gloster

Hi pd

I wouldnt want to bore you with the full process, but believe it or not it'll all fall into place at some stage.
You right in thinking get an agreemenr in principle from a mortgage lender. Then you'll know how much you can borrow. Offer on a house. Have it accepted. Get the advisor to submit your application. At this stage pay for the survey and local searches. Await mortgage offer. Get an overpaid solicitor to act for you in the purchase. When the offer is out, communication between a;; parties takes place and you agree an exchange/completion date. Completion comes and key release for you.

A quick rough quige for you.

:: Advertising removed - FM ::

Si

Heth_2

Re the student loan as income problem - have you talked to a mortgage advisor about this? I am a postgrad student, and trying to buy a house with my husband who is doing a normal job. I get a maintenance grant (not a loan) from the research council which is tax free, and 12k a year and many mortgage lenders won't consider this as income, so you might struggle with a student loan. We have a substantial deposit as well, but are still struggling as they don't like my grant.
You might find they just take your part time job into account, and possibly affordability.

bluekp

I bought my first house last year with my boyfriend. We saw the Countrywide mortgage advisor a couple of times, but found through our own research that we could get a better deal from A & L who weren't on Countrywides list of mortgage providers.

We put down a deposit so as to reduce the overall amount we'd need to borrow as much as possible, and kept enough to pay the solicitors fees/searches/stamp duty, and an extra £5k as the house we bought needed renovating.

We did things in this order:

Mortgage in principle
Approached estate agents
Viewed properties
Put in offer
Had offer accepted
Recontacted mortgage lender
Had valuation surveys/homebuyers surveys carried out
Accepted mortgage offer
Searched for solicitor (on web)
Filled in tons of forms and signed loads of papers
Bought house!

Good luck :T

silvercar

Personally, I would find a solicitor as soon as an offer has been accepted. They can start the legal work while your waiting for the survey and mortgage offer to come through.

sarah_elton

silvercar wrote:

Personally, I would find a solicitor as soon as an offer has been accepted. They can start the legal work while your waiting for the survey and mortgage offer to come through.

I did things in the same order as bluekp.

I waited to instruct solicitors till my mortgage had been finally approved (not just in principle), for the simple reason that my move budget was tight, and I couldn't afford to pay for a solicitor if the mortgage was then declined (even though there was no reason it should be).

It does depend on the patience of your seller though. Some wouldn't be happy at all if you didn't instruct a solicitor straight after the offer was accepted, and my EA actually wouldn't take the property off Rightmove until I instructed (about 2.5 weeks after offer accepted - time it took for mortgage approval). I also luckily have a seller who has been completely relaxed throughout (probably because he's already moved out and in with OH, so we're chain free and don't have move dates to tie up).

Joe_Bloggs

@pavlovs_dog
I hope you have more income to throw at your mortgage when the time comes. If you borrowed £90K for 30 repayment years at 4.5% you would pay £456 a month. This may be affordable once you have completed your studies and secured a well paid position. Travel costs to and from work may require the purchase of a car or a rethink of where you choose to live anyway.
What may be more depressing is that the housing market is being talked up by ODPM. Where I live there are numerous newly built flats that are vacant or hundreds of the residents can't afford electricity.
J_B (http://www.hsh.com/hbcalc.html for a free offline amortization calculator)