First Time Buyer Mortgage Finance Help/Query?

jed500

This is my first post so please don't be to hard on me if its not in the right section.

I am looking for any advice/solutions to helping us get our first mortgage for our first house.

My partner and I have been living with our in-laws to save for a mortgage, we had been renting for the last 8 years so it was about time we did something about it. FYI reasonable (not brilliant) houses in south yorkshire cost around £70,000 to £90,000.

We have saved £3,500 so far for a deposit and put this into two ISA's at 5%,
we put about £600-£700 away per month currently so this will be about £5000 in July -any interest accrued.

My income is £14,151 although I am looking for another job unless I get a pay rise I was promised. I have a personal loan, with which I have been paying off for the last three and a half years, it will cost £3570 to pay off including early settlement which is £70, I pay £220 a month and have 17 months left to pay, roughly sept 2007. I also have an overdraft of £2500 this has been like this for the last few years as I paid my £220 a month. My aim was to pay the loan of then sort out the overdraft.

My partners income is £11,900 and has no debts or loans, just a small overdraft of £500

London and Country reckon we can get between £70,000 to £76,000 with current outgoings as long as we have a 5% deposit.

My bank advised me to try and get rid of the loan and lower my overdraft usage/limit in the next few months to give me better mortgage they quoted currently £58,000 - although their not brilliant on the mortgage front, although my credit rating according to them is very good.

My question really boils down to this? I don't really want to consolidate the loan as I think no matter what I do by credit card or other loan company will incur extra cost. But I think it would help to get rid of the £220 a months outgoing, because I was told that mortgage companies would take it off the amount I earn before multiplying my wages to get the mystical mortgage figure. My bank said the overdraft amount just gets taken of the mortgage amount once and is not multiplied along with the wages unlike the loan? We could pay my loan of with our savings (not really fair?), but that will mean we need a 100% deposit which may not give us a good mortgage rate.

Any help, advise or encouragement appreciated.

Cheers JED500

Kzlnd

We're sort of in the same position, first time buyers also in South Yorkshire, now with no savings (Where are you looking for houses at those prices?! haha I'm struggling to find any so cheap! ) ..

I was advised that it's almost pointless to save money my ISA account as I have a loan and cc with high interest rates - The savings account rates simply don't earn enough and so paying off the high interest cc is a much better use of the money?

We're now in the position of possibly looking at a 100% mortgage but I've not found many lenders who offer this, obviously if you paid off your loan etc you would be in the same position..
Although with you having around £700 spare each month to put into savings, it doesn't seem like it would take you too long to build savings up again? Say around 4k + if you saved until September, that isn't much difference of what you expect to have with your current savings in July, but then you would still be left with loans etc.


Sorry not much help, in the same position but not overly familiar with mortgages, maybe best to ignore my comments? :rotfl:

curfish

I found the best mortage for me was a northern rock together mortgage.

im not to sure on the technicalities, but you can take a 125% mortgage.

100% is a standard mortgage and 25% is a unsecured loan at the smae rates and the mortgage over the same period.

basically it enabled me to get £108k on a 23k wage with 3k in loans and
credit cards

so im gonna buy a 105k house and use the remainder to pay off loans and credit cards

details on the website below
http://www.northernrock.co.uk/mortgages/together.asp

jed500

Thanks for your advice, its quite hard as a first time buyer in todays climate, we hope to move for sanities sake this side of september so all the other cash spare will have to go on solicitors fees etc Although 100% mortgage would help, I don't know how reypayments and interest rates are compared to 95% mortgages. We may try and save more and try and settle the loan with whats left? Good point about paying of debt first, but I stand to save only between £200-£300 settling early, its just the effect the re-payments have on getting a mortgage....

You have my sympathy about the house prices, but their are some not bad houses on the web for decent prices, as opposed to the ones in the telegraph property guide, but they're not going to be palaces. Does mean living out of the city a bit though for a good deal.

jon

Kzlnd

curfish wrote:

I found the best mortage for me was a northern rock together mortgage.

im not to sure on the technicalities, but you can take a 125% mortgage.

100% is a standard mortgage and 25% is a unsecured loan at the smae rates and the mortgage over the same period.

basically it enabled me to get £108k on a 23k wage with 3k in loans and
credit cards

so im gonna buy a 105k house and use the remainder to pay off loans and credit cards

details on the website below
http://www.northernrock.co.uk/mortgages/together.asp

Curfish, regarding the 125% mortgage..

On the website it gives an example of 95% towards the house and up to 30% personal unsecured..
Just wondering, we're wanting a 100% mortgage - Would it be possible to take 5% from the 30% unsecured and use this to make a 100% mortgage??

From reading the website, I'm unsure if you could use the together mortgage to make up 100%?
It does state: You can use the unsecured loan part of together for any legal purpose.
Would this mean you could use the extra and make it into 100% mortgage?

Wickedkitten

we are getting the together mortgage as well, and basically what we are doing is buying a house for 90k; 81k is taken out for the mortgage, and 9k is taken out as an unsecured loan at the same rate as the mortgage.

After that effectively, if we want to we can take up to 21k more as a loan at anytime and our repayment is £483 a month IIRC.

herbiesjp

That is indeed what most people look at it for - they take the funds split between secured and unsecured, and in your case make a 100% mortgage.

Depending on your income/situation though, you may be able to look at other straight 100% mortgage deals.

Kzlnd

Good gosh, how daft am I :rotfl: Thanks for that! Just wasn't quite sure

We were going to go with Natwest 100% as they can offer us slightly more than the basic NR show (Even more if my work were cooperating and giving me my salary increase I should have got before the end of last year :mad: ).
However, with current salaries, Natwast haven't offered as much as I'm comfortable with.. an extra 1.5k more and all would be good! So I'm checking out other lenders again.
With upto 125% this would allow us to give a good offer on the property we're interested in.

homer_j_3

With the NR Together, your income multiples will depend on your credit score.

I would seek advice towards the together product as it may not be the most suitable for you personally.

The rates are not the most competetive but the product is a good product for people whose debts are ruining the amount they can borrow.

NR has various start up fees where you can pay anything from 425 to 1000 up front which should also be considered fully

Wickedkitten

oh aye, my OH's credit scare was actually exceptionally high and they would have loaned him more but it would have been silly really stretching it out so far.

and we had to pay lets see 440 for the homebuyer survey + valuation, and then then 225 for the application. We get 1000 cashback on completion though.


oh it may help if I add this is through a broker as well.

homer_j_3

the 1000 is the help with costs and you have to pay this back if you move within a certain period of time.

This is why I would recommend profesisonal advice on the basis that you are fully aware of

1 you are getting the most suitable product
2 you are fully aware of the pros & cons of that suitable product
3 you can rest assured that the broker can be held liable for misadvice should it prove incorrect at a later date.