First time buyer, looking for advice

jb1305

Hi,

I currently live in a flat that I rent from a family member. I'm now looking to buy the flat as I have now secured a permanent job. I do not have a deposit, but my father spoke to an advisor on my behalf who suggested I look into the LIFT scheme (in Scotland) for open market properties. I'm waiting to see if I will be approved for that. I am keen to buy a property via that route rather than continue renting whilst saving.

If I am approved for LIFT, then I will have to then get approved for a mortgage - this is where the problem lies. For the past year I have essentially been living in my overdraft, my salary is due to rise in August and I should be able to clear the overdraft fully within a few months. My limit is £1000, but by the end of the month I am usually into my overdraft by around £600-700. I also have a credit card with £1000 debt on it. I typically pay £70-100 on it per month and will have it cleared fully within the next year.

I realise that this does have a big affect on my chances of getting a mortgage. I do have a good credit history, have never missed any payments and checked on experian that I have a credit score above 900.

Any words of advice would be greatly appreciated. I'm scared of waiting until next year when I will have cleared the overdraft etc as house prices etc could rise again in my area.

benjo

Not sure that overdrafts show on your credit files unless you are over your agreed borrowing limit - I could be wrong on this though.

In terms of getting a mortgage, you dont mention you income or how much you are looking to borrow.

Idiophreak

jb1305 wrote: »

If I am approved for LIFT, then I will have to then get approved for a mortgage - this is where the problem lies. For the past year I have essentially been living in my overdraft, my salary is due to rise in August and I should be able to clear the overdraft fully within a few months. My limit is £1000, but by the end of the month I am usually into my overdraft by around £600-700. I also have a credit card with £1000 debt on it. I typically pay £70-100 on it per month and will have it cleared fully within the next year.

I realise that this does have a big affect on my chances of getting a mortgage.

You think?

My gf and I just bought together - we both live in our (interest free) overdrafts and had a few grand on credit cards - wasn't a problem at all...

jb1305

Thank you both for replying.

benjo - My overdraft does appear on Experian. I've never been over the agreed limit and should gradually come out of it over the next few months. It's actually interest free until next March so I've not been in a great rush to pay it off straight away. I've been into it slightly more than usual this month as I was on holiday.
Also my salary is 25k (but I'm a teacher so it will increase every year according to the pay scale). Through LIFT I can apply to buy a property at 120k max - they will pay 20-40%, obviously I'm looking to get a mortgage so that their share is as close to the 20% mark as possible.

Idiophreak - Thank you for that. I was under the impression that it would seriously affect my chances of getting a mortgage.

SelbyJay_2

If you are living in your OD, it may look like you cant handle your finances very well which could put lenders off. The CC's shouldnt be an problem, but the amount you have to pay for them will affect your affordability.

Dont forget that you will need money for fees etc, which could easilty set you back £2-£3k.

jb1305

Thank you for replying SelbyJay.

I'm going to make it a priority to get out of my overdraft as soon as possible. I'll move up a point on the payscale in August bringing in an extra £200 per month which will help. I've also renewed my car insurance, broadband and mobile phone for less than I was paying previously - all of these savings can go toward my overdraft. I'm going to have a bit of a clear out around the house too and put things on ebay. I never spend more than I bring in each month though but I know I need to be a little more active in sorting out this overdraft.

I do know that there will be fees involved but I think my parents will help me out with those and I can repay them.

jb1305

*update*

I've got the paperwork through for the LIFT scheme and it all looks pretty straightforward. I need to get 3 mortgage quotes and send them back with the paperwork.

I'm now wondering if it would be better to postpone this for a few months until I clear the overdraft? The credit card is not a huge worry to me as I make regular payments and it is not something I intend to use again (cut it up).

Also, my salary increases as of next month from 20k to 25k. I have to show them three consecutive payslips and I assume it may be better to hold off and show the first few months on the higher salary as it could get me a better mortgage?

Again, any help would be appreciated.

kells1232002

Hello jb1305

Do you have an update on this?

I am in a similar position and wondered if you had any luck with applying for a mortgage?