First Time Buyer Advice please

dmp1980

Hi

I have an appointment with a whole market broker this evening - but want to prep myself before then...

I have had some poor history in the past - only with late payments and bank charges - however the last late payment made was over 40 months ago. I have only been overdrawn twice in the last 3 years and never over my agreed overdraft limit.

Through Experian my credit score was 856 - Fair, although only 20 points below Good.

I am looking to by a property for 179950 tops, with a deposit of £30.5k. My salary is £41,070.

I currently have approx £4k outstanding on CCards, which will be fullly paid off next week.

I will then have no outstanding debt at all, but will continue to service my CCards monthly.

What would people recommend are the questions I ask of the broker and any suggestions of my likely success or avenues to try.

I was hoping to be looking at buying in the new year with my GF who has just finished Uni - but she needs to be employed for 3 months and we have seen the house we really like and therefore are trying on my own.

All advice greatfully recieved!!

DP:rotfl:

DJ_Mike

Taking a mortgage of £150,000 against a £180k property is a LTV of 83%, which is very respectable for a First Time Buy! You'll get a fair range of mortgage deals at that level (probably not dissimilar from what I got, given I was an LTV of 85%).

Obviously the credit rating could hurt you a little, but the other issue is potentially how much you're borrowing against what you're earning. Your salary measured up against a loan of £150k means you're borrowing 3.65 times your salary. This isn't excessive by any means, but a lot of lenders have tightened up to only loaning up to 3.5 times. However, lenders like Abbey will generally meet you at 3.65 easily enough, especially if you're borrowing 85% of the house value and not higher.

In terms of what you should ask your broker... Just impart the information you've given here. Make sure you take stuff like last 3 months' worth of pay slips with you, P60 for last tax year, etc. Ultimately, just be honest with any questions he or she asks!

Good luck!

dmp1980

Thanks - Im hoping that it will go Ok.

What are most people doing at present - fixed or variable? I understand that most fixed rates are not on repayment terms only and not intereset only - is this correct?

My main concerns are over my credit score - although I think that this will only affect the top end rates available. If I pay off all the outstanding debt next week - how quickly will that register?

My other issue wast my salary to loan multiplyer - but the 179950 is the full asking price and tbh - i would want to offer nearer to 170k for it, and avoid the obvious stamp duty threshold...!

As for costs - i have allowed approx £4k that i have not included in my deposit for fees etc. Is this in general terms enough considering all of the above?

I am quite excited now - hopefully this will all go ok!!

DP

DJ_Mike

4k is generally more than enough to cover all fees, although one thing to watch out for are arrangement fees on mortgages. Mine with Abbey was only £495 but they can run much higher than this, so be wary! Your broker should tell you all of this, however, and will advise on the best deal money-wise to go for.

As regards fixed or variable, that's never an easy one to answer. As a First Time Buyer, whatever deal you go for at this stage is going to carry a high interest rate.

A better question to ask might be - how long do you want to be tied to a particular rate?

I opted for a 4 year fixed rate, but in hindsight I'm actually wondering if this was wise. I have every intention of overpaying my mortgage quite substantially over the next few years, to bring my capital down, and thus get a better deal. In actual fact, I may have been better off with a 2 or 3 year fixed deal, but there aren't many round for 85% LTV right now! Tough choice!

Depends really on how much you plan to overpay by!

dmp1980

Mortgage in principle came back in 24hrs from A&L - best rate on the market for 83% LTV interest only for 3 years.

No problems and able to lend the full amount asked. Have just been asked to supply 3 payslips and p60 for it to be fuly approved.

Now just need to find the right house!!

I am sooooo happy!!!:rotfl:

benjo

Well done and goodluck with the rest of the process.:beer:

TimSage

Hi,

I thought I'd just mention a recent development in the world of mortgage brokers and first time buyers that isn't being publicized by brokers.

I'm a whole of market broker myself but prefer to be ethical about these things. At the moment there are a number of lenders who are offering products right up to 90% of the value of the home. Many of them are offering products through brokers as well as through their branch network.

However, the differences between the two product ranges are enormous. For instance, one of the main providers at this level offers a product through brokers which is over 1.25% higher and has roughly £800 more in fees associated with it.

Most brokers are able to search for these products on their system, know as TriGold, as this has changed recently. However, they will not automatically include these.

Unfortunately, customers have also not been particularly ethical about this either. For instance, I have spent considerable time with customers without charging any fees at all. I have been prepared to provide this honest advice even though I lose out. I have requested that they come back to me to offer quotes for any of the insurances they require and most have said that they will. Unfortunately, this loose promise has counted for very little most of the time.

Please remember that some brokers are honest, but we also need to make an honest living too.

dmp1980

OUr offer on our new place of 180k was turned down, but told that 190k would secure. i now have to go back to the broker and see what he can do - any ideas?

I was suggested a vendor gifted mortgage on this property by a broker - that would cover the 10k shortfall. I have a 30k deposit and my loan to salary ratio is currently approved at 3.72.

Any help gratefully recieved - i hope to get this sorted today!

Thanks

dmp1980

bump........

DJ_Mike

Have you tried haggling half way?

Usually when you make an offer on a property, you only have an Agreement In Principle, and these aren't very hard to change (assuming the lender is happy to lend you the increased amount).

Just ask your broker to increase the AiP, they generally fax them off and get a reply pretty promptly so it's not a lot of effort on their part.

dmp1980

Mortgage AIP was approved last Thursday with Abbey. Offer of 190k made Friday and accepted yesterday.

My friend at Abbey was a great help - but now have a slight concern.

He automatically calculated my net monthly pay from my gross - however - on my payslip for last month, my net is approx 150 less than this. This is due to PMI, life assurance and Moblile costs being deducted at source from my gross pay, and approx £800 in backdated tax from 07/08 being recovered in the 09/10 tax year. My tax code has varied considerably in the last 3 months due to this - Will this make a difference? My Gross is exactly as stated and the mortgage costs equates to about 35% of my monthly net on the last payslip.

I am now concerned that this will be an issue, as the vendor has required exchange in 4 weeks and completion in 5. They have refused to remove from the market until exchange date. I do not want this mortgage to fall through because of this.

I have solicitor instructed and have documents with mortgage offer to return today. They have only asked for 1 payslip and copy of both passports. Is that all they will require?

Thanks

DP