Question - would we be able to get a mortgage? (totally clueless about mortgages)

Silverbird

Hi there

I'm sorry if this is a really silly question, but I haven't a clue about mortgages at all and I've tried reading about them and have got my head around a few things, but find some of it is going over my head.

Basically OH and I would like to get onto the property ladder. We currently rent at £450 a month and I pay for this all myself, as OH has debt of around £20K.

I have always assumed that we'd never get a mortgage because of OH's debt (although he hasn't defaulted now for many years and is overpaying on all debts) and also that a mortgage may cost us more than we can afford (I could pay £500 per month, but no more really).

We are just looking for a first time house with 2 bedrooms.

We both work full time and earn around £18,000 each before tax.

We have been looking to rent a larger place for us soon, but a colleague today mentioned that we could actually be paying a mortgage back for less than rent per month. This never crossed my mind. I had always assumed we'd have to wait until OH was out of debt, as I thought mortgage repayments were quite high.

Could somebody send me in the right direction or give me a few pointers? As I said, I'm totally clueless (which I'm sure is blatantly obvious!) and just looking for some thoughts.

Thanks in advance!

clearing_out_my_pockets

Hi.

Realistically, mortgage lenders will take your OH's debt into consideration when they calculate how much they'd lend you. How much is his monthly payment?

Also, you'll need a deposit. How much are the 2 bed houses in your area?

Israfel

Silverbird, it's worth asking a mortgage advisor but at the moment they're still quite tight on the mortgages and you'd need a least a 10% deposit. See how much of a deposit you would be able to get together and speak to a mortgage advisor

Silverbird

Hi both and thank you very much indeed for your answers, which are very helpful.

Suitable houses look to be £100,000 to £130,000 in our area.

I'm so clueless I didn't even know about the 10% deposit!

I suppose the answer is obvious now I know this. We won't be able to get a deposit of this size together until OH is debt-free and if we want a bigger place in the meantime then we'll have to stick to renting.

Thank you very much both, I really appreciate your responses and I'm sorry for the silly question!

clearing_out_my_pockets

There is no such thing as a silly question!

Looking at the house prices in your area, I've run a couple of scenarios for you:

Nationwide do a 90% tracker at 4.13% above base rate. If you had a 10% deposit of a £120,000 property, you'd need a mortgage of £108,000. Over a term of 30 years this would be a mortgage payment of £560 a month. However if the base rate rises by 1% your payments would increase by £67 a month.

If you want the security a fixed rate offers, you'd be looking at a rate of around 6% which would be a payment of around £650 a month.

What I'd do is overpay the loan as much as you can (if you can) and build up as much of a deposit as you can.

If you have any other questions, feel free to PM me. I'm by no means an expert, but I've been in your position not too long ago and know how daunting / overwhelming it can be, particularly with a partner who's in debt.

Silverbird

Bless you. Thank you so much for your help and for checking that out for me. That's fantastic of you and very helpful and generous of your time.

Yes, I am currently saving up to pay off my loan in full and will be debt-free myself in May or June (hopefully sooner if I can make some extra money in the meantime through Amazon and eBay).

Once I'm debt-free I will be starting to save my disposable income - half for a baby and house fund and half towards my OH's debts to get him out of debt sooner.

Your information has been really helpful and the way you've explained it has helped immeasurably.

Thank you very much indeed for your kind offer as well - I may well take it up later on next year and PM you!

Many, many thanks once again x