Would they look at us twice?

Zaslit

Hello!

Myself and my girlfriend are looking to purchase our first house - we would be looking at no more that £110,000 and can put a deposit of £25,000 (to include fees.....) down. We have both got a good credit history, but the problem is we are both PhD students and therefore both our incomes are not taxable. I have heard mortgade lenders take a dim view of this? would they consider us if we had guarantors? (parents on both sides happy to do this).

Any advice would be greatly appreciated! we dont want to start looking and get our hope up if any lenders are just going to say no due to the income considerations.

Thrugelmir

How long is your stipend guaranteed for?

Zaslit

Hi Thrugelmir, both our stipends are guaranteed until September 2013 and ur combined income is just under 30k. Cheers!

herbiesjp

There will be one or two lenders that could potentially look at this, but it will depend on the whole scenario and how the case is put forward.

Having a guarantor as well could make a stronger case for you as well - as long as the guarantor meets criteria.

Zaslit

Thanks herbiesjp its reassuring that there is potentially someone that would look at us! parents on both sides are in a strong position income / credit wise so it sounds like asking for a guarantor could be the way to go. Out of interest do you know if you can have more than one guarantor and if so does this put you in a stronger position?

Cheers!

nervousftb_3

yes there is some hope, but at the same time there are some pitfalls to look out for! i am a phd student with a stipend too and got a mortgage last year, but my circumstances are slightly different as my partner has a 'normal' wage!

a lot of mortgage companies won't even consider stipends as an income (e.g. britannia, barclays) but others will (e.g. halifax, C&G). the other problem is that those who do accept stipends will only take around 70-80% of into account (no idea why!). however this situation may be different if you use a guarantor (we didn't) so still worth checking!

having a guarantor(s) will help alot, but bear in mind they need to earn enough to be able to cover their own mortgage as well as yours, and they must be under the age of retirement by the time your mortgage term ends. it is a huge commitment for somebody to undertake, and they need to be credit checked, provide ID, proof of income etc. you can have more than one guarantor, which may help but i'm not certain on this!

best thing to do is to get a whole of market advisor, sit down with them and explain in detail how your stipend works, explain it is tax free, bring evidence of when it is guaranteed til, etc. make sure they full understand what it means - the first advisor we went to clearly didn't understand our circumstances (despite us explaining over and over) and came back to us with a load of mortgages that were clearly unsuitable/unobtainable and wasted a lot of our time and his, so make sure it is all clear from the outset.

best of luck!!

Zaslit

Cheers nervous ftb thats brilliant! definately given me some points for consideration. Its great to hear from someone who was in a similar position!