Mortgage advice please

Bexter

Hi

My fiance and I are looking to buy a house, have £20k deposit and will need to spend about £180k-£200k in East Renfrewshire (v popular area due to excellent schooling). Both of us had previous credit problems (me a trust deed (like IVA) and he a CCJ but both of these were over 6 years ago and are no longer on our credit files (I check Equifax and Experian regularly and all our payments are up to date, everything as it should be, on electroal roll etc). We can get credit but not the best deals so I'm guessing our scores are pretty low though.

Anyway spoken to London & Country but the 90% LTV's they mentioned weren't as good as some I've seen direct through lenders (we'd probably prefer a fixed rate I think though open to advice!).

I also spoke to A&L who are my bank as they were offering a 5.99% fix with no fee. The advisor at the local branch has been a bit chaotic. All done over the phone, kept getting details wrong, has taken a week for her to get back to me properly and she's now telling me they would only offer us £150k maximum (this is without having done any credit search etc, just inputted our details).

She tells me they use the office of national stats to predict expenditure and for a couple with one baby on our income, they say we spend £1500-£1800 on bill, shopping, leisure etc - which seems high to me. Plus they include pension contributions etc etc.

Anyway our situations is;-

Partner - public sector job for 7 years, salary £30k
Me - in job for nearly 2 years, salary £44.5k
Only other income is child benefit and partner's overtime as and when

Debts
Credit cards- £6k (mainly due to my mat leave so we are working on reducing this)
One loan £213 a month
Other loan £330 a month - this finishes Dec this year
Car - £360 a month

Bills, food, travel, council tax etc - c. £1k a month

So total outgoings around £2150
Incoming money is £4000 - leaving us up to £2k for mortgage payments - which on 5.99% rate would be about £1200 for £180k

All a bit rough I know but pretty much right

I would just like a bit of advice on what to do next - are any lenders giving agreement in principle now, should we use a broker or go direct to a lender like Halifax where my partner banks - and really any advice about whether any lender will assess differently to Santander and gives us more than £150k really

Thank you - pleaes let me know if I've missed anything

Cannon_Fodder

Some Lenders are turning down applications with sizeable debts, so I don't think getting £150k is too bad. Whether they would approve the application when the credit search etc is done, is another matter.

If you have £2k spare each month, you will be able to make substantial dents in those debts. i.e the credit cards will be clear in 3 months.

That would free up payments/interest, so the rest of the debts become even easier to handle.

Debt-free in no time.

Maybe leave the longest debt, or one with highest early repayment charges (? the car), as they don't mind too much if you have one debt. Its having a loan and car finance and heavily used credit cards and another loan, that adds up to a poor profile.

Then you'd be nearly squeeky clean, have oodles of spare income by not having to pay so much interest any more, and be a much better proposition all round.


(You say that their estimation of £1500-£1800 for average outgoings seems high...but YOUR outgoings are over £2100 ! So they will think THAT is high!)

Bexter

Thank you and I appreciate the points about clearing debt - however we don't currently have £2k spare each month, we have to pay rent which is £995 a month! But we are certainly trying our best to bring down the credit cards.

As for the monthly living costs - well the thing is, Santander's £1500-£1800 was only for bills, food, leisure stuff - it doesn't include any credit commitments like car/loans/credit cards whatsoever - that's why I think it's on the high side.

JA1000

So in 6 months the credit cards could be cleared?

Bexter

Yes, we'll clear the cards.

property.advert

Lenders will look at rent versus mortgage. On my first mortgage, of around £180k back in the 1990s, I was paying around £1300 rent and my mortgage would have been around £900 on variable or £500 on discounted. Whichever way they looked at it, I was hundreds of pounds a month ahead with the mortgage.

I would reduce the CC as you state though.

Only point I would raise is your liking for loans. Why do you have so many loans and 20k cash lying about ? Why not pay them off, save the interest and build more of a deposit that way. Your credit file would clean up instantly and just get better.

Am I missing something here ?

Loan 1
Loan 2
Loan 3 (car)
CC debts

20k deposit.

Bexter

property.advert wrote: »

Lenders will look at rent versus mortgage. On my first mortgage, of around £180k back in the 1990s, I was paying around £1300 rent and my mortgage would have been around £900 on variable or £500 on discounted. Whichever way they looked at it, I was hundreds of pounds a month ahead with the mortgage.

I would reduce the CC as you state though.

Only point I would raise is your liking for loans. Why do you have so many loans and 20k cash lying about ? Why not pay them off, save the interest and build more of a deposit that way. Your credit file would clean up instantly and just get better.

Am I missing something here ?

Loan 1
Loan 2
Loan 3 (car)
CC debts

20k deposit.

Yep, everyone who hs posted has suggested the same thing - clear the debt - I get it! It's just that this isn't actually what my original post was asking. The reason we have £20k deposit is that we've been gifted it by very generous relatives who don't want to see us having to move with a young baby all the time - renting doesn't offer as much stability and it's likely the place we're in will be put up for sale soon. If we use this to pay off our debt we're not using the money in the way it was intended and we're delaying being able to buy somewhere. Anyway, not to worry, I'll just seek info elsewhere.