Is it back to the drawing board for us?

Plans_all_plans

Hi all

We are FTBs who have a 40k deposit. I am a stay at home mum (one dependent) and my fiance is working full time earning £15.5k before tax. We are also in receipt of Child Benefit, Working Tax Credit and Child Tax Credit. We have no debts at all and never have had any either.

We were hoping to borrow in the region of 50k, to enable us to buy a small house costing 90k overall.

I have just spoken to the Nationwide who have said that they are willing to offer us a maximum of £38,600. Obviously, this is short of what we would have liked by about 12k.

I would like to know if most banks/building societies will offer us very similar amounts? I have rung around and am waiting for calls back off various banks mortgage advisors, but in the meantime, I am concerned that we will have to rethink our plans.

Obviously we do not want to get into trouble by borrowing too much, but we were clearly quite far off the mark thinking our large deposit would help us!

Any advice much appreciated.

Thanks.

maninthestreet

Have you tried contacting a whole of market mortgage broker??

AstraTurbo

Try abbey and Barclays

Plans_all_plans

Thanks for the replies. We have not yet tried a whole of market broker. My FiL said he'd put us in touch with one he knows once we found out the amounts the banks were offering on contacting them directly. I don't know why he wants us to wait and see what the banks say first, but I haven't pushed it with him. It will be our next port of call though.

I've just tried Santander and they're saying 50k is the absolute max they'll lend us subject to a cracking credit history and they include the child related benefits we receive in working out how much they'll lend.

Will get onto Barclays now.

Thanks for your replies.

Any more advice much appreciated.

pivotalgubbins

I'd be surprised if you couldn't find a mortgage for the amount you are requesting - as above, I'd recommend you contact a full market mortgage broker ASAP.

I've recently had a Mortgage-in-Principe at just over 5 x income with a 15% deposit, but I'm in very different circumstances so I'm not sure that is relevant.

Have you taken into consideration fees (i.e. survey, legal, etc.) as this may impact on your deposit / loan amounts.

Good luck with it all.

Plans_all_plans

Hi pivotal, yes we actually have 50k saved, but are budgeting 2.5k for our wedding this July (our parents are helping us out with the rest), 2.5k for furniture (to be second hand!) and 5k for fees.

LittleMissKitty

Are you specifically looking at a 25yr mortgage? We managed to get a lot more than we expected by getting a 36yr mortgage and then overpaying to redue the term. Ours was with IF.com but they no longer offer new mortgages unfortunately. They have transferred to Scottish Widows though so it might be worth a phone call.

Kitty x

Plans_all_plans

Thanks kitty. Yes, we are only looking at a 25 yr term ideally. I would rather get a cheaper house than extend the term. I am cautious of longer terms, purely because it seems quite a new thing? I am looking at it from the point of view of what my parents did: 25 yr term, 3 x dad's salary and it was affordable.

I feel (perhaps wrongly) that a longer term means the property is actually unaffordable. We are only 24 and 26 though and will be in work for the next 40 years anyway, so we may look into it! Thanks for the suggestion.

pivotalgubbins

Plans_all_plans wrote: »

Thanks kitty. Yes, we are only looking at a 25 yr term ideally. I would rather get a cheaper house than extend the term. I am cautious of longer terms, purely because it seems quite a new thing? I am looking at it from the point of view of what my parents did: 25 yr term, 3 x dad's salary and it was affordable. You can always over-pay too, as said above, though you need to be disciplined with yourselves to do this.

I feel (perhaps wrongly) that a longer term means the property is actually unaffordable. We are only 24 and 26 though and will be in work for the next 40 years anyway, so we may look into it! Thanks for the suggestion.

I would probably look at the longer-term to be honest, especially at your age! My MIP agreement above was based on a 35-year term, as a lot of mortgage companies go on affordability rather than strict income multipliers these days.

Having said that, you are not a high multiple in any case, so sit down with a broker in the first instance to see if you can achieve what you want on a 25-year term.

Sounds like you have the fees sorted anyway (and are budgeting very sensibly for your wedding too). All the best with it.

Plans_all_plans

Thanks pivotal. The lady at Santander actually suggested the longer term to us and explained that it goes on affordability rather than multiples nowdays anyway. I will speak to my fiance about it this evening after work.

The wedding is actually costing a lot more than that (!) but our parents are helping us out with most of it and we're not having a honeymoon. We should have looked at mortages before booking things for the wedding though as I'd have gone for cheaper stuff if I'd realised we'd only be able to borrow 50k max. I'd have thrown some of the wedding money into the deposit! It has been an education!! Thanks for all the advice.

Cazzr

Don't know if I'm missing something but you are budgeting 5k for fees?!

You won't pay stamp duty on that price, solicitors fees should be about 500quid, I can't imagine your mortgage fees being THAT high on that LTV.... You aren't selling and probably don't have a lot to 'move' as you haven't bought it yet....
I think 5k is very generous but I'm sure someone will be along soon to point out what i'm missing...