Mortgage Advice for newbie!

t0mbop

Hi guys,

Got some questions about mortgages and what sort of proposition I represent to lenders.

I'm 23, and so is my partner. She is an NHS Staff Nurse and I'm a Web Developer. Together, we bring in around £40k per year. We currently rent a 2up-2down for £490 per month. We were in dire straits debt-wise about 6 months ago until her parents helped us out with a consolidation loan, which we are paying them back. We also have a car on HP. Both these outgoings are set to end at almost the same time, in 3 years time. My goal is to be in my own property by my 25th!

We currently have no debt, no credit cards and no loans through banks (just through her parents). During our childish debt period we encountered 3 late payments (not missed, just late) in 3 years. My credit score through Experian now is 965/1000 which apparently is Excellent, with my partners 910/1000. My concern is that when we come to get a mortgage which will be sooner rather than later hopefully, as we are saving £500 per month (hopefully the stupid car will stop breaking to stop spending our savings for us!) what sort of risk are we going to pose because of our history with high debts and 3 late payments, albeit now non-existant.

I'm worried because our relationship is much better since the debt has gone, also we've learnt very harsh lessons, but I'm worried it's not "over" and that it will be remembered and held against us when the time comes where we can get our first place that we own!?

Cheers

Annisele

At the moment, if you don't have a deposit then you won't get a mortgage. Credit history only starts to matter once you can put down a deposit.

Will you have any savings by the time you're 25? How much (as a percentage of the price of the property you want to buy)?

t0mbop

No, I'm aware that I need a deposit. Well if all goes to plan we should have around 12k which is around 10% of the value of the house so it would be a 90% LTV. Unless we come into some money!

This is all approximate assuming we don't have to delve too much into our savings like we have had to early on because of the damned car!

I just wondered what effect having the odd late payment would have on our future mortgage requirements?!

Cannon_Fodder

Not sure of the logic in saving while owing debt to family.

Bear in mind that the affordability calculation your Lender will undertake would have to be informed of the regular outgoing to repay the parents' loan.

Depending on the size of that loan/repayments, it will either reduce the amount a Lender is prepared to loan, or deter them from wanting your business at all.

The car HP will also affect their determination.

To be the best proposition aim for when both those are finished - i.e. your 26th+.

t0mbop

Yeah that's what I thought.

I'm just going through a depressing stage of hating the house I rent because it's not mine!

When both the loan and HP are finished it will release over £500 per month that will be available to either add to savings or bolster our attempts at a mortgage.

Cheers.