First Time Buyer Applying For a Mortgage

Littlemadam83

Hi guys,

My new hubby and me are looking to buy a property, the only thing is we did not take into consideration we were living in our overdrafts. If I give the facts below I was wondering if anyone could advise the best route forward.

Salary combined - £38000
Commission combined - £7000
Overdraft - hubby goes to zero every month, and I am about £1000 down :eek:

I have no credit cards, hubby pays about £200 a month on his.

As a wedding present parents are helping with a deposit of 10% and we are paying the remaining off to my dad.

We are looking at spending no more than £90000 on a flat, and currently paying rent of £575 per month, so a mortgage on this value would hopefully be a saving!!!!

Any help greatly received.

Thank you xxx

Cannon_Fodder

The spare cash you plan to have, to be able to pay off the remaining loan from your Dad, can be thrown at the overdraft for a couple of/few months, to make you squeeky clean..?

Clearing the credit card wouldn't hurt either.

And maybe boost your deposit a touch, if you are close to an LTV threshold that secures a better deal..?

herbiesjp

A 90% mortgage on a price of £90k would be £81k

On an average fixed rate deal of 6.99% you would have repayments of around £575pm (on a 25 year repayment mortgage) - so not really saving on your rent. There are rates higher/lower than this, but what rate you get will depend on your eligibility for the lower rates.

Have you done a budget planner/SOA to see where your money goes each month - owning a house incurs lots of other expenses once you have it!

Hugbubble

herbiesjp wrote: »

A 90% mortgage on a price of £90k would be £81k

On an average fixed rate deal of 6.99% you would have repayments of around £575pm (on a 25 year repayment mortgage) - so not really saving on your rent. There are rates higher/lower than this, but what rate you get will depend on your eligibility for the lower rates.

Have you done a budget planner/SOA to see where your money goes each month - owning a house incurs lots of other expenses once you have it!

I second this. If you intend buying a flat, then especially look at management charges (which can go also go up at anytime, depending on the health & wealth of the development). Also, city centre flats- not sure where you're intending to buy- can have a disproportionately high council tax.

Believe me, I have first hand experience!

Littlemadam83

Thanks guys.

Cannon - Clearing the debt is I agree going to be the first step, and as the mortgage companies will look at this it needs to be done sharpish. Thank you x

Herbie - thank you for the great advice. Interesting that we would still be paying £575, I am sure I did a calculator and it came out about £80 cheaper per month. I will take heed of your advice though as you obviously know more than me!

Our problem is we eat out alot and from last weekend this has now stopped, so we will have spare cash. We are cutting down on everything, so we should have extra cash there for any emergencies.

Also as for the maintenance charge, where we are currently is about £1000 per annum, but is incorporated into our rent. So yes, will be another thing we need to check on xxx

TrickyDicky

If you find you're at £0 each month, or in your overdraft, where is the money going? how do you expect to pay the ongoing costs of a house (redecorating, broken boiler, any accidental damage, house insurance). Most of the ongoing costs are already covered in your rent.

Also, any mortgage underwriter will see you're in your overdraft constantly, and wonder why - this will look bad in your application. Also, unless the money from your dad is a gift, it cannot be used for a deposit.

Littlemadam83

I totally agree with you and understand what you are saying. As i have said we are cutting back big style from now so will slowly build it back up, and or find a way to get it back up to normal.

Also, what got us into our overdrafts gradually was buying small bits for the wedding. This is all over now, and with cutting back on needless eating out we will be alot better off.