house buying (mortgage) advice!

5t3ve

Hi Everyone!

I'd like to ask for some advice regarding my financial situation and would love to hear from some of the many experts here on how you think I should proceed..

Essentially - my girlfriend and myself would like to get on the property ladder. I'll explain our financial situation:

Me
I'm in not such a great financial position.
I owe about £18,000 in bank loans. Don't have any credit cards. Have a £500 overdraft which I often use but never go over.

I pay back about £700 a month, and earn about £32,000 a year plus overtime (which isnt guaranteed so wont include here).

Girlfriend
Earns about £300 a month.
She has no debts, and has £105,000 savings!!

The Scenario
- For houses around our area we are looking at about the £250,000 mark. We could drop to around £220,000 for a bottom end house.
- I can't expect (and dont want!) my girlfriend to pay back any of my debts.. the money she puts forward needs to remain hers!
- She won't get any kind of mortgage on what she earns. That money is for her personal use, although she'd be willing to pay towards a few bills if we got a place (of course this would change once she's working!).

The Questions
So how would we go about getting a place?

1/ Does her huge deposit help my case for getting a mortgage? or do I need to provide my own deposit?
2/ Would a bank provide me with a mortgage given my current financial situation? Due to the large amount of 'LTV' we have on a house, would they perhaps lend me money for a mortgage, but pay off my debts with the mortgage also... making the mortgage more affordable for me (£700 more affordable!).

What do you lot think is the best option? and roughly what would the costs be for a mortage on the second half of the house if i'm paying it alone?

I don't fully know how mortgages work when split between people with different finances etc...

Thanks in advance - i know its an unusual situation! Let me know if you need more info!!

Conrad

2 people, 1 deposit, 1 mortgage.

Try inputting your details into some lenders online affordability calculators and see how much they offer.
Big deposit will help but a lender is legally bound to only lend the amount your income and outgoings can sustain.

Good luck.

5t3ve

Conrad wrote: »

2 people, 1 deposit, 1 mortgage.

Try inputting your details into some lenders online affordability calculators and see how much they offer.
Big deposit will help but a lender is legally bound to only lend the amount your income and outgoings can sustain.

Good luck.

Great thanks - you've already answered a load of my questions! So basically my girlfriend and me apply for a joint mortgage, go with the £105,000 deposit - and when it comes to paying the mortgage - I just foot the bill!! Simples...

I should add that although in debt, I've never missed a payment on anything and have an excellent credit rating - which should help I hope!

beecher2

Your debts are going to impact on how much you can borrow. 3.5 times your salary sounds ambitious when you have £18k of debt.

Thrugelmir

Reduce your debts before even considering purchasing a property with a mortgage.

Also learn to get by without using your overdraft.

5t3ve

thanks for the replies - I guess it would be a lot easier going into this with my debts cleared...

looking at online mortgage calculators - I'll barely get offered anything with my current outgoings - even though I could probably afford it without much of a strain!

guess i'll be holding off 2 years then.. unless there are any other ideas people have?

surely not everyone goes into a mortgage without some debt behind them?!

beecher2

5t3ve wrote: »

surely not everyone goes into a mortgage without some debt behind them?!

Many may have some debt, but you have substantial debt - over half your yearly salary. Debt Free Wannabee forums will help you if you post a Statement of Affairs - they'll give you advice on how to pay back your debts as quickly as possible.

5t3ve

beecher2 wrote: »

Many may have some debt, but you have substantial debt - over half your yearly salary. Debt Free Wannabee forums will help you if you post a Statement of Affairs - they'll give you advice on how to pay back your debts as quickly as possible.

Thanks for the feedback, I'm regularly on that forum.. they're brilliant there! Although not excusable, most of my debt is 'student' debt.. i'd imagine 90% of students are in the same boat! Do they all pay off every last dime before getting their own place? Surely not...

GMS

Would your girlfriend be prepared to clear your debts meaning a lower deposit?

This may well mean you can borrow sufficient for your needs as you will have no debts.

You could pay back the debt repayment money at an agreed rate if that was necessary.

Also if the deposit is all from your girlfriend you could (if you both wish) have the property on a 'tenants in common' basis where the share owned by each is clearly defined. You could have the debt money written into this if required as an extra share for your girlfriend.

The large debt will seriously impact on your borrowing which seems daft given that you have a huge deposit.

There could be options for you. Speak to a 'Whole of Market' broker.

LillythePink

I was going to say much the same as GMS - if your debts could be settled from her money, use the rest as deposit and either have it written in an agreement that she would get a bigger share of the equity.

However, as she will be putting up the deposit and not paying the mortgage (initally) as she only earns £300 - you could pay off the amount that you owe her (for debts) by way of the mortgage and bills if you know what I mean!

Even with your good credit history - the debts will hold you back - I suppose it depends on how quickly you want a house.

5t3ve

thanks for the replies - I guess I need to speak to my girlfriend and work out how desperately we need to get a place.

to be honest - the more I think about it, the more I think we should just hold off another 2 years while I get myself debt free - and then jump onto the property ladder in a much stronger position.

it gives us a good chance to get a good feel for the market too i guess - so its not really a bad thing.. plus she'll probably be working full time by then thus we'll have even more cash flow!

I appreciate the suggestions on combining her deposit with my debt to enable us to get a place quicker - its a good idea - but I have strong feels towards not wanting her to 'bail' me out of my debt (call it a man thing!). I want to get out of it alone.. so from the reponses above, we'll be waiting till this is done!

Thanks again everyone.