Mortgage Advice

smalley72

Need a bit of advice on mortgages and whether this is a viable option to obtain a mortgage and buy a property.

Some background info.

Deposit available - £15k could be a little higher (Only available for a depoist not debt reduction)

My Earnings - £22k

Spouses Earnings - £18k

Possible complication - Spouse has interest only mortgage with ex husband with 8 years to go. Unable to use this property or equity for any purpose. Would this effect any joint appliaction?

My unsecured debt - £10k Credit cards, £10k HP car - Total repayments - £400 pm

Spouses unsecured debt - £25k credit cards, store cards etc Total repaymenst - £750 pm

Current rent payment - £520 pm

All debt payments are upto date and no payments have been missed in the last 36 months.

Would we qualify for a mortgage and how much? Either joint or on my own.

Looking for a max of £100k which we feel that we could comfortably repay.

Any advice gratefully received.

Thrugelmir

The amount of debt you have is your issue. No mainstream lender will consider you for a mortgage.The fact that to date you've made payments on time has no relevance as far as the lender is concerned.

So get to grips with your personal finances. Use the deposit money to clear the highest interest rate debt you owe first.

Suggest you visit the Debt Free Wannabe board for advice and support.

Otherwise you'll still owe that credit card debt by the time you retire.

.

smalley72

Unfortunatly the depoist can not be used to clear existing debt (inheritance with conditions attached).

I am aware that the high level of debt is the major problem but if reducing the amount to borrow would help, would take this option if a lender would provide?

Would a single applicant from myself work and maybe get 60k?

Or a joint applicant for 90k?

Really looking for an option to change the annual rent payments of £6k to mortage repyments. Is there any realistic option?

Please advise

CloudCuckooLand

As the deposit is an inheritance with conditions attached, do you really want to risk losing that money?

Having no deposit of your own, to add to the inheritance, means you are borderline in your finances at present.

Supposed you bought a house. In a year or two, as the cuts unwind, 1 of you lost a job, or fell pregnant or somesuch. You'd have no way to catch up on arrears - because you have no savings...

The lender would repossess. Selling it cheaply for quick turnaround, with fees and arrears attached, would eat up most of the inheritance.

Then you'd be back to renting, still with the debts. Without a deposit, until the next inheritance.


The best advice has already been stated;

Thrugelmir wrote: »

Suggest you visit the Debt Free Wannabe board for advice and support.

Please do not buy a house with those debts still behind you.

Thrugelmir

smalley72 wrote: »

I am aware that the high level of debt is the major problem but if reducing the amount to borrow would help, would take this option if a lender would provide?

The high level of debt you have is the issue. A lender will most likely consider that you are unable to manage your personal finances in a competent manner (irrespective of how the debt was accumalated). So your first task has to be to slash your expenditure. Cut out life's luxuries and record every penny spent. As if your serious about home ownership you have tackle this head on. There's no quick fixes just gruelling hard work.

The choice is yours. Rent for life and pay a fortune in interest servicing your debt. Or totally change your lives.

PS. The inheritance should be a major carrot in the decision making process.

smalley72

I am aware of the issues with the unsecured debt (this will not increase only decrease) and has been addressed with a 7 year plan to clear (3 years into self plan). But this is irrelevent to what i want to know, current expenditure is under total control and as such we can make the repayments. We are not looking for the max amount on a mortgage on our earnings (2 X would be sufficent) just an amount that maybe we can start on the property ladder.

We are looking to buy not rent in the future so the money works for us not for a landlords benefit. Repayments are not an issue on a mortgage just if we could get an actual mortgage.

The depoist is available now or in the future, we can not lose it but can only use it for depoist on house when required.

So what I want to know is would any mortgage providers consider us? Or would we need a larger depoist?

Thrugelmir

smalley72 wrote: »

So what I want to know is would any mortgage providers consider us? Or would we need a larger depoist?

Forget the deposit for the moment. The problem you have and why you'll be declined a mortgage for the foreseeable future is one word, DEBT.

I can assure you that lenders will not look at your personal finances in the way you are.

Burridge60

Your net just after tax and National Insurance about £1400 Your spouse at best £1200 that assumes you make no pension contributions or have season ticket loans or other deductions. Net Household income £2600.

Your debts cost you £1150 (by your figures) credit cards normally taken at 3% of balance per month. This leaves you 1450 to pay Council Tax £100/120? Food £100 a week say £400 a month. Utilities £100? Mobiles, Internet, TV, Sky home phone etc £110. Leisure (the pub valentines meal holidays) £100 (very low) £810 on these low assumptions. Leaves £640.

A repayment mortgage over 25 years for just £100,000 would cost you £636 based on a rate of 5.75%. And I haven't even got to the potential liability of the other mortgage if the joint borrower fails to pay the mortgage.

Now would it really be responsible if a Bank lent you this money in the current climate. In five years when the rate hit (say) 7% would you be screaming mis selling?

smalley72

Thanks burridge, your figures are about spot on to what we budget and spend (bit less on food and more on leisure) . To allow for potential interest rate increases would it better to reduce the borrowed amount to approx £80,000.

There is no risk of the other mortgage not been paid, interest only (approx £100 a month) with 38k (plan in place to repay) to be repaid in 7 years on a house worth about £130k and a 50% share in the property.

If we could borrow an amount which would allow a property purchase with lower repayments than our rent surely this would make financial sense?

herbiesjp

Do you have any children? That will impact on a lender's decision as well.

You might sneak in at that level, but you are going to have to go through your figures really really carefully to see if what you are looking to do will put you in a more financially stressed situation.

Don't forget rates are currently at historic lows - so what happens when rates go up?

Have a word with a good broker, and analyse every single detail.

Also remember that the rates available will depend on your LTV - so the lower the purchase price, the bigger % deposit the £15k will give you.

maninthestreet

smalley72 wrote: »

If we could borrow an amount which would allow a property purchase with lower repayments than our rent surely this would make financial sense?

Not to any prospective lender it won't.