Mortgage Help - First time buyers

leon103

Hello All

I am in need of some help.

I have recently started a new job which is about 60 miles or 1 hour and 45 mins drive from my current address, so I have to move. But houses prices are sky high there.

My OH will be moving with me and we have found the ideal location and house. The house is one of the cheapest available and is priced at £150,000.

We have a £20000 deposit which was given to us but we are both in debt. I have two loans which I pay about £300 a month until 2010 on, I have about £5500 on cards also (I am working on bringing these down). My OH has about £2000 on cards and a loan of £126 a month, with about 2 years left to run.

I earn £21009 currently but this goes upto £24000 in October plus there will be overtime available then.

My OH currently earns £13875 but has a couple of interviews in this new area soon. These pay around £16000.

Going on our figures we can't afford anything, not even a caravan. We have been searching for ages now and what we have seen is there best in a 35 mile radius.

Any experts out there with any ideas. Who to try? WHat to do etc?

I feel like this is all my fault because of my debts, without them we would have sorted. Worse is my OH hasn't a clue about them.

Thanks

herbiesjp

After loans, your available income will be £17400 and yur OH will be £12363 (without taking into account deductions for the cards) - joint income of £29763

Mortgage needed of £130k

This could be achieved with a few lenders.

Is it the right move for you though? If you have these debts should you really be looking to take out this mortgage? Would the move increase your monthly affordability and reduce your outgoings?

leon103

herbiesjp wrote:

After loans, your available income will be £17400 and yur OH will be £12363 (without taking into account deductions for the cards) - joint income of £29763

Mortgage needed of £130k

This could be achieved with a few lenders.

Is it the right move for you though? If you have these debts should you really be looking to take out this mortgage? Would the move increase your monthly affordability and reduce your outgoings?

Which lenders are these?

Its the only choice really. If I don't get closer to my place of work I will be sending over 3 hours a day on the road and god knows how much on petrol.

Rental market is very expensive in the market. Around £600 a month so not much difference from a mortgage.

We are putting plans in to reduce card debit. Downgrading cars etc, sharing lifts. We are both waiting on cheques over around £3000 between us, but these could take upto 9 months to come through.

Thanks for replying

UK007BullDog

You see, if we tell you the names of the lenders you are going to try and do it directly to secure a mortgage. Which is fine, however that particular lender might be totally wrong for you, also if you apply to many lenders on your own it might damage your credit record. So I suggest two things:

1. Pull a credit record on yourself and your OH. Take them with your current P60 and last 3 payslips and other docs to a free independent whole of market broker. They will advise you of the best options open to you and also give you an idea of your new costs if you take out the mortgage.

2. Maybe you should use the £20K to pay off all your debts and look instead at 100% mortgage instead. Then overpay if possible to reduce the debt quicker. You would not have a deposit, however all or most of your debts are gone, so you can take full advantage of your income multiples and affordability calculations.

3. Don't bank on money you do not hold in your account.

4. Any job changes will work against you if it happens right at the time of the mortgage application, especially if you need a big loan or 100% mortgage as that one particular lender likes to see at least 3 - 6 months employment and out of probationary period.

5. Have you thought of using public transport if available like a train. It might be less stressful, cheaper and you could use the time to do work or read or study....

If you were my client I would be looking at Northern Rock for you, however they have very high fees and are very picky with credit records. They might also tie you in for 5 years. This might be the perfect lender for you, but it might also not be. You need to speak to a broker and you also need to do some extensive research on the internet if you go on your own. Birmingham Midshires might also be an option, but without knowing all of your requirements and needs I say "buyer beware"!

Also maybe renting is an option for you in the short term. One year in rented accommodation might help you settle more in the new area you want to live in. You could rent out your current property and hopefully that rental income will cover your present mortgage (interest only). In effect renting and having someone else pay your mortgage for a while. Once you have gotten rid of your debts you could try to buy then, by that time your incomes might have increased as well to support a new mortgage better. In your situation you need to be flexible and look at all kind of avenues available to you. Another would be to not look where work is directly but to calculate in a commute of 20 to 45 minutes, houses might be cheaper there.

Where exactly are you located (town name) and where is work located to give us some sort of idea where you are.

herbiesjp

leon103 wrote:

Which lenders are these?

Its the only choice really. If I don't get closer to my place of work I will be sending over 3 hours a day on the road and god knows how much on petrol.

Rental market is very expensive in the market. Around £600 a month so not much difference from a mortgage.

We are putting plans in to reduce card debit. Downgrading cars etc, sharing lifts. We are both waiting on cheques over around £3000 between us, but these could take upto 9 months to come through.

Thanks for replying

Without knowing any of your details, no one should really give any lender names. Not because they should not help, but because without knwoing your whole situation no one will know which lender will be right.

So if you went and applied to each lender given you could end up with 10 credit searches on your credit file, all of them say no for whatever reason, and then your credit file looks bad should you then apply to the right lender for your situation

Have a read of Martin's guide and have a word with a fee free whole of market mortgage adviser and let them come up with some options.

HTH

MortgageMamma

Have you considered shared ownership? this might not be your ideal solution but its worth considering. you could use the 20k to pay off your debts then take out a smaller mortgage on a shared ownership property which would be more managable for you. Some shared ownership mortgages you can get without a deposit. Using SO in this way, you could either buy the remaining part of the property in "chunks" - also known as staircasing - there is also another option, open market homebuy, this is similar to Shared ownership in tht you only own a percentage of the property but instead of a housing association owning the other portion, you are actually loaned 12.5% of what you need from the goverment an another 12.5% from your mortgage lender as an equity loan. Try having a look at this link and it might open up your options http://www.housingcorp.gov.uk/server/show/nav.2129

talksalot81

Surely the rental market cant be 'that' bad everywhere in the vicinity. I know in my area I could get rent for £600 right in the city but can easily drop £150 from that by accepting a 15 minute drive...

I will admit to being very bearish, but I think now is a very dangerous time to get yourself further into debt.

leon103

Thanks everyone for the replies.

Things have gone worse.
After some re-thinking we found we only needed a mortgage for £113,000 which was much better.

Searched and found Nationwide was the best deal for us. Applied and got rejected after credit scoring.

They said credit score was too low and we were an high risk.

Now lost what to do.

How can we improve our credit score? We never miss payments.

Any companies that take low credit scoring?

talksalot81

leon103 wrote:

Thanks everyone for the replies.

Things have gone worse.
After some re-thinking we found we only needed a mortgage for £113,000 which was much better.

Searched and found Nationwide was the best deal for us. Applied and got rejected after credit scoring.

They said credit score was too low and we were an high risk.

Now lost what to do.

How can we improve our credit score? We never miss payments.

Any companies that take low credit scoring?

A good idea would be to sign up to credit expert and see your actual report. It is free if you take the trial and will give you a much better idea of the problems.

leon103

talksalot81 wrote:

A good idea would be to sign up to credit expert and see your actual report. It is free if you take the trial and will give you a much better idea of the problems.

I did this about two months ago and it looked like my score was good. Only 1 late payment ever. And that was going back to the summer. I did notice that I had a couple of searches from car insurance companies that I never took up their quote.

talksalot81

Hmmm - I believe nationwide are probably obliged to disclose full details of their refusal. I was refused for a CC a few years back and I was able to go through to find out why (mind you it took a while).