could we get a reasonable mortgage?

cautiousFTB

Hi all,

I usually post under another user name but have moved to my present location so I can post financial details etc. without friends and family knowing its me. I just wondered if any MSE mortgage-gurus had any comments/recommendations on our position.

We are a married couple in our mid-twenties, one of us in employment (in present job since August) on £19,500 a year, the other in the 3rd year of a PhD currently getting £3300 quarterly tax-free from a research council, but with only 2 more guaranteed payments (expecting to overrun and get another 6 months worth).

We are currently renting at £600 a month a lovely house (way out of our price range to buy), but our landlord who is currently living in his BTL wants to swap houses with us shortly. We haven't talked money with him but expect to pay about the same rent for the other house, although a neighbouring house is currently being advertised at £700 a month. Houses similar to those we are looking at buying rent for £550-600 a month.

We are thinking about buying something for between £120k and £128k. We have about £24,000 in savings and pay our credit cards off in full every month (its hard to be exact about the savings as my income is quarterly and I've just been paid.)

We are thinking about buying since we will have to be moving anyway and the landlord's other house is not ideally located for us. We have pets so finding rented accomodation is not easy. I am aware of the potential pitfalls of prices decreasing etc, and we would buy a 2 or even 3 bed house so if we were not in a financial position to move we would still be flexible (e.g. rent out a room, have children etc).

My first question is should we be thinking about buying at all. Are we likely to have to pay high interest rates as we are not both in normal employment? I have based my calculations so far on a 5 year fix of 5.17% (just because its what HSBC are currently promoting, and they have indicated in the past they will give mortgages to postgraduate students). I know there is pretty much a mortgage for everyone but owning a house isn't so important to us that its worth committing financial suicide for. If we have to pay an extra 1% for example I'm not sure its worth it.

My second question is what info I need to get together before going to see a mortgage broker. A student friend has a mortgage which she got using her parents as guarantors, however I know they are well off. My parents earn well (i think about £60k+ between them) but still have a mortgage of their own and other debts. OH's parents are mortgage-free but I'd guess their income is about £25k a year (they don't like talking money). Neither has offered to be a guarantor but I think we could perhaps persuade them - but are either likely to be helpful as guarantors anyway? Should I bring the matter up with them before going to a broker?

In summary - our normal income is £19.5k gross, our unusual income is £13k net, we want to borrow somewhere around £105k for a £125k property (allowing some savings for fees and emergencies).

Just remembered - we owe £24,000 between us in student loans, I currently don't have to repay anything as a student, OH's payments are £33 a month. OH puts £50 in pension each month.

UK007BullDog

Hmmmm....... I know I am going to sound repetitive but see a broker.

To get the amount you need you might have to self certify, but a broker can look if a lender will take your quarterly earnings on full basis.

As for guarantors, they will be responsible if you do not pay the mortgage. Do you want to ask your two sets of parents if they are willing to take on that risk.

No need to worry about the student loan.

Good that you have a deposit.

£20K x 4 (5) income multiple = £80K - (£100K) borrowing depending on lender. So you might be able to do it without parents help.

cautiousFTB

UK007BullDog wrote:

As for guarantors, they will be responsible if you do not pay the mortgage. Do you want to ask your two sets of parents if they are willing to take on that risk.

Well, its not something we'd take lightly. OTH my parents have let my sister live at home for 2 years since graduating rent free (and buy most of her food too) so at least if they are guarantors they are guaranteed that we are living elsewhere!