First time buyer looking for advice!

Krisdufc

Hi, this is my first post and with reading through the forum I thought i would look for some advice.

Me and my girlfriend are visiting a mortgage broker for the first time this week and this is obviously an exciting time for us but we are also a little nervous as it is a step into the unknown!

My main concern is whether or not we will be accepted for a mortgage.

We can together afford the repayments on the property we are looking at but I have credit card debt and a loan which i am hoping does not affect our application.

I would like to find out what they look at during these meetings and what goes for you/counts against you.

Any help/advice would be much appreciated.

Many Thanks

Kris

Thrugelmir

Hi and welcome

Can you not clear your debt from savings?

Krisdufc

Thanks for the quick reply.

Unfortunately I wont be able to clear the debt from my savings as all my saving are going towards our deposit! I will however be able to dedicate a large amount of my disposable income to paying off these debts if we are accepted for a mortgage.

Thrugelmir

A few questions for us to help you.

Mortgage
House Price

Total debt owed

Krisdufc

Mortgage will be £85000
House price is £95000

My debts are a loan with around £6000 outstanding and credit card with £5000 outstanding.

Our monthly joint income is around £2400.

Thrugelmir

How much is the monthly loan repayment?

Krisdufc

My monthly loan repayment is £144 and i am paying off my credit card at around £150 a month.

Zogger

I'm not an expert, but £10,000 deposit, £11,000 debt - it seems unlikely tbh! If the loan is student loan you might have a chance.
Otherwise you're almost always better off paying off the debt and then saving a proper deposit as the debt will count against you more than the savings will count for you, and in general you won't be able to get a 100% mortgage

Try online affordability calculators that have outgoings included (e.g. northern rock, nationwide) and see what they say you can borrow

KingElvis

Your debt to income ration looks like it may well fail affordabilty tests.

11k debt is a lot to have on a fairly small income.

spadoosh

I dont really think the loan is a big problem, its a manageable debt. Very similar situation 6 mths ago but missus had car finance about 4k and loan about 2k and we were accepted for a mortgage the big one for me would the credit card. Would look to reduce this as much as possible before applying for a mortgage and possibly use the cc to pay for solicitors fees etc. Have you considered those costs? We ended up paying about 1k with all the costs involved in buying. It was only this amount because of the mortgage we got that paid for searches and a few other costs plus a few cash back incentives (this wasnt added to the mortgage btw!)

evo180

I think the credit card is more of an issue, the loan if you've never defaulted may even work in your favour can show you can keep up with payments.

But the credit card is a slight worry as when my card was maxed at 3k nearly 10 years ago now I would pay off say £100 and next month another £80 would've been added in interest so I was only paying off £20 a month!! I increased my payments massively but worked out that I would be paying it off for years still so ended up borrowing the cash to clear it. So unless it's 0% interest and for a fairly long period it would be wise to clear that first.

Also have you considered any renovation/general items, solicitors fees, product fees, mortgage broker fees that you will normally need to cover cash upfront?