First time buyer help

overwhelmedandunderpaid

Hello
Any and all help would be greatly appreciated.

Basically this is the situation:
We are both self employed and for our 09/10 accounts he has a profit of 19,000 and I have a profit of 10,000. Our profits show steady increases and we can get an accountant to sign off on accounts.

We wish to borrow 80,750 and have a deposit of 14, 250 (15%) as well as the money to pay all fees. So that brings the possible property spend to 95,000.
My husband recently changed his current ac to the CO-OP and had a brief chat with a mortgage advisor there who seemed really positive.
In the meantime however, because of our self-employed situation, we thought it might be best to deal with an independent advisor and used someone from Which? who also seemed positive about our chances of getting a mortgage, though we explained we didn't have much credit history, always having lived within our means.
She recommended the best possible product for us as being from Santander and seemed to think they were a "lenient" lender. However, when we moved forward with the Santander MIP we were rejected for a low credit score.

My husband has a credit card, but we have never had loans. We are on the electoral role for a long time in our current location but I do not have any loans or anything more than a debit card. We do not have any bad credit and his score when checked at Experien was rated good. (I bank with Santander and currently have about ten thousand pounds lodged with them but this didn't make any difference: would we be better off to speak to them directly?)

The mortgage advisor has come back and said Halifax would now be a good bet but at a rate of 4.69% fixed with larger upfront fees. She has stated that they check the credit ratings in a different way and will be more likely to go with us. However we feel like we are being penalised at this rate and would have to consider borrowing less if this is the route we went down.

When I asked the mortgage advisor about the CO-OP and the positive conversation we had with them she said that she didn't have access to their products. They have much better rates that this Halifax rate and so we feel it might at least be worth having a conversation with them, being really frank about the Santander rejection. Also my husband was checked to get his account there and that came back fine.

However it seems like everyone thinks we'll have "no problem" until they go about trying to sort us out and we are afraid of too many rejections having a further negative impact on our credit score and ability to borrow in the future.

Part of me thinks one more try and if it is a knock back then we leave it for a couple of years until we have a bigger deposit. The question is should we try Halifax or the CO-OP?

Another part of me thinks it would be such a shame to walk away as it is a buyers market where we are at the moment. And it would work out as less (or just a little more with Halifax) than what we currently pay in rent. I would have no worries about paying the mortgage. We have never missed a rent payment EVER and are so bloody reliable despite our modest income. If we waited I would take out a loan and/or get a credit card to build up my score. Though it seems madness that I would only be doing it for this purpose.

Any thoughts, suggestions, help appreciated. We are finding this very stressful and feel like we are gambling as everything is so unclear...

CLAPTON

it's not a question of whether you have no worries about paying the mortgage, it's a question of whether potential lenders agree; do you have a history of paying off any credit?

does your OH use the CC regularly and pay in full each month? this will show he uses credit well

you could get a CC too and do the same


Santander have a specific savings a/c for potential FTB it may be worth opening one

GMS

What will yoru profits be for 2010-11?

overwhelmedandunderpaid

Hi and thanks for replies.
That account from santander for first time buyers has been withdrawn due to poor take-up, which is a shame. We enquired about it a few weeks back.

Yes, I understand that lenders want to see evidence of you paying credit back. He uses the credit card regularly and pays it off steadily. But obviously that might not be enough for now. I suspect it is me that is the problem. Also we are not British. Don't know if that matters. Irish but living here six and seven years respectively. Have National Insurance numbers, pay taxes, on electoral role but initially found it difficult to even get bank accounts and debit cards. My husband was only able to get one because he had a student account. But I could only get the most basic product going when I moved here first.

Sorry those are our profits for 10/11. My typo. But we would like to get this done before end of the financial year as my husband's profits will likely be down of 11/12.

I understand that there are things we can do long terms to improve our chances but I'm wondering what to do about the situation we find ourselves immediately. In particular whether the broker's take on Halifax is correct...

somethingcorporate

Why do you think 4.69% fixed is too high? how long is the fix for? At 85% this seems like a very reasonable rate to me. If you cannot afford to go much higher whilst mortgage rates are at there lowest sustained level ever are you sure you can afford to buy a house? there are a lot more costs to consider of owning rather than just the mortgage.

Lucaskane

I'm an Underwriter for a mortgage lender. Each lenders credit score system is different as you're FTB's and don't have a history of managing high levels of debt at the level requested, you'd be considered high risk in the lenders credit score.

If you're failing a credit score, obtaining credit and managing it for a 6 - 12 month period without missing payments can improve your credit score.