First Time Buyer Mortgage

saqibhs

Hello,

I earn £17000 a year on my current job. I am thinking of applying for a mortgage to buy a house in the range of £ 110000, i also have £20000 deposit which i guess is required with my low income. Fulford say that Halifax have agreed to land me maximum £ 85000 in principal but there is no search on my credit report. My experian credit score at the moment is 670 which is in poor category, but there is nothing major apart from some late payments (but no miss payments). I just want some advise on what are my best options in term of credit lender and if i stand a good chance of getting a mortgage.

Thanks

kingstreet

Halifax does not carry out a full credit search for a Mortgage Promise. You may find your full application is declined for credit problems which have not yet been seen by the Halifax scoring system.

saqibhs

Thanks for prompt reply, do you think having some missed payments (1's on experian report) is a big problem? I have only ever used credit cards and over draft before so my borrowing in the past has been small (below 500 pounds) do you think i should wait untill my credit score improves?

oh and I also have an existing current account with Halifax which I use for my daily use.

Thanks Again

kingstreet

It's difficult to say. Computer says "yes or computer says "no."

It may be worth you talking to an independent or whole market broker to see which way would make the most sense. I'd say a smaller building society which doesn't credit score may be your best bet.

As a Halifax existing customer, you may be ok. Keep the other option if Halifax does turn you down.

saqibhs

Thanks for you post again, I really appreciate your help on this as i want to get as mush information as possible. i dont understand when you say smaller building society can you name any please? also as i said on my original post I have £20,000 pounds for deposit which is over 20% do you think that's an advantage and gives me a better chance of getting accepted as most mortgage only ask for around 10-15% deposit for my understanding? sorry if i am asking too many questions.
Thanks

maninthestreet

£85K is FIVE times your gross annual salary!

saqibhs

yeah that's right £85000 is 5 times my salary, but that's what they said when they got back to my mortgage advisor. I only asked for £72000 which is what I needed for the property I was interested in but they said the maximum they will lend is £85000. I don't think I will require all £85000 on the mortgage because i have £20000 as deposit and would probably be buying a house in the range of £95-100000.

I just want to asses my position in terms of my bargaining power with lenders to get the best deal or I should just go for whoever agrees to give me the mortgage as I ll be lucky to get it?

Thanks

kingstreet

Halifax says 5x income, but that's based on an "A" or "B" credit score. When you finally apply, the problems you've had may mean a "C" pass which would reduce your borrowing power by a fair chunk.

I've just keyed the details in the Halifax affordability calculator and for a 25 year mortgage at 82% (£90k on £110k) of the loan to value, I got;-

A - £85,000
B - £80,185
C - £74,840.

saqibhs

Thanks for your post again! Even a C pass would be enough for me! As that would still mean that i can buy a house of around £90000 which is what i am looking at the moment as i don't want to buy a expensive house if i can avoid it. I guess my only other question would be that I have an over draft with lloyds tsb on my Graduate account of around £1000 which I intend to pay off in the next two months but i have not been in a great hurry to pay that one off as its interest free. but that £85000 figure may have come from that i have no outstanding debt. do you think that can be a problem if i dont pay it off? (Between i also think that my bad credit score is due to this high overdraft as cant see any other reason of have a bad score).

Thanks

maninthestreet

saqibhs wrote: »

Thanks for your post again! Even a C pass would be enough for me! As that would still mean that i can buy a house of around £90000 which is what i am looking at the moment as i don't want to buy a expensive house if i can avoid it. I guess my only other question would be that I have an over draft with lloyds tsb on my Graduate account of around £1000 which I intend to pay off in the next two months but i have not been in a great hurry to pay that one off as its interest free. but that £85000 figure may have come from that i have no outstanding debt. do you think that can be a problem if i dont pay it off? (Between i also think that my bad credit score is due to this high overdraft as cant see any other reason of have a bad score).

Thanks

I suggest you pay off that £1000 asap, before even considering taking on a mortgage. What sort of property does £90,000 buy in the area you want to live in?

kingstreet

saqibhs wrote: »

there is nothing major apart from some late payments

That's enough to pull down your score.