FTB advice needed re mortgage

suzzopher

Hi all

A quick set of questions if I may..

Husband and I are FTBs, our credit scores are 800-900 so not too bad. Hubby has had a defaulted cc that is now paid off and settled. We're both on the electoral roll.

1. My dad's helping us with a deposit, would around 20% be enough, or should we ask for 25%?
2. We have a car we're buying from my folks as well, that we want to include in the mortgage (£5k) plus we'd like to settle a few cc's through the mortgage as well (currently around £3k in total)- do we tell the mortgage broker that that's what we're wanting, or do we simply say £x for house which includes the car and the debts?
3. I'm due to have a baby in April, and will go on mat leave in march- does that count as an adverse change of circumstance? I'm still going to be employed by my current company, but will have 9 months of SMP..

Thanks in advance everyone appreciate your advice!

catieeb06

1) It would all depend on how big your OH's default is- when it was registered and when it was settled but I would certainly look for no less than 20% deposit. Do you not have anything you can put into the transaction?

2)If you are a FTB then you can't add anything over and above the mortgage amount into the transaction for example a £100,000 house with 20% deposit means that only £80,000 will be lent. If you have debts then they are for you to settle outside of the mortgage.

3) Most lenders would expect that you had a letter from your employer to confirm your re-start date and may also request that you had enough in cash savings to cover the difference between your wage and the SMP for the 9 months you intend to be off.

suzzopher

Hi catiee- that's really useful
The default is a phone contract, sorry said the wrong thing, and that was £170. That was settled 2007 but still shows on the report.
He was also paying a defaulted cc that isn't on his credit report. So we think it actually wasn't his (this was opened in 2001, settled in November last year as the debt collecting company only found him in 2009).

The savings we have are measly, and are working towards us affording me being off on mat leave. So far it's about £3k or so, which will be more than enough for me to be off that time.

The house was bought by my dad in 2009 as a repossession, and he's agreed we can buy it for the same amount he bought it for £175k) when it's worth about double that in today's money. Could we realistically ask for £190k minus the deposit, whether 20-25%, or would the mortgage company be onto us?

We can prove that we can afford me being off the 9months in terms of savings and a letter from my employer, so that's great, thank you for that!

Sorry about the continued questions, fear I'm being a bit thick!

catieeb06

Mobile phone contract- okay.

The default on the C/Card was probably registered pre Jan 2006.

With regards to the property transaction- your dad is letting you have it for £175,000 is he selling it to you at under the market value or just selling it to you for the £175,000 and then gifting you the deposit? The two things make for a very different transaction.

suzzopher

The way he wants to do it is to get £180k for the house, which includes the £5k for the car. He will then gift us the deposit knowing he'll get it straight back.

BoGoF

I assume that the property has been you dad's main residence up to know?

suzzopher

BoGoF wrote: »

I assume that the property has been you dad's main residence up to know?

No- he's had it as a buy to let to us til this point.

BoGoF

He is aware there are CG implications then of selling the property at way below market value to a connected person. He will still have deemed to have sold the property at market value.

suzzopher

sorry what does CG stand for?

catieeb06

Bogof is correct, the CGT will be calculated at market value rather than what he let the property go for.

Reason I ask about the deposit is because if for example the property was worth £250k but he let you pay him £175k then theoretically you could borrow the additional £5k or whatever in order to pay off your credit commitments and simply get the solicitor to pay your dad £175k that he wants from you.

The lender will request full disclosure of this but most should be okay with it.

catieeb06

Capital Gains Tax.