Guidelines on preparing to apply for a mortgage...

frivolous_fay

Hello,

I'm finding moving house and mortgages a bit of a minefield - very confusing!

I'd be very grateful for any suggestions about any of the following points, which I'm struggling to get my head round. Our specifics are that we will probably need to raise a mortgage of around £170-180k, and we bring in £50k p/a between us. (before tax) I'd like to make sure we're in the best position possible before we start applying.

- Will having student loans (inflation-linked interest) outstanding hamper us? Mine is around £6k and I don't earn enough to have to pay it off yet. O/H has been paying his off for the last couple of years.
- Should I clear my £2800ish 0% credit card balance before applying? I have this money accessible. (The latest in a 3-year run of rate tarting and stoozing )
- The bulk of our savings are in our mini cash ISAs. This will presumably end up being our deposit (around £20k) but I don't like to think of wiping out all those years of tax allowances by emptying them out... would I be insane to consider a 100% mortgage and offsetting? Would this make it a lot harder to get approved?
- Should I hold back from topping up our ISAs in April so that not all of our savings are locked away?

Aside from the above... no other debts or major financial commitments... (yet!)

I'd be grateful for any suggestions.

Rick62

For £170k to £180k on £50k joint you are looking at an earning multiple of about 3.5 which is very modest these days, so if your credit is Ok you should be fine, even with your modest student loans and credit card balances.

You will get a better rate with a 10% deposit than with no deposit (around 5% versus about 6%), so it will be better to put a deposit down. You might find a lender giving a good rate with just 5% deposit, but you need to look out for (and avoid) 'higher lending charges'.

I suggest speaking to a whole of market broker who will be able to advise on the options that different lenders have.