Mortgage Newbie....completely so.

30dirtybirds · 22 March 2012 at 12:30PM

Hi All,

Thanks to this forum and the great advice I got, I managed to be debt free! I never thought the day would come but it did! and life has been debt free for nearly two years and I'm loving it.

However, now its time for me to get into the only debt I would ever consider...a Mortgage, please excuse the rambling but I'm trying to get as much info in as possible.

Some basic details, I've been in my current job for almost 2 years, and its pretty solid work. I earn 35k but I'm working through a "promotion road path" which should see me on 40k within a year.

As I said, I'm totally debt free (no loans, no credit card etc), so other than ongoing bills have very little outgoings.

I'm married and my wife an I have just had our first child together, who is 11 weeks old and I have a 13 year old daughter from a previous relationship who I have custody of.

My wife worked full time as a carer in a old folks home but I'm pretty sure whe wont be going back after her maternity leave, certainly not full time anyway. So it'll be based purely on my income.

Recently a family member passed away and has left us 40k for a deposit, on the understanding that that is all it is used for.

3 Bed House prices in our area vary from £150k-200k.

Where do I begin?
What kind of Mortgage can I expect?

A big thing for me would be to a MFW as soon as I get the mortgage, so flexibility in payments are critical.

Any advice would be awesome.

Thanks

DannyboyMidlands · 22 March 2012 at 12:41PM

You seem to be in a decent financial position.

If I were you I'd go for a £160k house, with 25% deposit and a mortgage like a First Direct lifetime tracker. Unlimited overpayments allowed and a current rate of below 3%.

betmunch · 22 March 2012 at 12:51PM

Cant see first direct taking on more than 2 times income with 3 dependents.

ACG · 22 March 2012 at 1:14PM

i have no idea what MFW stads for...like most of the abbreviations on here...

However, based on your income alone i think you would be looking at maybe 3-3.5x your income based on the fact you have 2 dependants.

So at most your probably looking at a mortgage of £105-120k ish. Add that to your deposit and your looking at £160k - however you will need some funds to cover stamp duty, solicitors and a valuation, lenders fees etc unless those come free with the mortgage or you are able to add them to the mortgage.

What you want though is certainly possible based on the info you have given.

betmunch · 22 March 2012 at 1:22PM

ACG wrote: »

However, based on your income alone i think you would be looking at maybe 3-3.5x your income based on the fact you have 2 dependants.

Hes pretty sure the wifes not going back to work as well

ACG · 22 March 2012 at 1:29PM

oops...i missed that.

betmunch · 22 March 2012 at 1:33PM

Think we need clarification on on her status, as any lender would anyway.

Even a part-time wage would be a big help as its one less dependent and say £5k extra income.

30dirtybirds · 22 March 2012 at 3:06PM

Hi Guys,

Thanks for your feedback,

MFW = "Mortgage free wannabe". I am almost phobic about debt so would want to clear it as fast as humanly possible.

Wife is currently on Maternity leave until October, when she hopes to return part-time.

I'm 38 years old, I'm guessing that would have a negative effect?

I had a quick look at the FD lifetime tracker, looks very promising, but if I can only get 2 times my salary, £120k isn't enough to by a house in my area.

Relocating isn't really viable.

Thanks again.

betmunch · 22 March 2012 at 3:23PM

30dirtybirds wrote: »

Hi Guys,

Thanks for your feedback,

MFW = "Mortgage free wannabe". I am almost phobic about debt so would want to clear it as fast as humanly possible.

Wife is currently on Maternity leave until October, when she hopes to return part-time.

I'm 38 years old, I'm guessing that would have a negative effect?

I had a quick look at the FD lifetime tracker, looks very promising, but if I can only get 2 times my salary, £120k isn't enough to by a house in my area.

Relocating isn't really viable.

Thanks again.

Being 38 isnt a problem, your still young my friend!

There was a thread about affordability a with FD a while ago, one chap on there was providing a 67% deposit and was only offer 1.25x his salary.

This is FD downfall, they offer great rates, but then theyy reduce what they will lend if you haveoutstanding loans or financial dependents.

If your wife will go back part time the at least she wont be considered a dependent, and she will have a salary to add to the mix.

I suggest you get professional advice from an Independent Mortgage Advisor.

The reason I say Independent is because they will consider the First Direct Direct only deals for you when they have done a full fact find with you.

Good Luck

betmunch · 22 March 2012 at 3:25PM

Just seen your signate line saying you have a 4th child on the way, we have only accounted for 2 so far.

Do you have any maintenance commitments? I only ask due to the tagline. If you do these will count against you the same way a loan would.

pinkteapot · 22 March 2012 at 3:27PM

Look for products with unlimited overpayments from the start but, if you can't get one, you could put your overpayment money into a savings account and then pay off a lump sum as soon as the restricted period ends. Usually payments are limited on deals with an initial 'special' rate. E.g. 3 year fix - limited overpayments during those first 3 years. After those 3 years you could either make a lump sum overpayment and stay on the lender's SVR, or move the mortgage but take the new one out for less than your current balance, paying off the same lump sum on the way.