First time Buyer, mortgage advice please

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Hi Everyone,

Thanks for taking the time to read this, I am at a stage where I might be making the biggest investment of my life and what better place to seek advise than MSE!

I will break my concerns and questions as simple as possible and hopefully someone can give me somewhat accurate up to date advise.

Me: Good credit history, 24,250 PA (with £200 overtime each month, not sure if this counts). Been with same employer for 5 years. I do not have any financial commitments.

Wife: Recently moved from the states, salary 17,500 (18k in 6 months when she passes her probation) had amazing credit in the states, and she does not have any financial commitments either, (5 year residents card)

We have a deposit of 40k, and are currently paying £800 in rent PM.


I really would like to own my own house and this is my main query here, but a partbuy part rent property has become available. The location isn't that great (propery value 150k, I would own 75% but have to pay rent £170 and service charge £170, rest is mortgage), but it's cheap and doable. I really wanted to avoid going down this route, and I want to get mortgage...but I really wanted to know what is the likelihood that I will be able to get a mortgage of at least 160k (plus the 40k could get me a decent house in South London).

I have tried checking online calculators etc but get mixed feedback.

If anyone can offer some advice, tips, opinions for someone in my position taking into consideration the above I would be very greatful. Also any advise suggestings regarding if my wifes situation will play a role as well.

Thank you

originalmiscellany

Great that you're thinking long term!
Some observations:
200k for a decent house in South London? Sounds very optimistic, but I'm in the rural heartlands, and not in the big smoke. If you can get a decent one, go get it!

Mortgages are getting harder to get with increased tightening up of rules, e.g. a bigger deposit needed and squeeky clean credit status.

You say you have "good" credit history. Does this mean that there have been defaults on your record to stop it being outstanding/excellent?

I fear the mortgage multiplier could not work too well for you...
You have a combined salary of around 40k and are wanting a mortgage at 4 times your joint salary (160k for the decent house with 40k deposit) which I don't think many banks will be too keen on.

Remember buying a house really is expensive, the upkeep first few months etc of getting established.

My thoughts:
Get saving (50k would be 25% of the house)before you speak to a mortgage broker who has access to the whole of the market.

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Thanks for the response mate. In regards to the credit history I have never been late on payment and the last time I did a credit check it was 'good', but I am thinking it was about a year ago and since then I have been spot on with all payments, so I am guessing it may be excellent.

Maybe it would make sense to try and go down the PartBUY PartRent route for the next 3-4 years and then save a deposit during that time. My only fear is that properties will only increase by then and then the saving won't mean that much.

mungobella

With regard to your wife: has she done anything to establish credit in the UK yet? Any credit cards in her name, or an overdraft on a current account? Unfortunately, credit in the US won't translate over here (I'm a US immigrant, too, so I speak from experience!). If she hasn't already, she should probably try to get a credit card in her name, and use it and pay it off regularly. She may have to get a card for those with no/bad credit history (I got Barclays InitialCard, but there are others out there). These have truly insane interest rates, so shouldn't be used unless you're absolutely sure they can be paid off. Alternatively, if she had an AmEx in the US, she may be able to transfer the account here (this is the only cc company that does this). I just put necessities (groceries, etc) on mine, so that I'm sure I'm not spending any extra money. Mortgage companies will look at length of credit history, among other things, so it's important to get this done quickly.

That said, it can be quite difficult for someone on a visa to qualify for a mortgage, though it's possible under certain circumstances (usually you need to have a certain amount of time left on your visa). Some banks won't do mortgages for visa holders at all; I tried applying with ING Direct a couple years ago and they were quite receptive, though I suspect I'm on a different type of visa than your wife. You can look around this boards for stories of people on visas who have qualified for mortgages. If your wife qualifies for indefinite leave to remain in a couple years, it may be worth waiting until she has that--then she wouldn't have the visa issue hanging over her, and you may have a chance to save a bit more and establish a bit more credit history for her.