Will we be able to get a mortgage?

kellymebo

Even though we have seen a mortgage broker I am still really concerned about getting a mortgage, details:

We both have good credit (Experian state its good) but we have both got debt. I have £7k left on credit cards but both on interest free and paying way over the minimum and I earn 30k a year.
My partner has £4k on credit cards but paying over the minimum and £4k left on a loan. He earns £22k per year. Neither of us have missed or late payments no CCJs etc.

We have a 5% deposit but looking at doing a shared equity scheme so LTV will be 75% of the property.

We have been told by our mortgage broker that we shouldnt have a problem getting a mortgage.

But I hear its tough to get a mortgage and worried that we wont get excepted, what do you think?

ACG

Whats the purchase price and mortgage amount that your looking for?

kellymebo

The house is £195,000 but as its shared equity we need a mortgage for £145,500 and we will be putting down a deposit of £9750

Thrugelmir

kellymebo wrote: »

and we will be putting down a deposit of £9750

Your unsecured debts total £15k. So a lender will consider you deposit borrowed money and not saved.

This will impact your any lenders own credit rating of you.

Dave_Ham

This will be hard work - not impossible but hard work.

I will be surprised if you can get this at 95%

I wish you well though..

kellymebo

Hmmm it is interesting so many different views and opinions, I suppose we wont know what the outcome is until we take the plunge, so we are going to take a chance on getting a mortgage through Firstbuy scheme.

It is crazy 5 years ago i was earning half of what I am now, had more debt and the banks were willing to give me a 100% mortgage!

HappyMJ

Do you really want to buy a shared equity property with such little equity yourself? You will be saying goodbye to your £9,750.

I would create an SOA and use an interest rate at least 2% higher than the current rate to see if you can afford it.

The interest rate on the firstbuy equity loan is 1% plus RPI. RPI figures released today are 3.6% plus the 1% makes the interest rate higher than many standard variable rate mortgages available.....and 20% of the sale price will still go the to agency and the builder when you sell.

matt8181

The interest on the equity loan is quite calculated like that - you don't pay 1.75% in the sixth year, and then add RPI + 1% for the seventh year, the inital 1.75% is uplifted by a percentage equal to RPI + 1%.

So if RPI is at 7% in year 6, in the seventh year you will pay 1.89% interest on the equity loan.

1.75 x (1+8%) = 1.89%

NOT

1.75% + 7% + 1% = 9.75%

Granted this will be compounded annually over the term so if RPI stayed at the fictional level of 7% for the term in the 25th year you would be paying around 11% interest on the equity loan.

Cheers,