help please!

mtb29

Hi,
my husband and i want to buy a house. we both have good jobs, combined in come of 59k+. we are currently renting but own a property which is mortgaged with consent to let (worth approx 105k, mortgage 89.6k, let since oct). We have only been on electoral register at rental address since march 2012 and this is only registering with experion, not equifax. We have just managed to clear 11k of credit card/unsecured debt thanks to my parents helping out. my husband has a further 2 unsecured loans totaling 25k but he has never missed a payment and the repayments are easily affordable for us. I have few questions-
1 I always use my £500 overdraft, every month but it is paid off when my wages go in- will this be a problem?
2 Because we have 'magically' paid off all that debt are we going to have to wait a few months before we can apply for a mortgage
3 what are our chances of getting a 150k mortgage with a 90%LTV?

All answers gratefully recieved, thanks in advance chaps

Reactor_2

Hi,

In response to your questions, here are my opinions:

1. It might be a problem, as one of the questions they will ask is how you will pay off the mortgage. If you have nothing left over at the end of the month, it will be a red flag. If the mortgage lender is also your bank, they will literally go through all the items in your account.

2. You still have a mortgage of 89.6k and your husband has outstanding loans, so you haven't 'magically' paid off debt. I expect the mortgage lender will take this into account, unless you lie to them.

3. Where will you find the other 15k? But assuming you can find this, your chances are better if your joint income is higher than 60k.

mtb29

Reactor wrote: »

2. You still have a mortgage of 89.6k and your husband has outstanding loans, so you haven't 'magically' paid off debt. I expect the mortgage lender will take this into account, unless you lie to them.

3. Where will you find the other 15k? But assuming you can find this, your chances are better if your joint income is higher than 60k.

re the debt I was referring to the 11k we have paid off, not the remainder and the other property, sorry for the confusion.

I am paying the deposit out of my savings. I have enough to cover the deposit, fees and emergency money.

I was not at any point considering lying to anyone.

Thanks for your reply

Dave_Ham

Reactor wrote: »

Hi,

In response to your questions, here are my opinions:

1. It might be a problem, as one of the questions they will ask is how you will pay off the mortgage. If you have nothing left over at the end of the month, it will be a red flag. If the mortgage lender is also your bank, they will literally go through all the items in your account.

2. You still have a mortgage of 89.6k and your husband has outstanding loans, so you haven't 'magically' paid off debt. I expect the mortgage lender will take this into account, unless you lie to them.

3. Where will you find the other 15k? But assuming you can find this, your chances are better if your joint income is higher than 60k.

1. Incorrect. You have no idea what their rental payment is, it could be more than the new mortgage payment

2. Wrong. Subject to credit score, the lenders will not even look at this so long as loans clear

3. Best of the lot and made up. What lender actually changes its parameters at £60k joint income - none

For me and I actually know rather than guessing, your 3 main hurdles are:

Credit score - obviously we do not know what this looks like

Affordability - the loans should be manageable, although if you are repaying them over a short term the monthly amounts may throw out

And at 90% this may be hard work, 85% a fair chunk easier for sure..

Good luck

mtb29

Hi, both our credit scores are excellent (only negative is not being on electoral register on equifax). The loans are long term, they were consolidation loans of previous credit card debts and he has been paying them off for last 3yrs (2yrs ish to go on them both) no missed payments and the settlement figures (of which we have copies in writing come to 19k rather than the 25k outstanding balance)
are 90% ltv mortgages really difficult to get? loads of banks are advertising them them. god, this makes my brain ache
cheers Dave.

The_J

Reactor wrote: »

Hi,

In response to your questions, here are my opinions:

1. It might be a problem, as one of the questions they will ask is how you will pay off the mortgage. If you have nothing left over at the end of the month, it will be a red flag. If the mortgage lender is also your bank, they will literally go through all the items in your account.

2. You still have a mortgage of 89.6k and your husband has outstanding loans, so you haven't 'magically' paid off debt. I expect the mortgage lender will take this into account, unless you lie to them.

3. Where will you find the other 15k? But assuming you can find this, your chances are better if your joint income is higher than 60k.

Jeez, and I gave Thrugelmir a hard time. Don't even know where to start with this.

mtb29 wrote: »

1 I always use my £500 overdraft, every month but it is paid off when my wages go in- will this be a problem?
2 Because we have 'magically' paid off all that debt are we going to have to wait a few months before we can apply for a mortgage
3 what are our chances of getting a 150k mortgage with a 90%LTV?

1. If it is authorised you should be OK but it doesn't look good if the underwriters ask to see bank statements.

2. No, if you can evidence the debt being paid off that is sufficient.

3. 90% will be tough, they tend to look for extra information at that level and borderline issues (like the overdraft) could make the underwriters decision easier. Based on income, and likely monthly repayments of the debt, it should be possible but I would be much more confident, as Dave Ham says, at 85%.

shortchanged_2

Why not clear your debts with the savings and then start afresh and save with gusto.
Without any debts you should be able to make significant savings with your income instead of servicing the debts which I assume have a high interest rate.

Or do I take it you do not want to bail your husband out?

mtb29

shortchanged wrote: »

Or do I take it you do not want to bail your husband out?

Ha, ha, ha- you've got it in one! He ran up the debts living beyond his means before I met him. Now it's a pain for him to have to pay the loans back but I figure it might teach him a lesson or two and, hopefully, make him more careful with his (our) money in the future. Tough love, eh?

shortchanged_2

mtb29 wrote: »

Ha, ha, ha- you've got it in one! He ran up the debts living beyond his means before I met him. Now it's a pain for him to have to pay the loans back but I figure it might teach him a lesson or two and, hopefully, make him more careful with his (our) money in the future. Tough love, eh?

I can see your point but it will only harm your chances of getting a house.