Achieving the Impossible (FTB)

bodmil

Only Flash Jon could see that thread as a reason not to save. Yes my deposit fund is currently £64,000, saved mostly whilst living in a ski resort paying high rent. Now my rent is £400pm and this month I still saved a grand on a much smaller salary. Rent is one part of the equation but it sounds like you have big problems with your other expenses.

jon557

I will save, a couple of grand.

You're not getting it. Yes you and I can both save £1k a month or so, not a problem there. But why should I save beyond a 5% deposit? If I do then I am loosing out because I am paying £400 on rent.

If I really wanted I could do a spreadsheet with monthly figures to compare a 5% deposit with expensive mortgage (6% interest) OR a 20% deposit lets say with a cheap mortgage (3%) - but the second option includes 2 years+ more rent while I am saving. Overall I could prove that option one is more financially beneficial.

It would be financially beneficial if I had no rent and lived with parents.

GMS

jon557 wrote: »

I will save, a couple of grand.

But why should I save beyond a 5% deposit?.

Because 95% mortgage are exceptionally difficult to obtain. By not having more than 5% deposit you are severely limiting your options in terms of lenders, and needing to meet ultra high criteria to obtain a mortgage.

You are not wrong in what you say. It's easy to say 'save a bigger deposit' but not always possible due to rents eating income.

The market dictates what is needed and 95% mortgages whilst not wuite up there with hens teeth are not too far behind.

jon557

Because 95% mortgage are exceptionally difficult to obtain. By not having more than 5% deposit you are severely limiting your options in terms of lenders, and needing to meet ultra high criteria to obtain a mortgage.

You are not wrong in what you say. It's easy to say 'save a bigger deposit' but not always possible due to rents eating income.

The market dictates what is needed and 95% mortgages whilst not wuite up there with hens teeth are not too far behind.

Yes! Agreed!!!

So, if I have a 5% deposit and clear most debts (bar my current small loan which banks are already happy with me having) then I need to prioritise how I can please the 95% mortgage criteria. :-)

Thrugelmir

jon557 wrote: »

bar my current small loan which banks are already happy with me having

What makes you so sure?

On a small deposit any unsecured credit will be be viewed negatively. In that the deposit will be viewed as being borrowed.

jon557

What makes you so sure?

On a small deposit any unsecured credit will be be viewed negatively. In that the deposit will be viewed as being borrowed.

Today a bank said they are happy with my financial commitment to my loan at £350pm as they mainly judge affordability and I exceeded their affordability requirement. They do not see a loan as bad unless I have problems managing it, and I do not, no defaults or problems.

They do not look at my deposit as borrowed as long as I show I have saved it. Many people have mortgages and loans, for example for house extensions etc.

bodmil

You're forgetting the interest you can earn on your savings.

Jellybean_Jo

jon557 wrote: »

Today a bank said they are happy with my financial commitment to my loan at £350pm as they mainly judge affordability and I exceeded their affordability requirement. They do not see a loan as bad unless I have problems managing it, and I do not, no defaults or problems.

They do not look at my deposit as borrowed as long as I show I have saved it. Many people have mortgages and loans, for example for house extensions etc.

And what about your 1k overdraft? I assume as you've included it on your signature that you use this regularly. I've just bought my first property so I'm by no means an expert but my FA advised me to clear my (tiny by comparison) overdraft before looking at mortgages.

jon557

My overdraft is not even registered on my credit profile. Well it is, but my bank often doesn't bother updating the amount. It was £0 last month, but I paid off an old loan completely so I'm now a little bit in it again, but this month I've paid off £450 of it.

I have told mortgage companies I have it, they want to know the limit but don't seem to care too much about it. It's not seen as serious as credit card debt. Although when I tell the mortgage company I am only in my credit card because of the 0% then they really don't seem to care, they look at the minimum commitment of £25pm and that's it.

My OD is £1000/£3000, my credit card is £950/£3000 and my other credit card is £0/£500 so over all my usage is low and I don't look too bad to them at the moment.

I have made some other stupid mistakes recently though, thats impacting my ability to get mortgages lol. Like too many searches etc.

Thrugelmir

jon557 wrote: »

Today a bank said they are happy with my financial commitment to my loan at £350pm as they mainly judge affordability and I exceeded their affordability requirement. They do not see a loan as bad unless I have problems managing it, and I do not, no defaults or problems.

They do not look at my deposit as borrowed as long as I show I have saved it. Many people have mortgages and loans, for example for house extensions etc.

That's the sales advisor talking. Not the underwriting team. Who i can assure you will have a very different approach.