couple of questions on getting a mortgage

moneywise22

Hi everyone,

My Hubby and I would like to get a mortgage for our first property. I have just started a new job on a great salary and now we can afford what we want.

My first question is will the banks mind that I havent been in my job for very long? Is there a minimum time they want to see? (Previous to this i was self-employed for 4 years, the first 3 my income was low and i havent filed the 4th year yet so i dont want to get into that with them).

Also we are thinking about having around £18k extra on the mortgage to pay off loans, which will save us around £600 per month! Do banks like to do this as a matter of course? We are thinking of getting a mortgage with our bank, the HSBC for a few years as they know us etc, and one of our loans is with them so they will be able to see us pay it off etc. Has anyone done this?

Thanks

shameless-about-money

You would be much better off by going to see an Independent Mortgage Advisor that offers a whole of market choice.

You shouldn't have a problem with either question. However, it would be doubtful that a bank/building society would be able to accommodate you.

moneywise22

shameless-about-money wrote: »

You would be much better off by going to see an Independent Mortgage Advisor that offers a whole of market choice.

You shouldn't have a problem with either question. However, it would be doubtful that a bank/building society would be able to accommodate you.

Why is that?

Mr_helpful

An independent mortgage adviser should be whole of market by default though a whole of market adviser isnt always independent. Confused ? blame the FSA. We independent brokers can get access to deals that you dont see in the high st. Many lenders have no minimum time in a job and I can certainly think of one high st lender who doesnt mind if you are in a probationary period.
I would be concerned about adding short term loans to a mortgage without proper discussion. Th other thing that you dont mention is whether you have a deposit and if so how much.

moneywise22

We have a deposit of £9k and could raise up to £12k if we needed to. We are looking at houses of around £160,000 and have 2 loans and 2 credit cards we want to pay off totalling £18k, so in total we would need to borrow £169,100 for a 95% mortgage.

I got one quote online with our bank which is HSBC and on their 2 year discounted mortgage they will lend us up to £177,000 which will cost £859 per month. If they let us do this it will save us £600 per month in loan repayments! which is the reason we wanted to do it in the first place.
We currently pay £875 per month in rent so dont really want to pay much more in mortgage repayments, but when i have tried to get other quotes online they are coming in at around £1100! I dont know why that is.

The other consideration that could cause a problem is credit history, which is why we looked at our own bank first as they know us. My hubby's is excellent but mine has a couple of blemishes from 5 years ago.
I had 2 defaulted loans from an ex-partner, one is due to expire this month (as it is nearing 6 years old so should disappear from my credit report), the other will remain until March 2008. The amount defaulted was £4300 and there is £2300 outstanding, i am currently in negotiations on settlement so will soon be 'satisfied' anyway.

We dont know where to start with approaching lenders, ideally it would be great if we could get the same deals offered to everyone else. Realistically I am doubtful though.

Which lenders would you suggest?

AndyWallace

most banks lend on purchase price or valuation, whichever is lower.

the maximum loan to value with many lenders will be 95% but northern rock, coventry and mortgage express to name 3 will allow you to consolidate your credit agreements into a single payment and thus reduce the overall, immediate, payments.

With all these schemes, the loan to value stays at around 95% with the remainder of the borrowing being on an unsecured loan, the term of which can be set to any term.

The rates are not the best on these schemes.

Andy.

moneywise22

I just spoke to HSBC and they said they only lend up to 95% of the house value so factoring in the loans is not an option.

AndyWallace

moneywise22 wrote: »

The amount defaulted was £4300 and there is £2300 outstanding, i am currently in negotiations on settlement so will soon be 'satisfied' anyway.

We dont know where to start with approaching lenders, ideally it would be great if we could get the same deals offered to everyone else. Realistically I am doubtful though.

Which lenders would you suggest?

Erm, uh, phew, oh wish i'd stayed out of this one now. You could try mortgage express. see a broker.

andy.

moneywise22

I am worried now. Who will give us a mortgage with £18k of unsecured debt?
Our spare money each month is only about 30% of our income. If we use our 9k savings to pay off debt we will not have a deposit. We really want our own place.

helping_hubby

One thing we learnt when applying for a mortgage is the lenders treat credit card repayments at around 5% of the total, whereas in reality you only need to pay 2%/2.5% minimum. So credit cards will sting your affordability rating.

Really, go and see an independent mortage advisor. Once you've given them all the finer details they'll be able to help you out and recommend mortgage companies that will more likely lend you what you want.

Surely...adding the loans etc to the mortgage is a bad idea in the long term though? Although you might get say 6% interest rate, you have to remember thats over 25 - 25 years. (Sorry if I'm completely wrong there.)

chinup_3

mnywse22- for what it's worth,2 observations. 1] makes sense surely to wait for that default to 'expire' AND THEN CHECK WITH EXPERIAN ET AL THAT IT HAS so your 'cr' is that little better. 2] '' going to your bank ie hsbc cos they know you'' has not really been neccessary for a good while now. as well said go to an indie broker and they will be the best option.
good luck