First Time Mortgage

eccolad

Hi all, another first time buyers mortgage thread

I'm currently renting with my GF, we decided to do this first rather than buy as we wanted to make sure we could live together and also afford all the bills... Success on both accounts.

We are approaching the end of our first year and are looking/considering buying our first house. We have saved £6500 so far. We would be looking at houses no more than £105 and at 95% and 90% (I realise further saving is required for this) mortgages. I have read on here that 95% mortgages are hard to come by, two of my close friends have recently successfully been offered one, and since both moved into their houses.

I had a lot of debt stupidly from my younger days, a mixture of loans and credit cards, ta the worst point was around £7000. Since 18 months ago I have cleared 2 credit cards, 2 arranged overdrafts and 1 loan and I'm left with £1500 on a credit card that I consistently pay over the minimum payment. I have never missed a payment on anything. My GF is debt free.

We earn combined £42000 a year.

I just have a couple of questions if I may...

Will my past history of having a lot of debt count against me, even though it is now paid off and a payment never missed?
Say we went for a mortgage now, would the £1500 credit card seriously count against me?

I know we could wait another year and save more deposit to get a better deal, but I'm thinking another years rent 550 p/m would make up for a not too great rate of mortgage now?

Has anyone else got a 95 or 90 mortgage recently? Or been in a similar position?

Sorry for the war and piece...
Thanks

BoracicLint

I dont think a £1500 balance would affect your affordability that much based on your combined salaries...assuming that your GF has a sound credit rating also.

I have recently applied (and received an offer) for a 95% mortgage with Nationwide, however I am buying alone with a salary less than your combined. I had a few debts, but agreed to pay them off before completion. When they calculate your affordability they can factor the credit card in and adjust accordingly or base the calculation on the fact that you will pay them off.

Obviously you need to weigh up whether it is better to buy now with 5% deposit, or continue to save for 10% as the rate will be better.

Dave_Ham

95% LTV mortgages are out there and available, just harder to get and obviously at a higher rate of interest.

From what you have described, you will be fine for 90% LTV and probably ok for 95% LTV.

This is so long that when you had these debts, you did not miss any payments as a completely clear payment history is required for 95% LTV.

Good luck, keep up the saving...

eccolad

Thanks guys, put my mind at rest. Was thinking I would be hammered for having such big debts in the past.
I think we will continue to save to get nearer the 90% mark. Just hoping the landlord allows us to stay on a rolling month contract and doesn't ask us to sign another 12 month.
It's hard because I like to think we have done things sensibly in renting first, to make sure we can afford to live on our own, but just makes saving that bit harder.
We have a family friend who is an independent broker who will help us out for free, so lucky in that respect. Does an independent broker make things slightly easier?

Dave_Ham

So long as they know their stuff, will definitely make it easier and can help hold your hand through the house buying process..