1st Time Buyer Advice

James1980

Hi,

me and my wife are considering buying instead of renting.

We do not have huge incomes but we have a disposable income of around £800-1000 each month.

We had some credit accounts and cards which have been put into a easy to manage loan with an all your eggs in one basket loan

but the £800-1000 is amount is after loan, and every other outgoing is counted, foods, insurances, travel, etc etc all taken out.

we have a deposit of 10% of the mortgage, and we will be buying a low value house £50-£70,000 as we feel this would be a better starting point for us at the moment.

I know most will recommend going to a Financial Advisor or a Broker, but I just wondering since we recently took out the all eggs in one basket loan of around 10k, would a mortgage vendor be willing to give us a mortgage of £50-70,000 with a 10% deposit?

My wife is set on moving, but I am thinking it would be better value to get a mortgage than to make payments of £450-550 per month in rent. a Mortgage for the values above with a 10% deposit over 20-25 years would be less than any rental at this time.

Thanks
James

kingstreet

The monthly payments for the loan will be deducted from your incomes before the amount you can borrow is set.

For example, a £10k salary means a £40k mortgage at 4x income. If you then take out a £200pm loan, that takes £2,400 off your income, reducing your borrowing power to £30,400.

You haven't actually told us your gross annual incomes, nor the monthly loan payment. Until you do, it's unlikely anyone will be able to say you'll get a mortgage upto the £63k you desire.

James1980

Hi,

yearly combined salary is only £30k

the loan we are paying is £240 per month.

I realise any lender is going to go by their own calculations rather than taking my word for it that we have £900-1000 disposable income each month, I guess they can only lend based on their set criteria rather than what the customer SAYS they have each month.

would it be beneficial for us to move to a new Rental and pay £500 a month for 6-12 months, therefore basically wasting money, to prove we are able to afford a mortgage which could potentially be £300-400 a month.

harvey115

Your bank statement will be revealing the monthly repayments of your existing loan so not to worry in that. Any other debt or commitments will also be removed from your annual pay and the remainder will be used to calculate your borrowing power.

With £30K I would imagine £120K (or may be more) mortgage would possibly be available to you, subject to good credit history.

kingstreet

James1980 wrote: »

Hi,

yearly combined salary is only £30k

the loan we are paying is £240 per month.

I realise any lender is going to go by their own calculations rather than taking my word for it that we have £900-1000 disposable income each month, I guess they can only lend based on their set criteria rather than what the customer SAYS they have each month.

would it be beneficial for us to move to a new Rental and pay £500 a month for 6-12 months, therefore basically wasting money, to prove we are able to afford a mortgage which could potentially be £300-400 a month.

A joint income of £30k, less the loan (£2,880) would suggest a maximum mortgage of around £108,000.

A lender will not be interested in what rent you are paying/have paid. They wish only to establish affordability for your future mortgage. This appears fine based on the circumstances you've set out.

James1980

Harvey & Kingstreet

Thanks for the advice.

My wife seems a little against trying to get a mortgage, I think its maybe she feels if they look at bank statements etc it probably looks if maybe our spending its a little strange (well to her anyway think she is a bit paranoid lol)

but if they base it on life expenditure and standard bills along with the loan vs our joint salaries then I dont see any reason why we would not get a mortgage especially with us being able to pay the 10% deposit required.

Just one last thing though.

Kingstreet with us only looking for a mortgage below £75,000 should we consult with a mortgage advisor/broker or financial advisor regarding our affordability or should we just go to our bank Santander or another high street brand offering a mortgage ourselves and skip the broker option.

Would I be right in saying regardless of a broker or a high street bank. if there are any bad markets against the credit reports the mortgage will fail.. I mean going via a broker aint going to hide anything? as it still goes through the bank criteria?

7-8 years ago we used a broker, like mortgage shop or something to that effect, we are in Northern Ireland, and they where happy enough to take all the various fees etc from us when we tried to get a mortgage at that time, viewed properties and made offers on houses for them at the last stage to go sorry. the mortgage vendor does not provide mortgages to buyers in Northern Ireland (Vendor was Northern Rock at the time who 2 years later opened branches in Northern Ireland grrrrrrr)

kloana

Myself and partner are in a very similar position, so I hope you gain reassurance from our case.

We earn £28k gross, between us. We also have a large-ish personal loan - a little less than yours, but we earn a bit less. In our case, we suffered the misfortune of our cars simultaneously dying, and we need reliable transport for work. We did have savings, but the mge deposit pot would've taken a big hit. Our loan repayments are £133pcm. Our loan is also very new (5yr loan, taken out in June 2012), though the new loan did replace an old previous loan with the same lender (which, painfully, had a TINY outstanding balance, we were this close to being debt free).

We've had a mortgage offer for 60k on a 74k property (HSBC, for the record). In principle, we were offered anything up to about 90k, up to 90% LTV, but weren't looking for properties that expensive. I believe from what I've read here and elsewhere that HSBC offers can be lower in value than other lenders, so potentially we would have probably borrowed more elsewhere (but wouldn't have taken the bait).

So, although I'm no professional at this, your case sounds do-able

kloana

James1980 wrote: »

Would I be right in saying regardless of a broker or a high street bank. if there are any bad markets against the credit reports the mortgage will fail.. I mean going via a broker aint going to hide anything? as it still goes through the bank criteria?

Broker will use their expertise and the details of your case to find you the most likely lender to accept you (acceptance doesn't seem to be a major issue here, assuming your credit files are OK - check). If you have non-conventional circumstances, i.e. self employed, poor credit, unusual property construction, etc., broker would have more success (than average Joe) in finding a lender, as an independent broker will be able to peruse the whole of the market, i.e. pretty much every product available, bar a small number that just don't sell via brokers. Doing all this lender-finding work on your own can be daunting, unless you're pretty confident of exactly what you're looking for.

But the bottom line is, you do still need to be mortgageable people, yes There's a guide on here somewhere about using brokers.

7-8 years ago we used a broker, like mortgage shop or something to that effect, we are in Northern Ireland, and they where happy enough to take all the various fees etc from us when we tried to get a mortgage at that time, viewed properties and made offers on houses for them at the last stage to go sorry. the mortgage vendor does not provide mortgages to buyers in Northern Ireland (Vendor was Northern Rock at the time who 2 years later opened branches in Northern Ireland grrrrrrr)

Rubbish broker, but not the case across the board. These mortgage shop type places aren't always independent, anyway, are they? Don't be put off by this alone, but do shop around.

James1980

One other thing is, kingstreet i seen you posted some links for the £2 credit reports.

We only recently took out the loan, and recently closed a credit card and a store card, obviously after we got loan cash. If we get a credit report NOW, I assume these payments and closures will not be reflected? if NO then how long would you suggest waiting until that is reflected on credit reports?


one other thing to note, we've been in a large overdraft for a while and the recent loan cleared that, will being in the overdraft over a long period of time have a negative effect as well?

kingstreet

Do you think you may have any kind of adverse credit information logged on your credit file?

Late payment
Missed payment
Default
County court judgment

Obtaining credit files is way of establishing the issues. If you have had no issues, it may be worth getting one, rather than all three.

The information on there is supplied by the credit provider. Typically, it can take upto a month for an entry to be updated.

Using an agreed overdraft is not usually a problem. As long as there are no unauthorised borrowing charges or bounced DDs.

James1980

Late payment - NO
Missed payment - NO
Default - NO
County court judgment - definitely NO


and as far as I remember there has been no bounced DD's
there may have been once or twice 2-3 years back where the overdraft, went over its limit, by pennies but was always put right within a day.

does getting the £2 credit report involve experian running an actual credit check on you? or is it just a footprint that only they see and no lender will see?