Chances of obtaining a mortgage

lees10000

Hi, been reading the forums for a number of years and only just registered to gauge opinion on the chances of my getting a mortgage - all feedback (positive and negative) gratefully received!

I'm currently living with parents and I would like to obtain a mortgage on a flat if possible and wondered what people thought my chances would be - I believe in my circumstances (see below), I would be better going through an independent broker, rather than my own bank (Natwest), though I have been with Natwest for over 15 years

Immediate requirement to move is that my parents are currently renting and are looking to downsize their rental to reduce their outgoings.

Summary of facts:

1) Flat Price - 40k
2) Deposit - 6k (5k gifted by parents and another 1 perhaps 2k from me which i will save over next couple of months)
3) Salary - 28k
4) In current job 7 months but returning to last employer in December to take up Management position (still on 28k but a step up, having previously worked there for 18 months, my probationary period will be 3 months, I have worked at the new employer previously, for some ten years)
5) Have obtained credit reports and all 3 are upto date (ok) but rating appears to be low (though i know this means nothing)
6) Age -mid 30's and single
7)mortgage term - 15/20 years
8) have credit card at 3.5k balance
9) overdraft of 1.5k - whick i am into every month
10) have had payday loans - last one in July this year - though all paid and never ever missed a payment
11) no defaults, ccjs etc

I believe that if I would be able to get a mortgage, it would be more the bad credit end of the market, hence my belief I'm better consulting a broker.

The credit card balances and payday loans have been built up over the past year, largely due to helping my parents out financially (both low paid and one has been on statuatory sick pay most of this year and is awaiting an operation - hip replacement), so I have had to fund them a lot.

My parents are about to come into a lump sum and they will be paying me some money back, hence the gifted deposit from them of 5k.

Moving out would be good - making the financial break from my parents, so I can tackle the credit card and overdraft. I'm sure you'll agree, 28k for a single person (up north) on a 40k flat on paper should be fine, were it not for the other things (credit card, overdraft, payday loans).

I could just move out and rent (and appreciate this may be my only option based on the above) whilst my contract becomes permanent

In addition to my salary, there is an on target bonus of 10-15% salary paid annualy (which historically has been paid for the last ten years, so my plan would be to use this to reduce my overdraft and credit card long term).

Any brokers out there with any opinions?

Thanks for reading and sorry for the waffle

Thrugelmir

lees10000 wrote: »

8) have credit card at 3.5k balance
9) overdraft of 1.5k - whick i am into every month
10) have had payday loans - last one in July this year - though all paid and never ever missed a payment

If are serious about purchasing a property then you need to change your attitude to money.

Perhaps use your parents gift to sort yourself out. Then take matters from there.

Suggest you contact a local broker to guide through your options.

lees10000

Thanks Thrugelmir for taking the time to reply.

I agree completely, RE: sorting myself out.

My hope is that by moving out of my parents home, I will make that financial break from my parents and they will have to manage on their own (as, nasty as it sounds, they're bringing me down with them).

I will contact a broker as suggested and see what my options are.

I have considered paying off my credit card and overdraft with the money and just renting a property, but the rent on a 40k property actually works out 25% more expensive a month than the mortgage payment on such a property, at 15 year term! :eek:

The additional cost of renting (and the associated household bills) obviously reducing my ability to save for a mortgage deposit somewhat.

So buying now is probably the wiser move in the long run.

marathonic

If your parents cannot afford to keep their heads above the water with your help, how will they cope when you move out?

Also, when you move out, you'll have more of 'your own' expenses so will be less able to help them out. You may cope better by cutting ties but, taking your family as a whole, it'll be a stressful few years ahead. Fair dues to helping them out thus far but, considering you have done this, I'm assuming you have a good relationship - could you really stand by whilst they go further and further into debt and are unable to put food on the table?

I highly advise both yourself and them to fill out this SOA calculator and post the results on the Debt-Free-Wannabe board. People there will help you both out more than you can imagine http://www.stoozing.com/msoc/soacalc.php

Based upon the above information alone, my advice would be to use the £5k to clear your debts.

Payday loans are a big no-no on credit reports these days, even if paid back on time. In my opinion, you'll want them to be at least a year old before you apply for a mortgage.

With no debt and the knowledge of peoples replies when you post your SOA, there's no reason why you shouldn't be able to save a deposit for a bigger place (considering you earn £28k and the smaller place you're looking at costs £40k)

Then, possibly, let your parents move in until they got on their feet - and pay half the mortgage (will probably work out cheaper than renting). That way, you'll be helping them out and they'll be helping you out.

The SOA is the first, biggest, step you can take.

marathonic

Just to add, if you can get a livable place of your own for £40k, you should be able to afford somewhere really nice for both you and your parents to live in temporarily until they get on their feet.

Just list your requirements and have a look at what's available in your area. I'm on a similar salary to you and have been offered a mortgage of £112,000 by my bank (based on me having a 10% deposit). That'd buy a place for £125,000 or so. Of course, you probably won't want to go as high as that but this is just for informational purposes.

What are rents in your area? You could base the amount you're willing to spend on this if you like.

Potential requirements you may have include:

• Two living areas so you both have your privacy
• Three bedrooms so there's room for visitors to stay occassionaly
• I've even seen houses with garages converted into a one-bedroom apartment in my price range in my area - a good idea if you wanted a more permanent solution

lees10000

Thanks for the reply marathonic

You've given me lots to think about and digest there and I do intend to reconsider my options.

I have a very good relationship with my parents -so it's not like we can't stand living together any longer

The flat I had my eye on has sold today anyway - was a bit of a bargain, probably with it being so close to xmas I guess.

McKneff

If you live with your parents and presumably just pay them board
how are you going into your overdraft every month.

Going on the above, how on earth wuld you manage to pay for
Council tax
Gas
Electric
Water
Food
Phone
TV
Insurance etc etc

And the mortgage............

Save as much as yu can now for the future and if yu havent already it may be worth looking at a pension for your retirement.

Dave_Ham

From information posted, mortgage should be achievable...

Get your Experian, Call Credit and Equifax reports and go to a broker, you do not want to get into Sub Prime as they hate the payday loans and considerably more expensive.

Also when you do get a mortgage, look for one with no product fee as with that sort of value it will almost certainly be better value...

Good luck

lees10000

Thanks McKneff and Dave Ham for the replies.

May just visit a broker and see what my options are. Depending upon what they say, may wait another few months or so before looking to apply for the mortgage (and pay off the credit card in the meantime).

Thanks again everyone :beer: