How likely is it that we would get a mortgage?

Ithilien

Hi there,
I'm looking for some advice. Here's the situation:
We're a couple. Currently renting together. We'd like to buy a house as the mortgage would be about the same or just a bit more than the rent we now pay.

Applicant 1: Me. Age 26. Credit rating was non-existent until September 2007; which is when I moved to the UK (EU national). I've been working on increasing my credit score, by getting a small loan (not needed but was 0% interest) - that's paid off now. I also have a credit card that I use monthly and pay off monthly. All my banking activities are with NatWest. Noddle now gives me a credit score of 4/5.
Yearly income: £32k basic + £16-£32k commission. For the last tax year my total income was £54k. Commission is paid out quarterly. I have worked at my current company since March and passed my probation on September.
Outgoings: no loan. I pay pretty much all the bills - rent, council tax, gas & electricity, Virgin Media, etc.
Savings: currently not much (£3k). I have now started to save my commissions when I get them, so about £3k every 3 months.

Applicant 2: My boyfriend. Age 29. He's English and his credit rating should be fair but not brilliant as he has a loan that he's paying off (see below). Always been on time with payments though. Also has 2 credit cards (1 NatWest, 1 Debenhams) which he uses almost every month and pays off straight away, to increase credit rating.
Yearly income: £25k. No commission. Has worked at his current company since June and has recently passed his probation. He's a compliance manager for a financial firm (not that I can imagine they take something like that into account...). All his banking is done with NatWest, but we don't have a joint account (because he says that would influence my credit rating too much with his loan).
Outgoings: Loan with NatWest he took out to study Bar Vocational Course (barrister training). Paying off £600 every month, for another 4 years. Fixed interest rate. Also has a student loan, currently paying about £100 a month off that. Apart from that he pays for food, restaurants, going out, London travel card (zone 1-4), etc. We have no dependents.
Savings: about £2k.

My dad will gift us £50-75k for the deposit. This is currently invested in a plot of building land (in the country where I'm from). My parents bought this land about 10 years ago with money from saving accounts from my brother and me. We'll both get half of what it's sold for. Current value €150-180k. It will be sold quickly (lots of demand where he lives), but he only wants to sell it once we're pretty much ready to go ahead as it's still increasing in value by about 10% a year.

The plan: Saving about £15-£20k between us. We want to put at least £50-£60k into a deposit. Everything that we have above that (including what the gift from my dad) will either be used to top up the deposit and for the fees and stamp duty.
The house we would buy would be in the region of £300-325k (we're in the South-East). I don't want to move in 5 years when we have kids so it needs to have at least 3 bedrooms, preferably 4, hence the budget. So with £50-60k deposit (hopefully a bit more than that), mortgage would be £240-£275k.

What would be our chances to get a mortgage, say in about a year? So my boyfriend would then still be paying his loan off at £600 a month for another 3 years. He thinks we won't be able to get a mortgage until he's paid off his loan, but I'm hoping it's earlier than that.

We are aware that our outgoings will increase when we buy, with insurance and savings for upkeep. Also travel would cost more as we would be commuting to London every day (I don't want to buy where we live now and can't afford a house in "nicer" areas of the capital).

Thank you!

(and: sorry for the huge post! :eek: )

tom9980

The one thing that sticks out to me is why your savings are so low given you made over £75k between you last year? if you really want that house you can easily save £40k per year if not more.

Also your plan to include the cash from dad is fine but come up with a plan that doesn't include it to avoid any disappointment if he is unable to extract it in time.

Ithilien

The reason why we've been able to save so little is that our rent is £1300. Almost all my wages go on bills (I get in total about £2k a month, after tax). £150 x 2 on our Oyster cards a month, gas, electricity, internet etc. it all adds up. My boyfriend has about £1400 a month after tax, of which £600 goes straight into his loan. We then still need to eat. And yes we spend a couple of hundred pounds every few months to travel to see family - he's from the north east (train travel is NOT cheap) and I need to see my family sometimes too.

Unfortunately living in London doesn't come cheap. However I am aware that we should save more money, which is why I'm now saving my commissions rather than spending them on holidays. There is no chance in hell though we can ever save £40k in a year. The amounts I gave was BEFORE tax. I think after tax we only just about get that much.

My question remains whether we can get a mortgage with what we earn minus the loan my boyfriend has. We will definitely get the money from the land from my dad; he could even give us the cash if it doesn't get sold.

dimbo61

Pay one penny over £250K and you pay 3% stamp duty which means £7500 or more just in tax.
Borrowing £225,000 over 25 years at 5% ( more the normal mortgage rate ) works out at £1315 a month and then you have to look after the place ( repairs, updates, decorating etc)
Mortgage of £275,000 and you would be looking at £1607 a month at 5%.
Lenders have to look at AFFORDABILITY and living in london is not cheap.
If you save a 25% deposit you can get better rates and consider long term fixes of 5 years or more
Good Luck
I