Are Lloyds a strict lender? Want to buy 1st house...

x.sophie.x

Hi All,

My parther and I are looking to buy our 1st home and like the look of Lloyds Local Lend a Hand scheme. We have to come up with 5% deposit and the council act as a guarantor for the remaining 20% deposit.

Both my partner and I went into our local branch to discuss the mortgage, and came out with an agreement in principle (mortgage promise).

This is for a house up to £150k - mortgage amount £142.5k.

I earn £33k, and my bf earns £25k + £3k bonus

I have a credit card with £2k on it and my bf has an overdraft of £1k.

We have £10k for the deposit and fees.

My bf has an excellent credit file (squeeky clean). I have 5 late payments on my credit card - all 1's on credit report (3 over 3 years ago and the most recent just over a year ago). All of these were late payments, as I did not set up a direct debit and was 2-3 days late (or erroneously paid x2 in a month). All of my other credit agreements have been paid in full and on time.

Will this affect our chances of getting this mortgage? We can easily afford the repayments. Are Lloyds very strict with their lending criteria?

I'm also looking to get a new job soon, as I believe I can up my income by about £10k. However I am putting it off until we manage to get in our 1st home - as I don't want this to go against me.

Any help, greatfully appreciated - it's all I'm thinking of right now! (What you get when you're not at work and have too much time on your hands ).

Thank you

Sophie x

Southend1

Between you you have an excellent income, why not just save up a 20% deposit? I imagine the rates will suck if you only have 5% to put down. And anything involving the council is bound to become a bureaucratic nightmare.

x.sophie.x

Hi Southend,

The rate we have been quoted is 4.29% for 3 years fixed, which I think is quite competitive. This is based on a 75% ltv, as the council put 20% in as a guarantor. We still own (or have mortgage for 95%) of the house, but have access to the better rates with a lower deposit. After 5 years, the council gets their money back, plus 3% interest from the bank and we either go to svr or remortgage with another lender.

I agree that historically councils are full of bureaucracy, but from what I can see the scheme is very popular, and has helped many people purchase their first home, within a short timeframe. I believe the council put in £10m in sep, and over half of these reserves have been allocated to other ftb within 4 months.

I'd love to save 20% deposit, but with paying rent it takes a very long time - it has taken us 1-2 years to get 10k. At least with buying my home, the rent money is being used to pay off capital on my house. I'm not looking at this in terms of making an investment, but somewhere where I can start a family in the next 2-3 years. I also plan to make overpayments on our mortgage, so we have more equity when we decide to purchase our second home.

I guess I'm most concerned that my stupid mistake in not setting up a direct debit to pay my credit card will result in Lloyds declining our mortgage application when we apply in full.

Does anyone have any experience with situations like mine?

Sophie x

Southend1

Sounds like a good deal then! And you have obviously researched it well. I know what you mean about it being hard to save a deposit - I live alone and managed to save mine while renting and it was damn hard work, especially when you see friends of the same age blowing their salary on holidays, iPads etc. It is worth it in the end though, I bought my place in Nov 2011 for £160k with a mortgage of £112k and I'm so happy! All my friends who still live with parents or in house shares in their 30s are pretty jealous! Lol.

Anyway I can't really offer any advice on your actual question, but I'm sure someone will be along to answer soon. I would recommend looking at your household budget though, maybe pop over to the debt free wannabe board and post a statement of affairs for some advice on where you might be able to make savings and increase your deposit a bit quicker.

Best of luck!

x.sophie.x

Thank you for the advice Southend. Really appreciate it.

My boyfriend and I have been through our budgets quite a bit recently, and we have been paying off other loans as well as saving for our deposit, which is why it's taken longer than we would have liked to gain £10k. Christmas has completely blown our savings routine tho!

As I mentioned we have £3k debts total now, which is better than we were a couple of years ago

Sophie x

Southend1

Well done with the debts!

x.sophie.x

I'm shamelessly bumping my thread.

Would appreciate some advice from anyone (but especially the mortgage advisors) on here... Pretty please

beecher2

Just make sure you have a plan to save up the £30k over the first 5 years, and don't depend on the supposed £10k wage rise. Otherwise you're likely to be in negative equity and stuck with whatever Llodys SVR is at that time. Also think about whether you're planning on having children as this will impact on your plans. I personally don't understand the rush - you'd be far better saving up a deposit of your own while searching for a better paid job which may be in a different area.

Olza23

A quick question.. how come the council are putting down 20%?

Is it a council property you are buying?

kingstreet

Ignore. Found it;-

http://www.lloydstsb.com/mortgages/llah.asp

Have you been approved by the local authority in question?

Will the postcode of the property you wish to buy meet the council requirements?

http://www.lloydstsb.com/mortgages/llah_las.asp

Simon_gloster

The lender provides 95% of the mortgage and the local council guarantee the 20%. 5% minimum of the purchase price must be put down by the OP.

It doesn't have to be a council property, it can be privately built (not new builds).

KS, thats correct in Lend a Hand, however Local Lend a Hand is slighlty different as above.