New Mortgage - Please read this and Help

prisat

I earn 40000 per annum. This is my gross. My take home after all deductions (NI / Tax) and taxes would be around 2550. I am not putting in any money for Pension. Iam planning to buy a house in London. I have no interests on Flats.

My budget is maximum 220000. I am looking in and around East London for a 3 BHK House. Hopefully I will find one.

Here is my scenario - :mad:

I have been living in the UK for the past 2 and half years. I am not a British Citizen and I will apply for my PR(ILR) in 2015.
I do not own a credit card (infact never had a CC).
No loans till date.
Working on Permanent Employment.
Can manage 40000 to 50k as Initial Deposit (Saving hard for this, Hope everything will be fine).
Iam 31. Married and my wife is a home maker. No kids so far.
Till last year i was living on a shared accomodation. From this january (Jan 2013) i have been renting a 1 BHK Flat with 800 as rent alone + coucil / gas / electric / water extra


Recently i discussed with Barclays Bank (Here is where my salary is credited).:eek:
First question she asked as "Have you found a property". I said NO and continued "if i know how much maximum i qualify for, then i can look out for something in that budget".
Then she started explaining things.
I was not satisfied with the way she explained things. She was so cautious that she did not even give me the paper where she wrote few calculation and some figures for estimation and retained it saying for security / data protection reasons (not sure if somebody can scam this bank or another bank with a scribbled thing on a plain A4 sheet paper). She asked if she can take a credit check for me. I said Ok. And she did it. I was expecting a report. But after getting few details (like previous address / name / DoB) on a computer screen, she just said iam qualified for a mortgage and i may be given 170000 as loan for an estimated 210000 property.
Infact she did this by showing the screen to me and the end result was nothing. It just said something like passport missing or iam not a citizen for which she said it is fine.


She said, she will need the following if iam going for a mortgage -

1. A letter from my employer.
2. Proof of Deposit
3. Proof of rent payment for the last 12 months (For this i said i lived in a shared accomodation until last year, but she replied back that even a letter from my landlord would do and this proof may be required by somebody - actualy forgot whom she refered. But she said they will need it).
4. Salary Slips (since my salary is credited there, so she said there will be no problem with that).

She also said something in these lines - for the next 3 months, how many ever times you do a credit check with Barclays, it will just be considered as one check. And if you approach some other bank, you can ask them to call me back for any details so that i can tell them that a check was performed and it was ok).

Iam planning to visit another Barclays Branch soon and take some input though.

So
Respected Boarders,
Respected Senior Members,
Respected Mortgage Subject Matter Experts,


My friend said to me that I should buy a credit card (or loan) and keep paying payments correctly on date so that my credit score will improve. I am not that comfortable doing that. But if needed, i will do it. Please advise on this factor.

Also answer this important one please -

Can you all please advise me how should i proceed and what is the actual process for mortgaging - step by step please - and what all should i consider before / while mortaging so that things are smooth and i dont get into any trouble or loss (loss = agent or others charging me more or unnecessarily cheating and charging me) ?

Please take some time and reply guys.


Thank you all so much for your time...:cool:

KTF

First of all I would recommend that you go to a whole of market broker rather than your bank.

The bank will only offer their products which may not be the best on the market for your needs.

As far as the credit rating goes, there are ways you can find this out online for little cost or free. Applying for a credit card may/may not make any difference to this.

The ID checks - employment history, passport, etc. - are normal as they need to know who you are and that you have the means to meet the monthly payment.

As a high level step by step, you get an agreement in principle from the lender (direct or via a broker) saying that they will lend you up to X based on your circumstances. This will be valid for 6 months or so.

You then find a property and go back to the lender with the property details and they start the ball rolling to formalise the mortgage against that property.

Simon_gloster

The not being British here is the main factor.

shaundiamonds

Take the above users advice and go to a broker, one that you pay for and has the latest mortgage sourcing software - you are narrowing your options from the beginning by going to a bank. Barclays aren't exactly known for their mortgage acumen, they were fined for rigging the libor rate that mortgages and savings rates are based on!

Annisele

I wouldn't take a loan with the intention of improving my credit score.

If a lender sees that you've recently taken out a loan, there are several things that might happen.

First, the lender thinks you've borrowed your deposit - which they don't tend to like. Second, the lender might reduce the amount they're prepared to lend to you - to take into account the fact some of your income each month has to go to the loan, so isn't available for the mortgage. Third, some lenders might think it's just plain weird you've taken a loan when you *appear* not to need one - which might make them suspicious of your overall circumstances. Fourth - there definitely will be a fourth, but I can't think of one right now.

If you have no existing credit at all, I doubt a credit card would do much harm. But pay it off in full every month, both to show you can and so you don't accumulate a debt that would reduce affordability on the mortgage.

But I agree with the others - given your situation, you're likely better off with a whole of market broker.

kingstreet

Presumably, you have a tier one visa and would need to satisfy a lender's criteria - such as two and a half years or more remaining and/or a three year history of living and working in the UK.

ValHaller

prisat wrote: »

My friend said to me that I should buy a credit card (or loan) and keep paying payments correctly on date so that my credit score will improve. I am not that comfortable doing that. But if needed, i will do it. Please advise on this factor.

While the 'advice' may be valid for improving your so-called 'credit score' which you pay for, remember that each lender scores your credit record for itself according to its own rules. The credit referencing agency so-called 'credit score' is probably biassed towards consumer credit and some of the things you might do to improve the 'credit score' might actually damage your prospects for a mortgage.

If you take out a loan, (for which you have no need) you will find your affordability reduced and the available mortgage may reduce by more than the loan you take out!

prisat

thanks for all your replies. Any other inputs please ?

amnblog

Stop asking your friends for advice and ask someone who is qualified to provide it.

If you do not have permanent right to reside you need a broker to assist you.

that it.

prisat

amnblog wrote: »

Stop asking your friends for advice........
that it.

Information is wealth and before i move on, just want to make sure iam uptodate and have all information that is required.

thanks for your reply