First Time Buyers Advice

Jessica29

My partner and I both graduated from university last summer, both went into full time jobs in May 2012 (on £20,000 and £13,000 respectively) before taking 4 months off in December to do some travelling. We saved up before going travelling, worked whilst we were out there and came back with more money than when we left. We both returned to our previous jobs in April this year, and both got payrises to £25,500 and £16,000. I've been at my job since 2010, working during my university holidays but always been on a temporary contract. I have as of the beginning of July, been put on a permanant contract at a £27,000.
We've always been keeping an eye on the local property market whilst saving, and whilst I hate using cliches, our dream house came up about two weeks ago. We saw it, both our parents have seen it and we're sure it's exactly what we want. The house is up for £175k, but the estate agent has advised that the seller wants a quick sale and would probably accept around £160-165k. It needs some work doing to it, but even with this it is fairly cheap considering local market prices.
We have about 5-7k saved, and our parents are willing to give/lend us the rest of a 10% deposit. We have a AIP from Natwest based on a 10% deposit, but this is obviously a long way from actually being approved for a mortgage!


I suppose our main questions are:

With a 10% deposit, is it worth going to a mortgage broker instead of sticking with Natwest, who other posters on the forum have said are not lending much? We hadn't even considered going to a broker, and had just done a lot of comparisons on the internet of major high street banks.

In terms of payslips, evidence of income etc. I have my payslips for the last two months plus my new contract to state my higher salary. Will this be ok?

We both have Natwest graduate accounts, with arranged overdrafts from our student days which we have recently reduced to £1000 each to keep them interest free. We both have a credit card each, my partner's with nothing on, and mine with £1300, which is a holiday we booked before we saw the house come on the market :mad:. Are the overdrafts and my credit card bill going to seriously affect our mortgage application?

Thanks for any help, and please ask if I've missed a crucial bit of information!!

hamster2013

1. you need to get it as a gift form your parents - not lent

2. you didnt mention what your pay was - between the intiial £25.5k and £15k? did you get a rise from £15k to £27k or £25.5k to £27k?
if we take into account you were on £25.5k and are now on £27k, then you and your partner have a combined income of £42k.
At 10% deposit of £160k - you are looking to borrow £144k.... i.e 3.4x your combined income.
This should not be much of an issue - so long as you are both on permanent contracts and not in your probation period.

3. the credit card and overdraft will hit your affordability - but should not impact it so much. I mean by that, to borrow £144k -at around 3.5% over a span of 30years... you are looking at a monthly repayment of £647.
Your net income in the household is around £1760+£1084=£2844
so even after paying the monthly mortgage payment, you are left with £2197 for bills and repay the small £1000 overdraft and £1300 cc bill - I would however repay the cc bill if I were you, and leave the overdraft as its interest free.

4. you dont necessarily need to go to a broker, if you have an AIP, and you provided all this information honestly without withholding anything that the lender will find out later - you should not have much surprises.

5. Keep in mind the extra costs you mentioned, about the work that needs to be done and also the solicitor fee's, bank fee's (valuation included) and the stamp duty - all this needs to come from your pocket. (Some banks allow adding their fee's excluding valuation to the mortgage).

best of luck

Jessica29

Thanks Hamster for the advice.

I forgot to mention that the CC is also interest free for 16 months, of which I have about 9 months left.

My pay went from £20k since 2010 to £25.5k in May 2013 to £27k starting from July 2013. I have my original contract plus my two letters of changes in my terms and conditions. Were both permanant and not in our probation period so this should be ok as you said.