FTB affordability advice

Zac24

Hi,

We are ftb looking to purchase a house in approx 18 months from now. We would save a 10% deposit and have around 2k for legal fees.

I am however confused on what we can borrow. Ideally we need around 120k to buy a 2-3bed semi in our area, however I am not sure how possible this is. We live in a small villiage where the cheapest house on the market is around 115k.

Income is approx 36k between us.

The catch is that we have one loan of 400pcm. It was originally for a car and also some other debt consolidated into one loan . The loan will have 3 years left to run at the time of application.

I am unsure what we can do about this if anything really. The car is in my name hence not being able to clear with deposit money as that is mainly my partners. We are also renting so can't save as much as we would like too.

Firstly, the loan isn't in my name, it's in my fathers as I couldn't get the finance for it as the car was originally a HP with huge interest hence now a loan with much lower interest. Does this mean I have to declare it? It comes out of my bank acct so surely they will question this anyway?

Also, is there a way to reduce the loan amount. If I pay a chunk off it will the monthly payment reduce? This would be the only way to increase affordability but I don't know how else to reduce the monthly payment?
Is it possible to extend the term of the loan instead or would I have to take out another loan?

I could pay off approx 5k but would this help?

Would a broker be able to help with something like this?

Thanks

Senior_Paper_Monitor

A simplified approach to your questions ....

You can expect to be able to borrow 4 x allowable income (less any financial commitments) from most lenders.

Your regular payments are clearly a financial commitment @ £400 pm (£4,800 pa).

Your allowable income appears to be £36,000 - £4,800 = £32,200.

4 x £32,200 = £ 128,800 possible borrowing


So 'affordability' does not seem to be a problem - I would be more concerned about your statement "I couldn't get the finance for it as the car was originally a HP with huge interest" as to get a 90% LTV mortgage you will both have to have 'squeaky clean credit'.


.... and 'yes' I do think a broker would be of benefit to you.

Zac24

Thanks for the advice!

I originally got the finance on HP under my father as I was too young (18) and had no credit score as no previous commitments.

Last year the loan was taken out to consolidate two cars (mine and partners) over 5 years, i again didn't get accepted for the loan on the basis I had only started my job one month prior and had still no credit history.

I have since gotten a credit card which I pay off in full and have paid this loan every month so hope this will improve my score although I am not sure as I have not applied for anything since.

I would love to get rid of the 400pcm but don't know how to do it!!
I can give the car back in 12 months time as it will equal the loan value and have possibly have the loan gone although I am concerned that due to giving the car back I will have no car and will just have to atart the process again!
I can't afford to buy a car outright and use it for work so a half decent one is essential!