Mortgage advice needed please!

ChrissyCamberwell

Hi

I’m a newbie but looking for some advice, so I really hope you don’t mind the in depth questions.

I am trying to get a 90% mortgage at the moment, thanks to a generous offer from my mum, and finding it very difficult. I am looking for a mortgage of £144k, based on a property value (in London) of £160k. Here are my personal circumstances:

• I am 36 years old and single, earning £36,000 a year
• I have been renting my current flat for 3 years and five months
• I am have been on the electoral roll since I turned 18
• I have a current credit card balance of £7000, which I have just transferred to a 22 month 0% card
• I have£4k outstanding on a personal loan from HSBC
• I have no CCJs or missed payments on my credit report
• I have had my current account with HSBC for 18 years
• The 2 negative factors on my account are currently “a number of recent searches” from when I was looking for a 0% card in August (before I knew I would be applying for a mortgage)
• My current credit rating is 794, which is described as “fair”. My mortgage adviser has looked through the detailed report and says there is nothing of concern except the recent searches
• I have been offered an 85% mortgage through Halifax, but I don’t know what I can do to increase that to 90%.

Can anyone help answer these questions?

1. How can I improve my credit rating and how long will it take?
2. Should I close the empty credit cards I have (credit of £8k currently available) – will this look like I am maxed out on credit?
3. Are 90% mortgages just very difficult to come by now?
4. Should I stop looking for a while and improve my rating, rather than get into a negative spiral of searches/declines?
5. Would you advise looking at Help to Buy? Ideally I would want to avoid it and do this on my own.
6. Is it worth speaking to HSBC to see what they could offer? Are they likely to look more favourably on my application if I have an account with them or does it not matter?
7. Can they give me an idea if I will be accepted before I apply?

Thanks in advance,

CC.

kingstreet

Is the amount you wish to borrow affordable, taking into account the card balance and loan payments?

Assuming £200 per month for the loan, Halifax affordability output is less than what you want to borrow, over 30 years.

Is it the LTV, or affordability?

ChrissyCamberwell

Thanks for the reply! The affordabilty shouldn't be a problem as is exactly what I have been paying in rent for three years (£700pcm). I'm not sure how they make the assumption? I pay £200 on credit card, £151 on loan.

Not sure what you meant by "affordability output"?

GMS

Your rent conduct is of no concern to a lender. They will have their own calculators which will calculate what they feel affordable to you.

There will be an assumed figure for the credit card, typically 3% of balance per month, though some lenders will use 5%. Monthly loan payment will be used.

You have £350 plus per month taken off your income for the loan and card prior to any calculations so this will have an impact on what you could borrow.

May require some or all of the debts to be repaid to get what you want on the mortgage.

ChrissyCamberwell

Thanks for explaining that. But even with those debts and outgoings I still have £1700 disposable to include a mortgage payment. I'm just not sure how I can improve that. Any advice on the credit rating? Pay off the debt?

Dave_Ham

The key question is whether 85% is based upon affordability (based upon the banks model and not your opinion) or if it was limited on credit score.

Clarify this with your broker.

I would fancy a solution at 90% LTV, but your broker needs to nail this in one go and not credit check with a truck load of lenders guessing.

Good luck

Paully232000

Just so you can see what others have been through.
We earn in the region of £55K a year and we had £7K in card balance between us and a HP on a car of about £200/month.

To get the mortgage we have been given £145K at 75% LTV we had to pay off all of our credit card balance before we would be given this, or the amount would be lower.

In addition to this we have no CCJs, on electoral register, no missed payments on our records, current house for 6 years, no issues getting CC/loans in the past.

I know each person is different but just to give you an idea.

Happinesshope

Hello my advice to you is to try and reduce your debts. Which will improve your credit score. Also bear in mind it is not just the score lenders look at they also look and the content of the report. Although lender might agree to lend you £xxxxx, however when your application is goes to the underwriting team. They will dig further into your finances and may reject your application. Reduce your debt and improve your credit report before applying for a mortgage. Good luck.....