Will We get a Mortgage?

SpaceCowboy83

Hi all,

I am looking for somone with experiance to advice if we are likely to get a mortgage. The details as follows;

Un-married couple with a 1 year old.
Me - Credit score 791 nothing on report except upto date credit card with £1,000 on & £450 overdraft with zero balance.
Partner - credit score unknown as she's never had any finance not even a mobile contract.
Me - £25k income
Partner - £7,800 part time
Child Benefit - £1,040
Other Income - £1,200
Total £35,040

1st time buyers with access to 10% deposit.
Looking at a house on the market for £155,000
Would ideally prefer repayment mortgage of no more than £700pcm.
Not concerned if the mortgage is over 25 years at this stage as eventually her wage will go up when our child is older & I will have minimum £15k in shares in 8 years to help reduce the mortgage.

Ultimately I am worried about being refused which will affect the credit scores & set us back going forward.

Any advice would be ppreciated.

Thanks SC83.

monty-doggy

Your credit score isn't great, you need to get copies of all 3. Equifax, call credit and experian and check them all.
You also need to check your partners.

You're pushing it very tight for under £700 a month and if the interest rates rise just 0.5% this will cost you around £40-50 a month extra, can you cope with that?
Also how will you afford legal fees?

Will you be able to afford the upkeep of the property?

Also where is the 'other income' coming from? Some benefits are not taken into account.

There's lots of what ifs, you need to start with the credit files then see an independent broker.

Foxy-Stoat_3

Credit scores mean nothing, speak to a whole of market broker and they will give you the best advice.

On 4 times your current income with 10% on £155K is very tight, assuming the lenders take into account benefits which I do not believe they will, but a broker will say for sure.

Can you lower your purchase price or save a bit more deposit?

ACG

If you dont try you will never know.

The figures seem to stack up, the credit score means nothing.

Without seeing everything its impossible to say but i would be pretty confident you can get a mortgage. If your unsure a broker (away from the estate agents) may be best.

hamster2013

lets assume you get the house for £149,950, under the stamp duty threshold
if you have 10% deposit, that is £15k
expect to pay around £1k to the bank
and around £2k to the solicitor
so you need around £18k lying around

if you do have that.... then over a 30 year mortgage, at 3.5% you are looking at a repayment of around £605/month
that is if the interest rate stays the same ...
considering that BOE states it will hold it still at least until 2016.... i would not bother with a fixed rate of 2 years, maybe 5years fixed will give you peace of mind.

now coming to affordability, in addition to the £18k you have lying around for the purchase, you earn around £25k+£8k... no bank will take your benefits into account, and as for the 'other income', unless you have 3 year tax returns on them, you can forget it too.
so your partner is all tax free, so earning a net of around £664 / month
and you £1650
so to be able to afford the £605 repayment, the bank will ask your bank statements to confirm your lifestyle, how you live and what your outgoings are
if you are living on around £1000-£1200 / month, you should be good (excluding rent)

jacobtheamish

hamster2013 wrote: »

lets assume you get the house for £149,950, under the stamp duty threshold

Stamp duty starts at £125,001 unless it is in a disadvantaged area, you need to check

jacobtheamish

hamster2013 wrote: »

no bank will take your benefits into account, and as for the 'other income', unless you have 3 year tax returns on them, you can forget it too.

A number of lenders will take certain benefits into account, child benefit is one of them dependant on the age of the child. A 1 year old, yes, a 16yr old then probably not.

Again as stated above, speak to a whole of market broker

kingstreet

jacobtheamish wrote: »

Stamp duty starts at £125,001 unless it is in a disadvantaged area, you need to check

Disadvantaged Area Relief ended in April 2013;-

http://www.hmrc.gov.uk/sdlt/reliefs-exemptions/disadvantaged-areas.htm

SpaceCowboy83

Hi All,

Thank you for all the responses. Looking at the comments above, information available, & money available we may get a mortgage but living would be very tight at present.

Would anyone advise using the Help to Buy Scheme Phase 1? With the equity loan.

This would surely make getting a mortgage easier, lower repayments for the first 5 years & be cheaper for the first year at least with the low 1.75% starting fee. In the meantime my partner will return to full time work & I will have access to some shares to help pay off the 20% equity loan.

Any thoughts?

SC83

jacobtheamish

The Help2Buy Shared Equity scheme is great for certain people.

Bare in mind it is an Equity loan and not a loan. If the property value increases, so will the value of the 20% share obviously. Great scheme if prices stay the same or reduce, not so great scheme if prices increase.

But...
All depends on personal circumstances, such as what your intentions are with regards to repaying the equity loan. The interest rates offered on Help2Buy are far better than 95% mortgages

Maxing out your borrowing on 75%, wont leave much option for remortgaging in the future to pay off the 20% without big increases in income.

Speak to a whole of market broker, don't pay a fee!

kingstreet

SpaceCowboy83 wrote: »

Hi All,

Thank you for all the responses. Looking at the comments above, information available, & money available we may get a mortgage but living would be very tight at present.

Would anyone advise using the Help to Buy Scheme Phase 1? With the equity loan.

This would surely make getting a mortgage easier, lower repayments for the first 5 years & be cheaper for the first year at least with the low 1.75% starting fee. In the meantime my partner will return to full time work & I will have access to some shares to help pay off the 20% equity loan.

Any thoughts?

SC83

Are you looking to purchase a newbuild? No equity loan if you aren't.