FTB - MMR impact at 95% LTV?

hanfrangipane

Hi,

I'm currently living at home with parents and saving for a deposit on my first home - obviously the new MMR rules are now in force and I'm just wondering what people's views on my situation are in terms of likelihood of acceptance and also whether there is much difference between 5% and 10% deposit.

So, my situation is as follows:
Income
£42,500 per annum
Annual Bonus 10% (contractual, although I'd rather not include this just to give myself a bit of leeway and a nice bit of spare cash each March!)

Commitments
Gym membership £50
Spotify subscription £10
Phone Bill £35-40ish

I pay my car insurance in full each year so no DD. I used to pay £300 a month towards my car but my Dad has very kindly offered to pay this for me to help me out (The finance isn't in my name, I was just contributing previously)

Obviously with living at home and Dad paying all his usual bills etc I don't have many DDs or commitments of my own at the moment. In my previous flat of 2 years I paid all the bills and rent and I'm factoring these costs into my own affordability calculations re. the amount of debt I'm willing to take on myself and maintain an enjoyable lifestyle.

Available Credit (Used/available)

MBNA Credit Card £0/5,000
Lloyds Credit Card £0/2,750
Halifax Credit Card £0/£100
Lloyds Overdraft £0/2,000

I have made regular payments on all of these over the last 5 or so years with the exception of the Halifax card where there are 2 late payments, one in 2012 and one in 2013. Irritatingly it was due to me paying off in full, then a small interest charge going on the next month in arrears and me not realising, was only about £1!
I don't use any of the credit at all any more having settled the last account 2 months ago.

Deposit
I am currently saving £1,500 a month. Hoping to be at 5% by August time, 10% would be around January plus wanting a little set aside for moving costs etc and some spare to furnish

Online calculators seem to be putting my affordability at around the £200k mark which seems absolutely ridiculous to me. I don't want my monthly repayments to be much over £750, less if possible, so I'm looking around the £115-130k house value range which will be an ample sized property for my needs as a sole occupier in the North!

Suppose my dilemma is whether to start looking when I have 5% together or whether to wait to have 10% and risk price and rate increases in next 6-9 months or so. Would I be likely to get accepted at 95% LTV based on the above?

I'd say my credit file is pretty much spotless other than the 2 late payments mentioned above, which I realise may well be a dealbreaker at the 95% mark.

Thanks in advance!

Han

Thrugelmir

hanfrangipane wrote: »

Suppose my dilemma is whether to start looking when I have 5% together or whether to wait to have 10% and risk price and rate increases in next 6-9 months or so. Would I be likely to get accepted at 95% LTV based on the above?

No one can forecast the impact of interest rate rises which are on the horizon. Base you affordability calculations on an interest rate of 6% or 7%. As that's the level they are likely to settle at over the course of the next few years after purchase.

Personally I would build a larger deposit. Not only will a lower LTV reduce your outgoings, but you are bound to wish to spend money on the property.

hanfrangipane

Thrugelmir wrote: »

No one can forecast the impact of interest rate rises which are on the horizon. Base you affordability calculations on an interest rate of 6% or 7%. As that's the level they are likely to settle at over the course of the next few years after purchase.

Personally I would build a larger deposit. Not only will a lower LTV reduce your outgoings, but you are bound to wish to spend money on the property.

Thanks - I had originally planned to save 10-15% before thinking about buying but a few people advised me to just get on the ladder sooner rather than later.

I suppose there's no 'right' way, I'm finding this a lot less fun than I thought it would be, doing it all on your own is pretty stressful when it comes to decision making!

amnblog

Brokers exist to assist you in making decisions.

egoode

hanfrangipane wrote: »

Thanks - I had originally planned to save 10-15% before thinking about buying but a few people advised me to just get on the ladder sooner rather than later.

I suppose there's no 'right' way, I'm finding this a lot less fun than I thought it would be, doing it all on your own is pretty stressful when it comes to decision making!

But the best part of doing it on your own is you can chose what you want and not have to think if your OH is also happy!

The hardest part of doing it on your own is there are so many decisions to make and things to look at you don't have anyone else there to share the load but once you move in it will all be worth it!

hanfrangipane

egoode wrote: »

But the best part of doing it on your own is you can chose what you want and not have to think if your OH is also happy!

The hardest part of doing it on your own is there are so many decisions to make and things to look at you don't have anyone else there to share the load but once you move in it will all be worth it!

Yeah - I'm a natural worrier so I think having someone to help with the load would be advantageous in this scenario!!

I get too hung up on 'what ifs' which, although beneficial to some extent, can be paralysing and you end up doing nothing.

Things could change for me over the next few years (Been with boyfriend almost a year - potential for moving in, that sort of thing) so it's easy to get caught up in all the 'well what if this that or the other happens' trap. I know I've seen a lot of people commenting on other threads saying to not buy if you're not sure, but I can't stay at Dad's forever and owning a house wouldn't stop anything that's on the horizon from happening either.

It would just be good to know whether my circumstance is likely to be ok mortgage wise so that I at least know whether buying in the relatively short term is a decision I'm able to make if I decide it's the right one!

mrginge

Your dad appears to have been very kind to allow you to live in his house for minimal cost.
My question therefore is why, when you earn almost 20k more than the average national salary, do you feel the need to take an additional 300 quid from his pocket to pay for your car?
Why not sell it and buy a smaller one? Then you could pay your own way, be less of a burden to your dad and enjoy a new level of self respect.

hanfrangipane

mrginge wrote: »

Your dad appears to have been very kind to allow you to live in his house for minimal cost.
My question therefore is why, when you earn almost 20k more than the average national salary, do you feel the need to take an additional 300 quid from his pocket to pay for your car?
Why not sell it and buy a smaller one? Then you could pay your own way, be less of a burden to your dad and enjoy a new level of self respect.

Wow - how judgemental and rude! I wasn't here to ask for a critique of how my family choose to support one another.

As it happens, I'm a chartered accountant and prepare all the accounts for my dads company, and have done for the last few years, free of charge. He wanted to make a contribution to recognise this fact and it was his suggestion that he took over the car payments. He specifically didn't want me to sell the car.

As far as being a burden - my dad has always maintained that whilst he couldn't contribute to mine and my sisters education during the uni years, he always wanted to make sure he helped us onto the property ladder. I was moving cities and he suggested I moved home for a few years to save. I'm saving as much as I can per month so that I can 'be less of a burden' sooner rather than later, hence my original post re. 5% deposit.

My dad likes me being home - he otherwise lives alone and we enjoy each other's company. I do all the shopping, cooking and cleaning out of gratitude and am more than happy with the level of self respect I have for myself.