Pipe dream or possibility?

wa1985

Hi there, so I know that there is no guarantee until I hear back, but I was wondering if you think my chances of being accepted for this mortgage are likely based on my situation. My paperwork has been sent to my broker, but I've just been told about these new rules and I'm worried I'm not going to be a good candidate now. Any opinions greatly received!

So I have found a very reasonably priced new build property for £105,950, which will be ready in around June next year, and on my salary of £26k have been approved for help to buy. I am currently on a secondment at work on £31k, but this will end in April.

For the last few months, I've used my higher wages to pay back two credit cards, one which had £1700 on it (the cost of my postgraduate degree course I've just finished) and the other had around £1000 on it (holiday and general spending). I've been paying back roughly £550 per month on those cards, and I finished paying them both back last month. I also have an £800 overdraft which I usually max out most months (it's there through habit mainly - bad I know) and an £8000 car loan which I pay back at £159 per month.

Finally, I have just finished paying back my interest free payments for my laptop, and I no longer pay digs to my parents, so I am now aiming to save a minimum of £950 per month - in fact my first £950 was transferred to my savings account last week.

My original intention was to pay back the overdraft next month, then save up for the next few months until I have a deposit sorted, but when this house came up it seemed like a really good opportunity. I spoke to the broker on the phone, and after she asked me a few questions and spoke to some lenders, I got an agreement in principle.

My worry now though, is that they want to see my last 3 months bank statements and they will be able to see that I've only recently finished paying off my credit cards. I also went to London with my boyfriend last month (his birthday present to me bit it still cost me over £300) and was a bridesmaid the month before, so my statements show a lot of spending that will probably look a bit unnecessary (hair, nails, meals out etc).

In addition, I only have the £950 saved up so far because I was advised I had until June to save my deposit up (which is true), but the mortgage application has to go in now and I'm worried that the lack of deposit and time to 'prepare' for them looking at my statements might affect my chances. I didn't realise there were all these new rules until I spoke to a colleague today either.

Anyway, like I say all of this is on it's way to my broker now, but I was wondering if anyone could tell me if I look like I have any chance at all of being approved. I can really afford it (I'm saving £950 a month comfortably, as well as paying £485 on bills and keeping £460 for general spending/petrol/good etc; if approved the mortgage payment will be around £371), but will my spending habits ruin it for me?

wa1985

I should also point out that the value of mortgage I'm looking for will be £79k plus a 5% deposit.

amnblog

This is really a question your broker is best placed to answer.


You will discover, like all applicants, that it is a nervous time until completion.


A few opinions on here based on a smattering of facts cannot be relied on.

Thrugelmir

wa1985 wrote: »

My worry now though, is that they want to see my last 3 months bank statements and they will be able to see that I've only recently finished paying off my credit cards. I also went to London with my boyfriend last month (his birthday present to me bit it still cost me over £300) and was a bridesmaid the month before, so my statements show a lot of spending that will probably look a bit unnecessary (hair, nails, meals out etc).

As a general observation you need to decide what your priorities are. Take off the RTG's of owning your own property. You'll be taking on a 25 year loan along with all the expense that goes with home ownership. So it's a good idea to be in the best place possible financially at the ouitset. As the roller coaster lof ife has a habit of throwing curved balls every so often.

Pete9501

Just got our mortgage offer and it is only valid until Apr 2015, that should be a problem if we exchange next week. However, if you apply now you might run out of time. However, at least you know you are good for the money and if your finances keep improving it can only go better for you.

6 months of beans on toast and cheap nights in for this young lady I feel.

wa1985

Thanks very much for the responses.

Yes you are definitely right that I will need to sort out my priorities, and this is something I have been actively doing over the last few months. My sister's wedding was the last big thing I was committed to, and since I've turned down almost every event or trip coming up in the next 6 months.

Like I said previously, by the 15th November I will have paid off my overdraft and will also have around £1000 in my savings account. My plan is to continue to save the £950 per month, and add it to my bonus payment when I receive that (I've not had a figure but have been told verbally it will be between 14% and 16% of my salary- nothing written though unforunately), so I should be in a great position by the time the moving in date arrives.

And yes - the broker did say that any mortgage offer will have expired by then and will need to be refreshed, but the developer is insisting that I must progress with this immediately. If I could wait until January, then I wouldn't have these worries actually, which is annoying!

kingstreet

I suspect the builder's broker will want to stick this with Halifax, whose HTB product has a drawdown deadline of 30/6/15.

The product fee-free option is 3.94% fixed until 31.12.16 with £610 valuation and account fees.

Meanwhile, if you wait until the completion is within six months, you can use Nationwide, for example, with a 2.29% two year fix with £699 fees, or 2.84% with a fee of just £200.

I'm glad our builders allow us to do our job and not disadvantage the client by making them exchange contracts more than six months before completion.

An HTB Authority To Proceed only lasts nine months, with three months to exchange and a further six months to completion. Any delay and that would have to be re-done.

wa1985

It's through Leeds Building Society actually, so I don't know what that means for the timescales? She did say it would need to be refreshed but there wouldn't be any fees for doing so. Although is there a chance of rejection at that stage too?

I have been told I need to pay £2000 of the deposit as soon as the missives have been signed and I'm scared I'd lose that if the offer was rejected the second time. I've already raised these questions with my broker, but she just tells me not to worry and it'll all be ok. I have to use her (builders requirements) but being honest, I don't have a lot of faith in her - for my AIP she asked me for figures which I told her I'd find, but she told me rough estimates were fine.

Anyway, is there anything I can do to stall the mortgage application until it's within the 6 months? Could my solicitor maybe arrange something?

kingstreet

If your builder wants you to proceed now when the property won't be ready until June, you go with it, or find something else. TBH I've never used Leeds for an HTB - EL case, so I don't know their policy when the offer expires.