Advice on saving for house

MrWillyWonka

I am usually on the DFW boards but now we have paid off all debts we are now saving up for a deposit for a house. Ideally we want a 3 bedroom house and average price is around £200,000 in this part of the country.

A bit of background. We had a HP which we overpaid and paid off recently as well as 2 credit cards and a loan. We now owe nothing. We have never missed a payment and everything has always been on time. No defaults DMP or anything like that. Myself and my wife both have excellent scores on Noddle (not that it means anything but just as an indication).

Our credit cards have been open for about 5 years (£5000 limit each) and we will now use them and pay them off in full every month (fuel, groceries etc).

Our income is just shy of £3500 after tax and our fixed outgoings at the moment is £925 with fuel, groceries, entertainment and other budgets totalling £700. We can save a minimum of £1500 a month but with effort could probably make that to £2000 some months.

Has anyone got any advice to give us to help improve the chances of a mortgage and get better rates? My parents have offered for us to stay at their house to help save for just the cost of groceries so we could probably save about £2500-£3000 a month which would be huge boost. However are there any impacts I should be aware of?

Thanks to all in advance if you have read this far!

getmore4less

Keep costs down and just save.

Bigger deposit the better the deal

£3500 net is £52k-£60k gross

10%(£20k) + costs should be in your hand in under 12months

£180k mortgage 3-4X multiple, affordability looks ok on 90% LTV 4.5% 25 years £1kpm
(£1500pm cover rate up to 8.9%)

A broker should be able to get something better than this and if you manage to save a bit more you might get into the 85%LTV deals

If you can keep costs down once purchased you can overpay so in 2 years you at a better LTV a deal that allows £500pm so you pay £1500(your bottom savings amount) 2 years time you owe under £160k 80%LTV deals available for the next one.

MrWillyWonka

Thanks getmore4less, that was a useful insight. I do need to do a lot more reading on mortgages but get what you are saying. We are aiming for a year.

Any advice on our credit cards? We have £10,000 available to us - is this a bad thing? I believe it is good to use them and pay statement balance in full, am I correct? I don't want having £10,000 available credit to be adverse in any way.

dimbo61

You are now doing the right things with the credit cards.
Use them BUT repay in full every month.
Consider a cash back card IF you can be sure you will Always repay the outstanding balance every single month.
Try and insure that the balance is very low when you apply on the day !
Moving back in with the parents might save you £1000 a month but do you and your OH really want this ?
Well done on clearing your debts and use MSE when spending any money, Car, Life, holiday insurance, gas+electric companies, phone+broadband, mobile deals.
Most lenders now ask SO many questions right down to hair cuts, holidays, mobile bills.
Do you really need an iPhone 6 or will a £11 a month Moto G on Tesco do the same job.

getmore4less

Just keep them ticking over use, paid off in full. £10k head room is not that much.

a year to research, LTV, rates, fixed, trackers, offset, fees, follow on, term.

have a play with calculators and try to understand how to compare deals with different rates and fees, how debt is paid off over time.

follow the threads on here you will get answers to questions you have not even though about yet.

There are some very good tracker rates about that long term could be the winners.