Preparation prior to first mortgage application?

FOXGLOVE_2

So I'm looking for any advice that I can do in preparation to apply for a mortgage, which will probably be in just over a years time.

My present circumstances are as follows:

Renting with my partner, both in FT work. Our combined income is £34k. I am hoping to be promoted which will see our combined income rise to £45k. Our overheads at the moment are relatively low, rent stands at £300 per month so I have been saving and if this new job goes ahead, I plan to save a considerable amount of money each month, maybe £400-500. Been in current job for 2 years, partner worked with her employer 10+ years.

And now to the not so positive stuff... lol

I had debt a number of years ago which resulted in 2 defaulted accounts... Was working part time and unable to keep up with commitments etc, horrible situation that I did my best to keep up with but... have learned from it now and very frugal and sensible when it comes to money. Easier to manage money when you have some!
So the defaults are due to drop off September 2016. I have been saving up and I have £5000 in an ISA which I plan to add to over the next year or so. Partner has approx £30k savings which we have discussed to be used as a deposit on property, so in a years time, hope to have combined savings of £40k towards buying a place.

All that I've mentioned above is stuff I know will help mortgage application, ie waiting for credit file to be clear, having a decent deposit, I have one credit card that I keep at a low balance, not sure if I should pay off balance and close, though?

At the moment my payslip is emailed to me and a colleague mentioned that she opts for paper ones as the email ones arent accepted when applying for mortgage? So should I switch to this method now?

What else can I do over the next year to help make an application successful?

Thanks in advance for any suggestions

Liverlad67

I would continue as you are. Keep the credit card but pay in full every month. Try to keep withdrawals from your bank to a minimum ie. Try to take lump sum out and live on that rather than multiple small withdrawals. Just keep saving as much as you can. Try to have as little as possible coming out of current account. Try to get paper payslips and any bank, cc statements. Make sure on electoral role. And check all credit reference agencies. Best advice save save save and good luck.

FOXGLOVE_2

Liverlad67 wrote: »

I would continue as you are. Keep the credit card but pay in full every month. Try to keep withdrawals from your bank to a minimum ie. Try to take lump sum out and live on that rather than multiple small withdrawals. Just keep saving as much as you can. Try to have as little as possible coming out of current account. Try to get paper payslips and any bank, cc statements. Make sure on electoral role. And check all credit reference agencies. Best advice save save save and good luck.

I tend to use debit card for payments. Also, bills and direct debits for household stuff comes out of partners account, i just transfer over my half when I get paid. As she will be on the application, does it matter where the bills are paid from?

Rollinghills

They will look at your statements and it is easy for them to query anything. This has happened to some people I know. It's probably better to use your credit card and pay it off each month. Now that we are in the middle of an application we are pre-paying our credit card just to be sure. It keeps the bank statements tidy. I only use my debit card when I have it, I might be wrong but you have better anti-fraud protection with a credit card and card fraud does still happen.

The other advantage is that we have a Tesco cc and it gives us lots of points, especially useful when they do the promotions where thing are effectively half price when you use clubcard points. Having said that don't apply for any new cards now, maybe check the cards you have for any incentives.

FOXGLOVE_2

Another thing, my current account is with HSBC and is a 'Green' account in that it is online statements only, I think I can swap to paper ones, should I always do that, I'm thinking that the ones I print won't have address etc on them?

Rollinghills

HSBC's online statements are very good, the pdf version is identical to the original except for the back obviously. They will also send you paper statements for free I believe (double check), they did for us and we are paperless (is that the same as green?).

FOXGLOVE_2

Rollinghills wrote: »

HSBC's online statements are very good, the pdf version is identical to the original except for the back obviously. They will also send you paper statements for free I believe (double check), they did for us and we are paperless (is that the same as green?).

Oh good, I've never had cause to print them off but AFAIK the duplicate ones can be issued within a set timeframe for no fee (was the case when I used to work for them lol)

Rollinghills

HSBC are such a good bank in my experience, I can only say good things about it. Shame they didn't have the mortgage we wanted.

FOXGLOVE_2

Oh another thing I wanted to ask is, does it make any difference if me and partner have a joint account? We don't at the moment after being together 8 years and I'm a bit nervous of making any applications for anything as I'm always aware of the 2010 default and don't wanna make it any worse with applications etc.

Partner doesn't really use credit, I'm the one with the card, she has an O2 pay monthly phone and also Virgin Media account in her name. Anything else either of us can do to make ourselves seem a safe bet?

FOXGLOVE_2

Hmm so things just got interesting. Found out in the past couple of days that my partner has just finished paying off a loan she got with Bank of Scotland a year ago. I knew nothing about this and there's been a few arguments and lectures back and forth. She increased her overdraft a bit, then a bit more and a bit more and ended up wanting rid of it so applied for a loan of £1000 to pay it off and use at Christmas.

As far as I know, she wasn't going above the overdraft or anything and her loan direct debits all paid on time etc.

She is an idiot for taking a loan at a crap interest rate when she has so much saved up, but mistakenly thought she coouldnt dip into the savings.

My question is, now where does that leave us re: mortgage?

Will it look bad on an application that she's borrowed recently? Or does the good payment and credit history help?

lazysundays

I'm pretty sure it should be ok as long as it's not a payday loan.

On a side note, this is none of my business but...

FOXGLOVE wrote: »

I knew nothing about this and there's been a few arguments and lectures back and forth

FOXGLOVE wrote: »

She is an idiot

She has a squeaky clean credit file & is contributing £30k to the deposit. Maybe cut her some slack.