Timing of mortgage application - FTB

Shahni

I'm hoping to be in a position shortly to be buying a property with my partner. We will be first time buyers.

We will have a £20,000 (approx) deposit which is coming from an inheritance.

I am employed full-time earning £24,000, though I will be receiving a pay rise in June to around £30,000. My partner is a full-time PhD student who receives a grant quarterly which is the equivalent of around £14,000 per year. He is in the first year of a three year course. He also earns a small amount in addition to this through tutoring and server admin work.

I have obtained a copy of my credit report from all three agencies. It shows a missed credit card payment in June 2011 which was fixed immediately. I also have a personal loan (no defaults) for which the redemption figure is around £2,900. I have recently obtained judgement in my favour in a court case for around £3,000 and I'm planning to use this to clear my loan in full.

My credit report also shows I went over my overdraft limit in October and November 2010 (overdraft has now been paid off in full and cancelled as of December 2012). It also showed up an old current account with HSBC which was a joint account with a previous partner. The account is now unused and the balance is zero, but they have my old address. I presume this is something I will need to fix by removing my name from the account and asking the credit agencies to sever the connection to my ex-partner.

Of concern to me is the fact that due to some unavoidable personal circumstances at the time I have several payday loans on my credit file in 2011 - 2012, all of which were settled in time. The most recent was August 2012.

My partner has a clear credit history (credit card, mobile phone etc, no defaults).

I currently have several bank accounts with RBS (bills, savings etc) and my partner has two bank accounts with Lloyds. We are planning on switching our bank accounts, probably to Santander, partially because there are no branches of our existing banks nearby which are open outside our working hours so it causes a real pain for us if we need to do anything in branch.

We're planning on using a broker due to my partner being a PhD student. However I'd appreciate some advice on the timing of the application. Given that I'll be getting a payrise in June, am I correct in thinking we should wait for at least 3 months after that to show 3 months payslips at my increased salary?

Aside from closing the old joint account, removing my ex-partner's name and paying off my loan, is there anything I should be doing in the meantime? Is there anything else from my summary which is likely to be a problem?

Also, regarding switching bank accounts, is it advisable to do this at the moment or would that be an issue for a later mortgage application?

EDIT: Reading over I should also add that our deposit isn't entirely from an inheritance, we have some savings also.

Also I forgot to mention my credit report also shows cash withdrawals on my credit card a few times in 2011-2012 (same time as the payday loans), the last of which in June 2012.

Shahni

Any thoughts on this?

(Sorry for the novel up there ^ )

Shahni

Bump for responses

betmunch

Aside from the payday loans, all looks in good shape.

Make sure your broker knows about them so he can avoid lenders that take issue with it.

with regards to the pay rise, you shouldnt need 3 wages slips with the higher salary, in fact some lenders will allow you to use the higher income up to 3 months before it starts. Again inform your broker and they will include it in their research

Shahni

Great, thanks for the reply. Better news than I expected :j

Shahni

An update for anyone who may be in a similar position re: income from a stipend.

I approached a firm of independent financial advisors locally, spoke to their head mortgage advisor over the phone. I explained our situation and she said she had never heard of a lender accepting a PhD stipend as income but she would do some research and get back to me.

I know that some of my partner's colleagues have obtained mortgages while on a stipend so I looked for a different broker. Phoned up and spoke to a broker who is a one-man-band, he was a lot more knowledgeable and has a son doing a PhD so he knew what I was talking about with the stipend, plus additional tutoring hours etc. He said we would be limited on options (which I expected) but that he'd look into it, asked me to email over a load of documentation, provided his t+cs etc.

He was able to locate 5 possible lenders to approach for a DIP. I gave him the go-ahead and the following day he was able to obtain a DIP for us from a major lender, which he emailed over.

The next day, incidentally, I had a phone call from the original woman I spoke to confirming that "there are no lenders who will accept a PhD stipend as income" :rotfl: