mortgage questions for dummies!

rainbowdust33

Sorry if questions sound silly, I’m very new to all this. Have been reading the forums but couldn't find answers for my specific questions.

I’m currently saving to get a deposit to hopefully buy a house early next year, with the 5% help to buy mortgage.

I have a few questions…

1. When is the best time to go speak to a mortgage adviser? Should I wait until nearer the time I've saved the full deposit, or go sooner to check I’m doing everything correctly? I do currently have a default on my account, but this is due to drop off in November this year (before I apply for mortgage).

2. I’m currently paying off a credit card, but also have a £300 overdraft I dip into occasionally, just before payday. Should I pay the overdraft off as a priority so I won’t have gone into it for 6 months before applying for mortgage?

3. Do I need to pay off the full amount of credit card before applying for mortgage? Or is it possible to have a remaining balance (but I’ll get it as low as I can) and they will use part of the balance in affordability calculation, which may lower what I can borrow? Also due to this, would I need to get help from a broker rather than a mortgage adviser??

Thanks

amnblog

1. Nearer the time - when you can take action.

2. Cleared balances are better but neither are a deal breaker.

3. Use a whole of market broker - do not go direct to lender or to your local estate agent.

rainbowdust33

Thank you for the reply! Can I just ask again, is it best for me to pay credit card off before applying (will take me about 6 months longer) or can I apply with money on credit card?

Thanks.

Malmo

rainbowdust33 wrote: »

Thank you for the reply! Can I just ask again, is it best for me to pay credit card off before applying (will take me about 6 months longer) or can I apply with money on credit card?

Thanks.

See @amnblog's reply above to question 2. If there will be a card balance remaining after completion (when you get the keys), then that will be considered as an outgoing commitment in affordability calculations, thus affecting your borrowing power. If you are able to clear the balance on or before completion, then that won't affect affordability and will help your borrowing power. Whichever case applies to you, it would be declared in the mortgage application. So if you can clear the card balance before completion, then that's preferable but not essential.

PixelPound

Malmo wrote: »

See @amnblog's reply above to question 2. If there will be a card balance remaining after completion (when you get the keys), then that will be considered as an outgoing commitment in affordability calculations, thus affecting your borrowing power. If you are able to clear the balance on or before completion, then that won't affect affordability and will help your borrowing power. Whichever case applies to you, it would be declared in the mortgage application. So if you can clear the card balance before completion, then that's preferable but not essential.

to clarify, you an apply with balances showing but need to decide whether you will pay them off before you complete the purchase