Credit score and mortgage

Hutch100uk

AliceBanned wrote: »

You might need to find ways to increase your disposable income by cutting back a bit more - the lenders will also be looking at your spending habits (yes including where you choose to live in relation to your earnings). It is hard that you can pay more in rent than you would be spending on a mortgage, it does seem unfair but from the lenders' point of view it is the risk they would associate with you as the borrower that matters, and they try to minimise this obviously. How much you can pay in rent won't necessarily make them happy to lend - especially if you could cut your costs and save by renting somewhere cheaper? I hope that makes sense.

Yes I'm aware that the fact we pay a lot in rent doesn't necessarily mean anything to a lender. Its a nightmare as neither of us has been bankrupt, had CCJs or defaults. All I can do is try to clear these cards and then hope for the best!

HappyMJ

Hutch100uk wrote: »

I should also say to everyone - this is a joint mortgage. My partner has an excellent credit rating and reasonable salary!

Can your partner apply on their own without taking your income and expenses into account? You can still be named on the mortgage and have really terrible credit but they won't take into account your income.

Hutch100uk

HappyMJ wrote: »

Can your partner apply on their own without taking your income and expenses into account? You can still be named on the mortgage and have really terrible credit but they won't take into account your income.

He doesn't earn enough to get a big enough mortgage unfortunately otherwise that would be our first fallback option!

user1168934

Hutch100uk wrote: »

Well I'm not sure that £2,500 is particularly high debt!!! We pay more in rent than we would in a mortgage so buying can only be an improvement in our finances. We would potentially be able to save a bit more each month if our outgoings are less. We do live a biggish house (which was our choice) but we have proved we can more than afford the repayments.

Sorry I should have made it clearer. I did not say it was high debt, I said its relatively high debt meaning when I compare it with your savings it seems very high. Of course I know nothing about your income and expenses so may be its normal for you to spend and repay this amount every month but this is not the idea I got from your initial post. Based on my experience (which I have to admit is not extensive) with the mortgages if you have you anything more than a couple of hundred pounds of credit card debt (which is what a typical person spends monthly on normal household things and clears at the end of month) the mortgage lender will ask you to clear it. Any mortgage broker will probably tell you to do the same.

Hutch100uk wrote: »

We pay more in rent than we would in a mortgage so buying can only be an improvement in our finances.

I am afraid this is not always true. Its not just the mortgage payments you have to maintain the property too which as a tenant you dont do. There may also be service charges, ground rent etc in case of a leasehold property.

Hutch100uk wrote: »

So did you ever get the mortgage then? And if so, what did you have to change?

Yes I managed to get one last year. Several things changed, I got an even better job, I moved close to where I work so my commuting expenses went literally to £0. In my case it was viable because previously I was living and working in london and the new job was outside london. I saved money whereever I could so for example I stopped buying lunches from the shop .... no holidays for a couple of years .... you know the normal things people do to save money. Also took some risk and made investments in stocks and shares which helped. Last year I managed to get a mortgage with 25% deposit.
Also one thing I did which I think you could use is "manage your expectations". I bought the property I needed and not the one I wanted which means mortgage payments are quite low, I regularly make overpayments and I can still save a decent amount.

Hope this helps.

AliceBanned

Hutch100uk wrote: »

Yes I'm aware that the fact we pay a lot in rent doesn't necessarily mean anything to a lender. Its a nightmare as neither of us has been bankrupt, had CCJs or defaults. All I can do is try to clear these cards and then hope for the best!

I know how you feel as I've been there and only managed to scrape through with a shared ownership mortgage (I am on my own near London so had to do it that way).


It does feel annoying when you do all you can to improve your credit 'score' and still get knocked back, but you will get there in the end if you keep trying. Sometimes you have to really pull out all the stops for a couple of years and sacrifice a lot to get as big a deposit as possible and pay off your debts - especially as lenders at the moment are still fairly averse to lending. My mortgage brokers have even been shocked by the refusals I had. It felt very unfair as like you I had fairly high outgoings just to live and was doing everything I could, paying everything on time, no CCJs etc. The first step is the hardest so maybe really look at your budget and save if you can put aside as much as possible, pay off the debt and save a bigger deposit.


Not sure but maybe the Help to Buy scheme or some other scheme could help you make the first step.

Thrugelmir

Hutch100uk wrote: »

Well I'm not sure that £2,500 is particularly high debt!!! We pay more in rent than we would in a mortgage so buying can only be an improvement in our finances. We would potentially be able to save a bit more each month if our outgoings are less. We do live a biggish house (which was our choice) but we have proved we can more than afford the repayments.

It is if you have no savings. Owning a property comes with expense. So paying a mortgage isn't the same as paying rent. If you would struggle to save any money now. How will you cope when interest rates rise back up again?

Hutch100uk

Thrugelmir wrote: »

It is if you have no savings. Owning a property comes with expense. So paying a mortgage isn't the same as paying rent. If you would struggle to save any money now. How will you cope when interest rates rise back up again?

Sorry but it can't be much worse than what we have paid in agent fees over the last few years! We paid £500 just for the privilege of moving into our current house (agent fees) only to find out the landlord is selling the house. BANG, more fees to move into another house etc.....

When you rent you have no guarantee how long you will get other than your initial lease period. We have been very unlucky in that this is the 2nd house where the owner has decided to sell after our lease!

Not to mention the fact that rents are set to rise following the higher tax on buy to let and second homes!

user1168934

Hutch100uk wrote: »

Sorry but it can't be much worse than what we have paid in agent fees over the last few years! We paid £500 just for the privilege of moving into our current house (agent fees) only to find out the landlord is selling the house. BANG, more fees to move into another house etc.....

When you rent you have no guarantee how long you will get other than your initial lease period. We have been very unlucky in that this is the 2nd house where the owner has decided to sell after our lease!

Not to mention the fact that rents are set to rise following the higher tax on buy to let and second homes!

Thrugelmir is making a very good point. The only thing worse then not owning a property is to own one and not being able to afford it. I am not saying you are wrong. If you are confident that you will be able to meet those expenses then by all mean go for it. By the looks of it you "feel" like it wont be much worse. Have you done your numbers to back it up? If you have then go for it.
IMO if you are struggling to save now then you will struggle to save after you buy a property unless something changes drastically. There is no magic pill. You need to increase your income and savings and reduce outgoings.

Hutch100uk

user1168934 wrote: »

Thrugelmir is making a very good point. The only thing worse then not owning a property is to own one and not being able to afford it. I am not saying you are wrong. If you are confident that you will be able to meet those expenses then by all mean go for it. By the looks of it you "feel" like it wont be much worse. Have you done your numbers to back it up? If you have then go for it.
IMO if you are struggling to save now then you will struggle to save after you buy a property unless something changes drastically. There is no magic pill. You need to increase your income and savings and reduce outgoings.

Yes this is all very true. The main reason we want to buy is the constant cost of moving into different rental properties and we need stability for the children. Our salaries will gradually go up and outgoings will decrease when we no longer pay nursery fees so ability to save will be much easier.