Mortgage Application

LittleOne

Wondered if anyone can offer a bit of advice, please? :-)


My boyfriend and I are looking to apply for a mortgage this year, probably in around September time-ish. We should have a deposit of around £16,000.


Our combined income will be around £45,000.


By September we won't have any debt other than my boyfriend will have around £2610 left on his car finance.


However, I just posted in the motoring thread about my car having just died and I will need a newer one that's more reliable due to the mileage I do per year. The deal I'm looking at would be £179 a month for 48 months, but I'm concerned that entering into a new finance agreement so close to seeing the mortgage companies will make it harder for us.


I'm also wondering whether it's worth trying to cut out as many outgoings as possible right before we apply (e.g gym membership, any charity outgoings, just whilst we are going through the stages of getting the house)


We think £700 a month will be the top end of our budget for the mortgage, but even if we had to go to this, we can still easily afford the car payment per month, it's just whether the mortgage companies will see it the same way as us? (probably not!)


Any advice is greatly appreciated, thank you.

elverson

Try this first.

https://www.moneyadviceservice.org.uk/en/tools/house-buying/mortgage-affordability-calculator

Include both car payments under 'travel costs'.

LittleOne

Yikes, even at the lower end of the scale it says we run a high-risk of over-stretching our budget.


Thanks for the link :-)

AnotherJoe

Kirsty_A wrote: »

g thread about my car having just died and I will need a newer one that's more reliable due to the mileage I do per year. The deal I'm looking at would be £179 a month for 48 months, but I'm concerned that entering into a new finance agreement so close to seeing the mortgage companies will make it harder for us.


I'm also wondering whether it's worth trying to cut out as many outgoings as possible right before we apply (e.g gym membership, any charity outgoings, just whilst we are going through the stages of getting the house)


We think £700 a month will be the top end of our budget for the mortgage, but even if we had to go to this, we can still easily afford the car payment per month, it's just whether the mortgage companies will see it the same way as us? (probably not!)

You are correct, they wont see it the same way, plus you should cut unnecessary expenses well before you apply, not "just" before.
IME a car loan will work against you.
On which topic, cant you get a cheaper deal than £179 ?seems a a luxury when you are borrowing to the max. Same as a gym membership is a luxury.

MacMickster

I would really consider buying a banger for around £1000 from your savings, then using the £179 to top up your savings over the next few months.

Once you have your new home you can consider replacing the banger with something newer if you are still sure that you can afford it.

Thrugelmir

Buy the car and defer the house purchase for a few months allowing your deposit to grow. Yes you are taking on a financial commitment but like most people. You'll incur travel expenses getting to work. Not as if you've blown £5k on a holiday and now need to repay the money.

LittleOne

My gym is the cheapest gym in the area at £15 a month and I have spent weeks shopping around for a car deal as I need something with good MPG and something reliable as I do a 52 mile round trip to work and I've had cars go bang on me on the M42 in rush hour - NOT fun. :-(


Looks like I need to cut out as much as possible in the run up.


Maybe have to re-think the car idea then it seems. It's just frustrating dipping into the deposit you've worked so hard to save for and delay the buying process :-)

Belloubec

I have just has my car written off due to stoem damage and had a pay our from insurance company. We have also just applied for a mortgage (approved today) and on the advice of my fantastic mortgage broker I have not ordered a new one like I was going to and just bought a 2008 fiesta for 3k. This will keep me going until we have bought the house then I will order a salary sacrifice car through my employees scheme. I know I can afford it (have a budgets spreadsheets) but on affordability that mortgage providers do it would have been tight. So if I were you I'd get a cheap run around for now and get a new car later

bambos

Personally if I was you I would be making as many cuts as possible, luxury items are a no go when buying a house. When my husband and I brought our first house five years ago we had a deposit of £24,000 and really struggled to get a mortgage but had a combined income of £46,000 per year.

You have to concentrate on improving your spending habits and check where your credit rating is at: check your on the electrol roll, finance history and previous addresses correct etc.

FORGET buying a new car that's going to increase your overall outgoings each month and decrease the amount you can afford to pay on a mortgage. We started cutting back and stayed well away from using any overdrafts a year prior to applying for a mortgage to give ourselves the best chance, we cancelled all unessesary costs such as gym, magazine subscriptions, charity etc. We spent next to nothing and lived very frugally to ensure our bank accounts looked nice and healthy.

Is there any chance of your boyfriend giving up his car and getting something cheaper to enable the monthly outgoing to be added to your savings?

Where are you currently living? We were renting prior to buying and we moved in with my in laws for six months to add the extra money to our savings, it wasn't easy but was well worth it.

Remember on top of your mortgage you will have fees to set it up (can sometimes be added onto the mortgage itself) and moving fees. It's an expensive business and I well remember being down to our last pint of milk in the fridge.

I don't want to come across as the grim reaper but getting a mortgage is a reality check in terms of financial priority.

Contemptuous

Wow, this thread is rather depressing reading!

No, you do not have to stop living your life in order to have the privilege of a mortgage. I certainly didn't cancel my cheap gym membership! We applied for our mortgage a year ago and had absolutely no issues. Our spending habits didn't change.

I agree that getting a car on finance in the run up to applying isn't the wisest move, though, especially if affordability is already tight.

bambos

Contemptuous wrote: »

Wow, this thread is rather depressing reading!

No, you do not have to stop living your life in order to have the privilege of a mortgage. I certainly didn't cancel my cheap gym membership! We applied for our mortgage a year ago and had absolutely no issues. Our spending habits didn't change.

I agree that getting a car on finance in the run up to applying isn't the wisest move, though, especially if affordability is already tight.

It's true but you need to adapt if you want the best rates and choice