Cynical about chances of getting a mortgage

echo_and_narcissus

Due to an inheritance coming to me shortly, me and my husband have been discussing getting a mortgage as first time buyers. I am sceptical that we would be accepted.

After paying off credit cards and my student loan from my inheritance, there should be approx 45k for a deposit. We have been living at the bad end of a 2.2k overdraft for months, which I can also pay off. This would, if everything goes to plan, be at the start of April.

My husband earns 16.5k per annum and I am currently a housewife, planning to start a university course in September. We have four children under 18.

I am concerned his income, our recent conduct of our account, and the fact I got a default last month for going ever so slightly over my credit card limit, will either exclude us completely from getting a mortgage, or we won't be able to borrow enough to buy somewhere. I don't know if waiting, say, three months after getting the inheritance then applying would make any difference given our income.

Please be gentle; this last year has been awful. I'm hoping there may be a way that this sadness can be used positively for the family.

EDIT: I've noticed some online calculators take into account tax credits, also child benefit and child maintenance? We receive all of these and it appears to make a significant difference on some calculators. Is this pretty standard, or only applies to certain lenders?

alchemist.1

A lot will depend on how much you are looking to borrow.

echo_and_narcissus

We're looking at houses around the 120k mark. So to borrow around 75k. We could possibly be looking at 110k for the house we're currently renting, but we don't know that for definite yet. We don't have a particular house in mind, so it's possible we could end up lower.

MortgageMamma

On the face of it if you don't have anything else outstanding on credit it could be doable, providing you settle that default.

Some advice to set you up in time for the purchase. Due to your credit status and the fact you've had a large overdraft and a problem with a credit card an underwriter will pay a lot of attention to whats coming in/going out of your bank account. If you spend money on online gaming, gambling or anything frivolous try not to do that, this can include ordering take aways via just-eat etc.

Think carefully about how you will manage when you go to university in September. I too have 4 under 18 and I know childcare costs can be enormous. Do you have any other income than your husbands wage and tax credits? Will you be putting any money away from the inheritance for a rainy day?

What will your job prospects be like when you have left university? do you have any big expenses coming up (such as children moving from primary to high school, high school to college, weddings, new cars etc) - factor all this in.

I think looking at your husbands income alone this would be a borderline case on affordability, so its important to get some professional advice to ensure that you can afford the mortgage payments in the long term before you commit to buying. You need someone to look at your present income spending habits honestly, and see which is the best way to go from there.

MM

Strummer22

echo_and_narcissus wrote: »

After paying off credit cards and my student loan from my inheritance

Is there a reason you want to pay off your student loan? This is a very important question. How much is the debt? Is it a standard student loan held with the student loan company? You can't be paying any if it off now if you're currently a stay at home mum and planning to go back to uni soon.

echo_and_narcissus wrote: »

EDIT: I've noticed some online calculators take into account tax credits, also child benefit and child maintenance? We receive all of these and it appears to make a significant difference on some calculators. Is this pretty standard, or only applies to certain lenders?

Yes all income should be taken into account.

pollydollydoodah

Do you mean you'll pay for your uni course with your inheritance? As I'm sure at 16k wage you'll get childcare help and more loans(although my knowledge isn't up to date with the new changes) but you may he worth using the money you've put aside for uni. (Check with gov.site as you may be exempt once you have the inheritance)

Vectis

I'd look at this from a slightly different angle to start with. After putting all your figures into the mortgage calculator, can you actually afford the repayments? What other factors may affect this e.g. how old are your kids - you say they're under 18 and you are getting paid maintenance for at least some of these, but for how long (when do the maintenance payments cease?)? Also, will you have significant other expenses when you start university?

Would it be more beneficial to go into employment now rather than undertake a university course?

echo_and_narcissus

MM

Thanks for your advice. We are not frivolous in any way! We're actually pretty good -now. The credit cards and overdraft are mainly in part due to the circumstances of my parents illness - both were very ill at the same time, one died, then I spent a lot of money I couldn't really afford on travel, food and other bits while they were ill going to care for them, food and other bits. Then the other died and had to organise the funeral abroad as my parent wished, so had to pay for flights for the family etc. Then I got ill and paying attention to our finances went out the window for a while.

Our income comprises:
Wages
Working tax credit
Child tax credit
Child maintenance for oldest two

Children are aged between 5-12. All go to school. I need to look into childcare for when I study, I had thought a childminder for wraparound care would be the best solution. Job prospects excellent, there is a big shortage around my area.

Debtslayer

I think you need to speak to a good Independant mortgage broker. They will look at all your income and expenditure and advise if they believe you will be able get a mortgage. They do this day in and day out and know what lenders would be willing to lend.
They will be able to advise what benefits etc are taken into account.
If they say it would bd possible for you to get a mortgage they will advise how much you could borrow and give you some idea of the payments and then you could see if a mortgage would be affordable
Speak to a mortgage broker, will be the best call you can make and will help answer any questions you have

echo_and_narcissus

Stu_N_ wrote: »

Is there a reason you want to pay off your student loan? This is a very important question. How much is the debt? Is it a standard student loan held with the student loan company? You can't be paying any if it off now if you're currently a stay at home mum and planning to go back to uni soon.



Yes all income should be taken into account.

The student loan is very old and with a different company to the SLC. It's just over 8k. I've never earned enough to start paying it off but assumed it would be sensible given it's a debt and I have this chunk of money coming. Do you have particular thoughts on this? I'd appreciate any insight.

pollydollydoodah wrote: »

Do you mean you'll pay for your uni course with your inheritance? As I'm sure at 16k wage you'll get childcare help and more loans(although my knowledge isn't up to date with the new changes) but you may he worth using the money you've put aside for uni. (Check with gov.site as you may be exempt once you have the inheritance)

I'll certainly look into this now. I'm not sure how the changes affect me as it's a Masters course so will investigate. I hadn't planned to use the inheritance to pay for uni, no.

Vectis wrote: »

I'd look at this from a slightly different angle to start with. After putting all your figures into the mortgage calculator, can you actually afford the repayments? What other factors may affect this e.g. how old are your kids - you say they're under 18 and you are getting paid maintenance for at least some of these, but for how long (when do the maintenance payments cease?)? Also, will you have significant other expenses when you start university?

Would it be more beneficial to go into employment now rather than undertake a university course?

After using many mortgage calculators, it appears the monthly amount quoted is around £200 less than what we are paying in rent. Also removing repayments for credit cards frees up around £190 as I will pay them off in full.

Maintenance as is lasts another 6 years then will be for the next child only, halved for another two years. Re significant expenses for uni, childcare and on my husband's wage, we are eligible for help with costs.

I would certainly look at going into work now if it looks to be more viable. I was thinking longer-term with studying and salary but I will take a look at what's out there.

Thanks all. You're giving me lots to consider.

amnblog

Things sound tight on affordability. Even with the tax credits and maintenance, 4 children and childcare for them will pull the affordability calculations right down. A smallish recent default is manageable, but reduces your options significantly.

You won't know exactly where you stand unless you engage an independent mortgage broker.