First Mortgage Deposit

dannyrst

Hi all,

Me and my girlfriend and currently living with my girlfriends parents to save up for a deposit on a house. We want to move ASAP and are saving up for our deposit. To help with this, I was thinking of selling our car and getting a new one on PCP. We were going to do this anyway after moving into a house, but thought we'd be best waiting until we had moved.

We could sell our car for roughly £3,500, and put all of that towards the deposit we need (£8,000). The cars we have been looking at on PCP are £200 per month with no deposit. This will obviously lower the amount we can borrow because it is an extra monthly cost, but I think we should be able to borrow enough anyway.

We're looking at houses around £140,000 with £7,000 deposit (£1,000 fees) and we earn a combined £40,500 per year gross before overtime and commission. Commission is around £3,000 per year and overtime is around the same.

I will be getting a payrise soon and some guaranteed overtime of another £3,000. So I'd expect our annual gross salaries to combine at a minimum of £50,000.

Would the £200 per month be an issue when it came to applying for a mortgage?

chanz4

Very low deposit, is this htb?

Contemptuous

You'll want to budget more for fees, too.
Stamp duty, legal costs, valuation, possibly a product fee.. You'll want to at least double what you've anticipated.

dannyrst

chanz4 wrote: »

Very low deposit, is this htb?

No, 95% LTV.

Contemptuous wrote: »

You'll want to budget more for fees, too.
Stamp duty, legal costs, valuation, possibly a product fee.. You'll want to at least double what you've anticipated.

I'm hoping to get some help for the fees.

dannyrst

So monthly, I bring home £1,300 after deductions (share scheme, pension etc) and my girlfriend brings home on average £300 per week, which works out the same (£2,600 combined).

I expect worst case would be £600 per month mortgage payments.

Is £200 going to class that sort of mortgage payment unaffordable? We have commitments of no more than £200 each month at the moment (phone bills etc) so:

Mortgage £600
Car £200
Commitments £200

That leaves £1600 for the bills etc (which we are aware of as we rented previously) and any luxuries/savings etc. This to me seems affordable, but I'm not familiar with mortgage lending and how they view affordability.

MandM90

I'm not sure that selling your car and getting out a PCP would be wise as mortgage providers will look at your debt presumably.


If I were you I'd speak to a mortgage advisor and, in the meantime, sit tight and keep saving.

dannyrst

MandM90 wrote: »

I'm not sure that selling your car and getting out a PCP would be wise as mortgage providers will look at your debt presumably.


If I were you I'd speak to a mortgage advisor and, in the meantime, sit tight and keep saving.

Indeed, it isn't ideal. I may find myself selling the car to put down a deposit and then getting a new car on PCP after signing the mortgage.

I will be arranging a meeting with a mortgage advisor shortly. Wasn't sure if I should wait until I have the deposit or whether I should book one now whilst we are still saving.

MandM90

Now! They'll be able to look at your unique situation and advise which lenders might be able to offer you X amount of money at a LTV of X.

I'm sure many mortgage companies will ask where the £3.5k came from (the one I have certainly would have - some of the questions they asked were quite amusing!) and the next question would be how you're planning on getting to work. It might be harder than it looks to pull the wool over their eyes, and ultimately you'll end up losing out financially by selling a good runner and buying a brand spanking new, instantly depreciating motor.

Again, this is a question really to ask an advisor/broker.

dannyrst

MandM90 wrote: »

Now! They'll be able to look at your unique situation and advise which lenders might be able to offer you X amount of money at a LTV of X.

I'm sure many mortgage companies will ask where the £3.5k came from (the one I have certainly would have - some of the questions they asked were quite amusing!) and the next question would be how you're planning on getting to work. It might be harder than it looks to pull the wool over their eyes, and ultimately you'll end up losing out financially by selling a good runner and buying a brand spanking new, instantly depreciating motor.

Again, this is a question really to ask an advisor/broker.

We're mainly looking to live in the same place we work. If so, I am not allowed to drive to work and my missus can't because she works in a shop with no parking. The car is mainly for weekends and nights where we like to get away from the town and into citys. Plus, I love driving, so train/bus isn't an option.

I'll get in touch with a mortgage advisor. Didn't want to waste time by arranging a meeting now without having the money in place to even get close to buying yet unless we sold the car.

Replacing the car was always on the cards. The question is whether to do it pre or post house purchase.

MandM90

dannyrst wrote: »

We're mainly looking to live in the same place we work. If so, I am not allowed to drive to work and my missus can't because she works in a shop with no parking. The car is mainly for weekends and nights where we like to get away from the town and into citys. Plus, I love driving, so train/bus isn't an option.

I'll get in touch with a mortgage advisor. Didn't want to waste time by arranging a meeting now without having the money in place to even get close to buying yet unless we sold the car.

Replacing the car was always on the cards. The question is whether to do it pre or post house purchase.

I'd definitely do it post, if you're going to do it on credit. Good luck!