Prep before first mortgage application

MrSquirrel

Hello,

I'm planning to apply for a 250k max mortgage in the next 6-12 months, hopefully, it would be great if I could get a little bit of guidance from you knowledge people

This is where I stand at the minute financially, what would you recommend I do to make the application easier?

Current account with £3000 overdraft (£0 used)
Credit card with £3000 limit (£1500 used on 0% offer)
Credit card with £5500 limit (£4900 used on 0% offer)
Credit card with £5000 limit (£3200 used on 0% offer)
Credit card with £8400 limit (£0 used)

My current plan is to put £500 minimum into saving accounts until the 0% periods are over while paying off the minimum payment, alongside this I was going to start a HTB ISA to get the benefits.

Would I be better off reducing the balances each month, cancelling the cards and reducing the OD/CC limits as I go on?

Thanks

kingstreet

So you've got about £10k on cards but have said nothing about income or loan to value.

All I can say is many lenders will treat your card debt as a £500 a month credit commitment and adjust what you can borrow accordingly.

Will it stop you getting a mortgage? No.

Will it stop you getting the amount you want to borrow? Who knows?

MrSquirrel

Hi,

Income is around 36k without overtime, I'll have around £750 spare which is going towards the cards on top or the ISA. I'd be looking initially at a 5% mortgage.

kingstreet

Suggest you find lenders willing to lend 95% and establish what you can borrow from their online affordability calculators.

Bravestar

MrSquirrel wrote: »

...
I'm planning to apply for a 250k max mortgage in the next 6-12 months, ...

MrSquirrel wrote: »

Income is around 36k without overtime, ...

Best of British luck with that one - I think you'll be needing it.

This MSE page will give you a basic estimate of what you can borrow
http://www.moneysavingexpert.com/mortgages/how-much-mortgage-borrowing

Whilst the page does state the calculation of what you may eventually get offered is far more complex, the old rules of salary muliples still gives a very good indication in many cases.

Whilst the maximum is typically about 4.5x salary, you are seeking almost 7x
And that ignores your current borrowing commitments.

It also ignores overtime which you didn't quantify. The old multiple rules for OT were generally to add it to salary if guaranteed, use half of the value if it can be shown to be regular, or ignore it if it is not regular.