Mortgage acceptance help (freaking out!)

MDL91

Hi all,

Can somebody give myself and my wife some help (actually, more reassurance!)?

Our current situation - we are selling our first home in the Central Belt of Scotland for 125k and have had an offer of 260k accepted for our perfect family home (Victorian mid-terrace 4-bed, survey valuation was 260k). We're in the very lucky position of my FIL generously gifting us our first home 2 years ago, so we've been living entirely mortgage-free until now. However, we've had a baby 5 months ago, and have decided now is the time to look to moving up to our "forever" home.

We plan on holding back some 15-25k of our sale price for fees / upgrades to the house, so looking at about 100k deposit, though we can bump this up to get under 60% LTV if that drops our rate significantly. Our combined salary is approximately 50k basic currently (27k myself, 23k wife). I also do a decent amount of overtime, but it's quite random, and my wife does get enhancements (weekend and evenings as a nurse). My salary has been improving steadily since I left uni 2 years ago (approx 6-7% a year) with no signs of this changing. However, my wife is currently on Mat Leave, until March 2017, and takes home £800-900 a month currently (usually £1300-1500 depending on her shift allowance as a nurse).

Now, onto the problem- we've been so caught up in our plans for moving and enjoying our young one that we've not stopped to look too far into how to prepare our finance for a mortgage application. Generally, we have consistently saved every month for the last year or 2, and had built savings up from about 35k to 48k. BUT, given our extremely low monthly bills (no mortgage previously, only £60 a month to gas and leccy, £150 council tax, 2 cars paid off with no car payment, no credit card debt other than fuel, etc which we pay off in fuel monthly), this saving has not been enough to offset what the new mortgage will be and the associated increase in council tax (band D to F), heating and upkeep (2-bed new-build to victorian terrace).

Now, i've done the sums, and I certaintly don't think, given the numbers (our mortgage advisor is looking at about £650-£700 a month mortgage cost vs £3k net income) that our mortgage will be unafforable. HOWEVER, our 3 months bank statements will show multiple things:

• 4k recently to a new car- traded in my wife's car and upgraded to a family-size car. 4k + trade-in value to a used Citreon C4.
• £250 on a new baby car seat.
• £450 to surveyor's for our home report.
• A not-insubstantial amount to restaurants. We aren't big on material possessions and don't spend thousands on clothes or other things, but we do go out probably twice a week. I wouldn't be surprised if our eating out bill is £300 a month.

The last 2 months have hit our saving hard, mostly with the car payment above and a generally above-average spend. What i'm wondering is:

• What do we need to do to convince a mortgage provider that we will be able to cut down on our discrecionary spending? We're willing and able to do this, and to be honest have just been enjoying our relatively lucky financial situation over the last while.
• Is there anything else we can do to make this go smoother?

We're just kind of freaking out now as we hadn't considered that our above-average spending may lead to us missing out on our dream house! Any advice?

More info available if you like- apologies if I've missed anything.

amnblog

A bit baffled by your post?

Have you spoken to your broker?

This all sounds like concerns you have built up in your own head rather than from any clear understanding of what does make a difference.

In short, I cant see the problem.

kingstreet

Someone's not been eating beans on toast for the last three months and thinks their mortgage application will be declined as a result.

It won't.

Lenders don't really care about one-off purchases.

MDL91

Sorry, it is a bit of a ramble!

We've previously had a Mortgage in principle agreed for 200k, which we've been sitting on for a few months while waiting for our house to sell. We're meeting our Broker on thursday evening to start the formal mortgage application process. I'm just worried that he's going to take a look at our bank statements and go "why have you been chucking cash about? You should have been scrimping every penny for the last 3 months!" (though this wasn't discussed when we first met him, i'm just basing this on what I've read online.)

Perhaps I am just getting overly worried! Thanks for the advice.

MDL91

That's exactly right Kingstreet. Thanks for the reassurance!

kingstreet

Some lenders don't ask for bank statements, so they wouldn't even know what you spend.

If you had a make or break issue such as gambling addiction, the broker would keep you away from lenders likely to have a problem with this.

amnblog

Your eating out bill sounds like more of a concern for insurers than the lender.

MDL91

Hi all,

Looks like I had nothing to worry about- mortgage was approved today (12 days after application).

Thanks for the assistance!