Mortgage's, First time buying and credit score!

VWayne

Hi, Currently trying to save for a mortgage. I am 22 and earn 28K a year.
I've been in my current job since 16, started as an apprentice.

Im not single but would be applying for a single mortgage.

I currently have £5000 in savings and a car worth around £6000 (i own the car, no finance) and putting away £850-£1000 a month so my savings will go up, but i can only save this much until around march next year, after this point i would only be able to save around £250 a month and my savings would go down at least £1500 having to put a deposit down to get a house to rent and pay agency fee's.

The houses im trying to buy sell for around £110-125k and i would be trying to buy with a 5% deposit, otherwise ill have to keep renting for at least another 2 years to get my deposit up to 10%.

Few thoughts ive got,

1. Sell my car and buy something for £1800-£2000 and add the £4k to my savings to take me to £9-10k?
If i had to sell my car to boost my deposit, i could get a loan to re buy a car similar, ive only had the car 8 months and love it and don't really want to sell it but i wouldn't mind if i could replace it after the mortgage went through.
(or could i get a loan to boost me to help with the fee's?)

2. Keep saving untill march and i should have at least £7k... would this be enough? to buy a house for £110k with a 5% deposit?

Ive worked out ill need £5500-£6000 for a deposit but i have no idea on how much all the fee's will come too

Also, my credit score isn't the best. its around 750 on Experian and is "fair" this is due to a 4 year old default(£200), would i have any trouble getting accepted?

Advice?

muhandis

In your place -

1. I would sell the car and replace it with a reliable used car which is cheap to run for £1500-£2000 at most.

2. I would avoid entering into a loan to get a more expensive car simply because any outgoings on this front will be taken into account when doing the affordability assessment for your mortgage.

3. For a house worth £110k, there shouldn't be any stamp duty to pay, so the cash funds you will need are - 5% deposit of £5,500 and maybe around £1.5k for extras (solicitors, valuation, any other fees).

4. Ignore the 'credit score' as each lender will evaluate your credit history differently.

The 4 year old default could be significant, I'm sure one of the mortgage brokers on the forum will have more to say on how that affects your chances as also your chances of getting a 95% LTV mortgage.

Good luck.

VWayne wrote: »

Hi, Currently trying to save for a mortgage. I am 22 and earn 28K a year.
I've been in my current job since 16, started as an apprentice.

Im not single but would be applying for a single mortgage.

I currently have £5000 in savings and a car worth around £6000 (i own the car, no finance) and putting away £850-£1000 a month so my savings will go up, but i can only save this much until around march next year, after this point i would only be able to save around £250 a month and my savings would go down at least £1500 having to put a deposit down to get a house to rent and pay agency fee's.

The houses im trying to buy sell for around £110-125k and i would be trying to buy with a 5% deposit, otherwise ill have to keep renting for at least another 2 years to get my deposit up to 10%.

Few thoughts ive got,

1. Sell my car and buy something for £1800-£2000 and add the £4k to my savings to take me to £9-10k?
If i had to sell my car to boost my deposit, i could get a loan to re buy a car similar, ive only had the car 8 months and love it and don't really want to sell it but i wouldn't mind if i could replace it after the mortgage went through.
(or could i get a loan to boost me to help with the fee's?)

2. Keep saving untill march and i should have at least £7k... would this be enough? to buy a house for £110k with a 5% deposit?

Ive worked out ill need £5500-£6000 for a deposit but i have no idea on how much all the fee's will come too

Also, my credit score isn't the best. its around 750 on Experian and is "fair" this is due to a 4 year old default(£200), would i have any trouble getting accepted?

Advice?

VWayne

muhandis wrote: »

In your place -

1. I would sell the car and replace it with a reliable used car which is cheap to run for £1500-£2000 at most.

2. I would avoid entering into a loan to get a more expensive car simply because any outgoings on this front will be taken into account when doing the affordability assessment for your mortgage.

3. For a house worth £110k, there shouldn't be any stamp duty to pay, so the cash funds you will need are - 5% deposit of £5,500 and maybe around £1.5k for extras (solicitors, valuation, any other fees).

4. Ignore the 'credit score' as each lender will evaluate your credit history differently.

The 4 year old default could be significant, I'm sure one of the mortgage brokers on the forum will have more to say on how that affects your chances as also your chances of getting a 95% LTV mortgage.

Good luck.

1. Yes I'm more than happy to do that to boost the deposit

2. I would get the loan AFTER its all gone through, i would be more than capable with re paying a loan.

3. I was thinking around 1.5k for fees but wasn't sure and don't have anybody else to ask so thought best to ask this forum.

4.the default should remove itself in 2 years time but I'm hoping that my other credit commitments will show I am able to keep credit payments and not miss anything etc. I've never missed any other payments at all.

Thank you

Edit: So.. IF i was able to get accepted, £7.5 - 8k should cover everything?

muhandis

It should.

However, do check the MSE page on what fees, taxes to budget for when taking out a mortgage. It is pretty comprehensive.

http://www.moneysavingexpert.com/mortgages/mortgage-fees-stamp-duty

VWayne wrote: »

Edit: So.. IF i was able to get accepted, £7.5 - 8k should cover everything?

VWayne

I'll have a read.

What's the process? I would like to no if I was going to get accepted before selling my car.

When do you pay what?

Who should I speak too first?

lee111s

Speak to a mortgage broker and get an AIP. Then sell the car.

Once you have the funds then you can start looking at properties and making offers.

Once you have an offer accepted you'd then go on to submit a full application for a mortgage.

Monies to the solicitor for deposit wouldn't be due until 6-10 weeks after the mortgage offer is issued but it does depend on many many variables.

VWayne

What about proving the source of my deposit? The 5k in my bank has just came from wage's ive moved into my savings account.

When i sell the car, would i need some kind of receipt? I would sell the car with the buyer paying via bank transfer into my bank.

Im currently at my mums house, what do i need to show? wage slips bank statements? what about bills, i only moved in here 6 weeks ago and im not on any bills.

If i was to wait and save a little more then i wouldn't be buying until at least March 2017, should i open a H2B ISA? I could open with £1200 tomorrow, put £200 Dec, Jan, Feb March which brings it up to £2000+? (min £500 bonus from the government)

muhandis

What about proving the source of my deposit? The 5k in my bank has just came from wage's ive moved into my savings account.

That should be fine, as long as it's been in your account for the past 2-3 months. It's very unlikely that the relatively small amount we're talking about will trigger any further enquiries.

When i sell the car, would i need some kind of receipt? I would sell the car with the buyer paying via bank transfer into my bank.

A receipt would be advisable in the unlikely event that you are asked to prove the source of these funds.

Im currently at my mums house, what do i need to show? wage slips bank statements? what about bills, i only moved in here 6 weeks ago and im not on any bills.

Assuming that you are a permanent PAYE employee on a regular fixed salary, most brokers/lenders will ask for some or all of the following - salary slips (1-3 months), bank statements showing salary credits and expenditure, bank/savings account proving deposit, proof of ID (passport, driving license, etc), proof of address (bank statement, utility bills, etc).

VWayne wrote: »

What about proving the source of my deposit? The 5k in my bank has just came from wage's ive moved into my savings account.

When i sell the car, would i need some kind of receipt? I would sell the car with the buyer paying via bank transfer into my bank.

Im currently at my mums house, what do i need to show? wage slips bank statements? what about bills, i only moved in here 6 weeks ago and im not on any bills.

If i was to wait and save a little more then i wouldn't be buying until at least March 2017, should i open a H2B ISA? I could open with £1200 tomorrow, put £200 Dec, Jan, Feb March which brings it up to £2000+? (min £500 bonus from the government)

VWayne

I work for the department for education on a fixed salary, and have done since i was 16.

Ive not got a utility bill but do have bank statements

muhandis

Sounds good. A driving license (for ID) and bank statement (for proof of address) should suffice.

I would recommend talking to a no-fee mortgage broker to get an idea of what you could borrow so you can have a concrete budget.

VWayne wrote: »

I work for the department for education on a fixed salary, and have done since i was 16.

Ive not got a utility bill but do have bank statements