When to Apply

TheTortoise

Hello all,

I'm a FTB. I've been saving for a deposit and currently have £7800 deposit, to which I'm adding £950 a month. I've started to look around at houses but haven't found anything to buy yet. I'm planning to save a bit more before actually buying but I'm looking at having between 5% and 10% deposit depending on the price of the property I buy. I'm not in a desperate hurry as I'm in a nice property rental, but it does feel now like I am throwing money away at someone else's mortgage, money which could be going towards my own mortgage!

I've been reading lots about mortgage applications and I'm starting to freak myself out that I won't be accepted! I think I'm being paranoid, but could do with some advice about when would be sensible to apply. It's just after Christmas so my spending has been a little all over the place. Starting now I shall be reigning in the spending, but is it true that lenders go back 3 months to look at your spending? Do some lenders look back further than that?

One more spanner in the works is that I had a sabbatical between July 2014 and July 2015, so my latest P60 doesn't show my full salary amount. If I wait until after April I will have a new p60, but I don't necessarily want to wait this long if a good property comes up.

Given that I'm saving quite a lot each month as well as covering half the rent and bills at my current house I'm hoping that I will be seen as a safe borrower. My current salary is £30357 but due to rise to £31383 (signed for job but hasn't gone through yet). I do get regular mileage/fuel reimbursement which mostly adds around £200 to my monthly wage...can this be included as income even though it isn't guaranteed (although it has been and will continue to be regular)?

My noddle score is 605/710 (4/5) but my MSE credit club is 830/999 which is only 'fair'. This is worrying me quite a lot as it seems to have inexplicably dropped very recently. I do have £5100 on a 0% credit card but have been advised by a friend who is a financial adviser that I should send spare money towards the deposit rather than paying this off, and that although the amount I would be loaned may be reduced very slightly by this balance but not too much. I intend to follow this advice and so I am just paying just a small amount over the minimum monthly payment. I have 30 months left on the 0% so it isn't a worry for me.

If I work at tidying up my general spending and try to reduce the credit card to under £5000 will that improve my chances of being accepted for a mortgage in a few months time?

Many thanks in anticipation of replies and advice, all gratefully and thankfully received!

TT

Edited to add: I have looked at my MSE credit club more closely and it seems the 'fair' yellow faces (as opposed to the nice smiley green faces) are on the following sections:

Account Stability: The average length of your financial relationships is less than six years. Remember, this isn’t just bank accounts, mortgages, loans and credit cards, it can include utilities, mobile phone contracts, broadband and more.

Residential Status: You're not a homeowner. Renters and those living with parents are seen as slightly more risky to lend to than homeowners. It's unlikely this alone will sink your chances, but it could be the straw that breaks the camel's back. Obviously there isn't a quick fix, so concentrate on ensuring the rest of your credit profile is good.

Neither of these can be rectified very quickly!!!!!

downhillfast

TheTortoise wrote: »

I am just paying just a small amount over the minimum monthly payment. I have 30 months left on the 0% so it isn't a worry for me.

... and what happens after the 30 months when you potentially have a mortgage to pay and bills from having furnished your new place etc??? If you are not planning to pay it off in full before your mortgage application (which I think isn't the best advice for a sole applicant mortgage, but I'm not a financial adviser!) then you should at least be making a monthly payment that ensures the whole balance is paid off by the end of the 0% offer.

TheTortoise

Many thanks for your reply - I have all the furniture I need and everything I need to set up a house so that won't be a worry. My general plan is to start to service the credit card a couple of months after settling in to new finances, and I intend to get a lodger in too.

Paying back the CC doesn't worry me at all...I feel that the £950 I'm saving each month, (taking off some to put towards insurance and other inevitable higher costs of owning ) can be directed towards the CC - if I pay off at £400 a month it'll be gone in more or less a year.

downhillfast

How much more are you planning to 'save' before buying a place... and what kind of priced property are you going to be looking for?

csgohan4

the debt will be taken into account regardless of the 0% interest, for affordability purposes.


You will not be able to borrow the full x4.5 your salary. Debt is debt whether it's 0% or 100% interest

greyroofer

Hi,

You're doing really well. Congrats on saving for your desposit. I'm in the same position as you.

Good luck!

AnotherJoe

I'm finding a few contradictions.
You say you have £7800 savings but of that £5100 has effectively been borrowed on a credit card.
You can write off the difference as money that will go in fees when you buy, so your whole deposit is actually borrowed on a credit card.
You say you aren't in a rush, but on the other hand, can't wait until April and are worried about your xmas spending on your bank account being a problem.
You aren't bothered about the credit card as it has 30 months on zero percent. What happens if when you come to renew, maybe as someone with a mortage commitment they won't offer you zero percent ?

Given the likely price of houses you are looking at (£100k-£120k?) is probably not appreciating very fast if at all, amd you are able to save right now, and are living in a decent place with low costs, I suggest you split your £950 a month into half pay off credit card, half save, and don't start looking at least until early summer.

Then you'll have your new P60,have your pay rise, have stabilised your bank account spending, and be better placed with a lower credit card debt that will be soon gone, plus a more realistic deposit and amount for expenses, and could see your way to getting some money set aside for contingency as well. Indeed if you could wait I'd say wait a year but you are obviously champing at the bit to buy.