Too worried to even attempt buying

Bromis

Previously owned two houses. Bought first house in 2005 when everything seemed to be so much easier! Moved into a bigger "forever home" in 2012 - split up a year later and I moved into a rented apartment, no equity in property so ex kept it and I signed over the deeds.

So now a few years on, I'm saddled with old debt and newer debt I've acquired from being on maternity leave etc. My husband has never owned a house and we're just about to move into our 4th rental property in 4 years and to be honest it's absolutely soul-destroying. Our last house was supposed to be long term, 12 months later they decided to sell! The charm of renting is wearing thin now so I think its time we focus on buying. The problem is, I'm so worried we wouldn't get a mortgage I can't even bring myself to try. I know our debt would be frowned upon by most lenders. I've done an SOA, although its asked for minimum payments on it and we always pay more. We are really chipping away through the debt as quickly as we can and we've probably paid £8k off in the last 12 months (so it was worse!) I would appreciate some guidance on how we could make ourselves sail through the mortgage process (if that's possible these days!)

We would probably look to buy a house in the next 12-16 months. We may be able to get a 10% deposit together, my parents have offered to help us. The house would be around £110k.

Statement of Affairs & Personal Balance Sheet

Summary

Number of adults in household 2
Number of children in household 2
Number of cars owned 2

Income, Expense, Debt & Asset Details

Income Amount(£)
Monthly income after tax 2100
Partners monthly income 1700
Benefits 134
Other income 50 (my ex's generous maintenance payment for our son)
Total monthly income 3984

Expenses Amount(£)
Mortgage 0
Secured/HP loan payments 431
Rent 525
Management charge (leasehold property) 0
Council tax 123
Electricity 35
Gas 41
Oil 0
Water Rates 34
Telephone (land line) 0 (included with internet, dont use landline)
Mobile phone 60 (two)
TV Licence 12.34
Satellite/Cable TV 8.99 (netflix)
Internet services 26.5
Groceries etc. 300 (nappies etc included)
Clothing 50
Petrol/diesel 150 (both, we have very short commutes)
Road tax 28 (both)
Car Insurance 50 (both)
Car maintenance (including MOT) 0 (cars are 1 year old)
Car Parking 0
Other travel 0
Childcare/nursery 250
Other child related expenses 0
Medical (prescriptions, dentists, opticians etc.) 0 (Wales - free prescriptions)
Pet Insurance/Vet bills 0
Buildings Insurance 0
Contents Insurance 6
Life Assurance 0
Other Insurance 0
Presents (birthday, christmas etc.) 20
Haircuts 10 (Genuinely cut my hair once a year, boys every 4 weeks)
Entertainment 100 This varies but this covers our gym memberships, spotify etc
Holiday 0 (We've just been on holiday won't be going again for a long time)
Emergency Fund (dont tend to save due to renting but have money leftover every month anyway)
Total monthly expenses 2260.83
Secured & HP Debt Description Debt(£) Monthly(£) APR(%)
Mortgage 0 (0) 0
PCP My car 15000 (261) 6
PCP husbands car 8000 (170) 3
Secured & HP Debt totals 23000 - -
Unsecured Debt Description Debt(£) Monthly(£) APR(%)
Lloyds Tsb 8500 110 0
Barclaycard 320 9 0
Tesco 1000 25 0
HSBC 6000 380 3.5
Unsecured Debt totals 15820 524 -
Asset Description Value (£)
Cash 0
House Value (Gross) 0
Shares and bonds 0
Car(s) 0
Other assets (e.g. endowments, jewellery etc) 2000
Total Assets 2000


Monthly Budget Summary Amount(£)
Total monthly income 3,984
Monthly expenses (incl. HP & secured loans) 2,260.83
Available for debt repayments 1,723.17
UNsecured debt repayments 524
Amount left after debt repayments 1,199.17 (some of this goes to debt repayment, the rest goes on day to day living, I will try and save some when I can)

Personal Balance Sheet Summary Amount(£)
Total Assets (things you own) 2,000 (art work/jewellery etc)
Total Secured & HP Debt -23,000
Total Unsecured Debt -15,820
Net Assets -36,820

I'm sorry if this is a bit of a mess. I appreciate your comments/criticism. I just noticed my £1800 overdraft isn't on there, I know that's a big no-no. My pay clears it every month but then I re-use it.

Thanks

Time2go

I'm sure one of the mortgage guys will be on here soon but plug your details into one of the mortgage affordiability calculator and see what it comes out with. Have you any ccj default missed payments ?

Bromis

Thanks Time2go, no never had any misspayments/defaults/CCJs. Both of our credit reports look good.

Filo25

Just to echo Time2Go, its worth having a play around with some numbers in the publicly available affordability calculators, to give you an idea how much you could borrow with various debt levels and mixes of types of debt.

Having debt in itself isn't necessarily a barrier to getting a mortgage, it will obviously squeeze your affordability calculation however, and be reflected in the bank being willing to lend lower amounts, so you may not actually need to pay off all debt before getting a mortgage for the amount you need.

Of course ignoring what the lender is wiling to do, you may want to pay of all the debt before moving anyway, as moving is expensive anyway, and not having debt gives you a bit more financial resilience to deal with it.

That said, we did get a mortgage last year for a significant amount while still having a pretty sizable amount of debt.

Firsttimebuyers

Following with interest as we're in a similar position.


Affordability calculators knock the amount they'd owe us down, but still enough for what we want to buy - but have heard that the Debt:Income Ratio will cause us to be declined.

Pixie5740

You don’t need one of the “mortgage guys” to plug the details into an online calculator. Just about every mortgage lender has an easily accessible online calculator so rather than worry why not plug the numbers in yourself? You might be pleasantly surprised.

ACG

There is a little too much information there for me to say yes or no but assuming it passes affordability in the main you should be fine.

Some lenders have a debt to income calculation that does not always get taken into account on the affordability calculators so you should be wary of that, but in the main having debt in itself is not a problem.

Speak to a broker if you are in any doubt and they can guide you to the most likely lenders to accept you based on your individual circumstances.

YHM

Pixie5740 wrote: »

You don’t need one of the “mortgage guys” to plug the details into an online calculator. Just about every mortgage lender has an easily accessible online calculator so rather than worry why not plug the numbers in yourself? You might be pleasantly surprised.

Yeah don't worry about receiving proper guidance from a Mortgage Broker / Adviser, just follow Pixies's guidance and wing it....or not!

It feels more like you need properly handholding by a mortgage broker. A broker will give you the support you need and potentially coach / guide you on how to get you into the position you want / need to be, to get a mortgage agreed.

Pixie5740

YHM wrote: »

Yeah don't worry about receiving proper guidance from a Mortgage Broker / Adviser, just follow Pixies's guidance and wing it....or not!

It feels more like you need properly handholding by a mortgage broker. A broker will give you the support you need and potentially coach / guide you on how to get you into the position you want / need to be, to get a mortgage agreed.

Simmer down. I never suggested that the OP shouldn’t seek advice from a mortgage broker I merely pointed out that the online calculators are available to everyone.

Firsttimebuyers

ACG wrote: »

There is a little too much information there for me to say yes or no but assuming it passes affordability in the main you should be fine.

Some lenders have a debt to income calculation that does not always get taken into account on the affordability calculators so you should be wary of that, but in the main having debt in itself is not a problem.

Speak to a broker if you are in any doubt and they can guide you to the most likely lenders to accept you based on your individual circumstances.

Would this be the case on a 95% mortgage or would a 10% deposit make it more likely?


Apologies OP for hijacking the thread, but we're in a very similar position - same income, and looking to buy at the same value with similar debt.

ACG

Debt is not a problem. If your income supports both and you are managing both then you should be fine.

There are lenders who are more open to debt than others, but people think debt is a deal breaker.

On a side note to the OP. If you do not try, I can guarantee you will not get a Mortgage. If you do try, you might.