Will i get a mortgage??

johngt_2

Hi, I need help.

I have a student debt of 15000 pounds (10K credit card and 5k loan) and i pay 500 every month on interest and loan repayment. Though i have debt i always pay them on time even if it is only minimum payments.

I have now stared to work with a salary of 32K.

I want to know if i will be able to get a mortgage . I am looking to buy in the range of 120K with a 5% deposit. And what is the likely interest rate i can expect to get.

Any help will be very much appreciated.

maninthestreet

A repayment £114,000 mortgage, at 5.75%, over 25 years would cost approximately £717 per month. Adding on your existing £500 per month loan/credit card payment means you will be paying out £1217 per month. On top of that you will have a council tax payment as well.

johngt_2

Though I have been advised that repayment mortgage is the best, because of my money flow issues I want to go I for a interest only mortgage.


Will I be able to get a straight forward mortgage with my situation?
I am wondering because when I have checked on some online eligibility calculator, it has come back saying I can borrow 50000 – 70000 based on my status and i am looking to borrow 120k.

riad_2

You certainly have a very good income which will support a mortgage of the size you're looking for (120k) without a problem... the only issue the lenders have is the fact that your outgoings of £500/month will severely dampen your affordibility for repayments... hence it might affect how much they are willing to lend.

The student loan is not really an issue. I would try and get the credit card and loan debts down as fast as possibile... try transferring the credit card balance to a 0% card for at least a year and try and throw all your spare money at that and the loan. If you can pay both off in a year (and save a couple of odd grand for your deposit if possibile) you will be in a much better position. With your income, paying off the 15k in a year will yes be tight but is very possibile!!

Given the market as it is I think waiting a year (while you pay as much off your debts) will benefit you as it doesn't seem like prices are going up anytime soon, and in a year's time you may find that prices may have come down. I think a year from now is actually the perfect time to buy!

Hope this helps!

PasturesNew

£32k gives you £1946/month takehome.

£500 - debts/student loan
£717 - mortgage (stated by poster above)
£120 - council tax (wild guess)
£250 - household bills (erring on the side of caution)
====
£1587

Leaving you £359 to live on: food, clothes, holidays, xmas, birthdays, household goods, house repairs....

Not a lot.

Clear your debts in total (maybe not student loan, depending on the rate of interest you are paying on it compared to your savings rate of interest) by paying out £1500/month on them. Then save £1587/month religiously WITHOUT touching it ever.

After 1 year, look at how your debts are clear, how you've found living without the money you need to own/run a house. And take it forward from there when prices won't have risen - and (I believe) may even have dropped (a lot if you ask me).