First time buyer but high pre-existing loans

clkaz

Hey,
I am looking to purchase a flat and am not sure if it is even worth applying for a mortgage.I have £14000 outstanding on car. £19500 outstanding on personal loan. £4800 outstanding on 2 credit cards.
My credit score is in the fair-good category.
After budgeting for everything I have approx £700 disposable income which is where my mortgage would come from. This is after paying the montlhy payments for the car/loans/credit cards, gym, estimated bills and council tax, fuel, food, etc.

My debt to income ratio is 41% if I use gross monthly income and monthly debt payments.

I'm a doctor and therefore have a high earning potential but I know that isn't really taken into account except for maybe a small number of lenders.

I'm probably a little silly for asking on here for advice but just curious to see if anyone else has had experience in a similar situation.

Do some lenders deduct pension? I am signed up to NHS pension.
I also have a student loan of £24000ish outstanding.

Because of money coming out for savings etc my bank statements are awful showing more out than in mostly because of payments going out to my savings account but it currently got has over £2000 in it.

Deposit would be from me and family.

First time buyer so just looking for advice, etc.

Do all lenders ask for current account statements and use student loan against you?

I've never looked too deep into my finances beyond ensuring I'm able to save a little and enjoy myself because I manage fine and I know I can locum a weekend here and there if I need more money.

cashbackproblems

most likely long term you will be fine money wise but the moment the high debts don't look great


You have said you can afford £700 for the mortgage, but not your earnings or how much the property will be which determines how much you can borrow and subsequently the affordability assessment lenders will carry out. There will also look to see if mortgages rates increased to 5% for example (not unrealistic), could you still afford repayments. And your other spending.


Student loan wont be taken into account. Pension deductions will so they will look at you net take home pay


Even though you are a doctor i.e. I assume stable job, I would look to clear the debts first.

amnblog

A debt to income ratio is a no for many lenders, some will include your pension costs in the affordability calculation, someone will not.

Plus the complication lenders don!!!8217;t know how to handle the vagaries of doctors incomes.

You need this application managed by a professional, one who is used to managing doctors .

Thrugelmir

clkaz wrote: »

After budgeting for everything I have approx £700 disposable income which is where my mortgage would come from.

Doesn't appear to leave you much leeway. Particularly as affordability checks are based on what interest rates may rise too. Nor any provision for the unexpected.

While you have earnings potential. Lenders decisions are based on the here and now. Ignore your credit score. Focus instead on your current level of indebtedness.

clkaz

I've got a mortgage advisor and I've sent him all the details. Will see what he says but I am doubtful. No hurry. Just having to move for work...so had a thought to buy myself instead of renting.

GoingOn30

It also depends what kind of deposit you'll be applying with, if it's 25% you are less risky to lenders than a 5 or 10% deposit.
As above focus on getting your debt down over the next few months, focus on paying the highest interest rate debt first. Picking up more shifts at work will help evidence your increased earning ability for some lenders too.
I can recommend a broker who knows about junior doc wages under the new contract if you have no joy with your first broker.

BigTaff

Search for the Barclays for intermediaries residential affordability calculator - it's pretty much spot on for assessing your affordability. Do an AIP with a bank that uses a soft search (Halifax, NatWest, HSBC, Santander, COOP, Lloyd's etc) you will very quickly have your answer. See my thread as we've just been through this process and felt having a halfax broker that was familiar with their underwriters and could talk to them was better than having an independent broker (yes, very controversial to say here)