First Time Buyer - Is It Possible?

Grezz24

Hi all,

so myself and my wife went to view a house yesterday to get a feel for what was out there, but have got to a point where we love the house and are being told it is possible to do in our current situation.

Details are:

House - £221,995
5% deposit required- 11099
Help to Buy mortgage cost - £166,496
House Completion in October (offered extra stuff free such as fully fitted kitchen with appliances, turfed lawn etc etc which is causing us to consider doing it)

Our details
My Salary - £41,001 (monthly take home after tax £2,435.38)
Bonus - 3-5% depending on company year (say £1000 a year for ease as its never been below that in the time ive worked there - 3 years - its usually around 1500-2000)

Wifes details
Salary - £8580 (this is over the last 12 months - she is currently self employed but is on the books with a school - so she gets wage slips from the school and has 12 months worth. However she will be leaving self employed in August and starting with the school on a contracted role at a salary of £13,358 - starting sept)

we have a 1 year old son and pay around £200-300 a month on child care but told natwest dont look at this, and thats out of my wifes salary while mine is used purely towards saving)
Current savings £6000
Saving £1000 per month

Credit:
Wife has good credit, old default but disappeared off her file a while ago
my credit isnt so good - my score is showing as 801
appreciate my score means nothing so looking at my file i have 3 current accounts open
1 - store card - limit of £800 but currently at a balance of £0 as i rarely use it
2 - halifax ultimate reward account - due to overdraft it shows on my file but thats been green for years
3 - mobile phone contract - all updated

I have no outstanding debt or money owed - currently i pay £170 per month back on my student loan but thats via my earns and doesnt appear on my file for the usual reasons. Only other outgoings are usual stuff like sky/tv licence/ mobile/ council tax/ gas&elec etc but i do have two defaults:

1. Capital One - Default amount - £1,264 - default date 31/10/13 (showing as satisfied as i offered part payment a few years ago)
2. Lowell (bought from a previous company) - £1,668 - default date - 31/05/13 - (showing as satisfied as i paid it off)

Mortgage adviser (Mortgage bureau) said due to wife's complicated pay it made sense to just use my salary in the affordability - and that i fit all the criteria and passed etc.

said i could potentially get (subject to application and including the fact i have defaults)

Natwest - fixed 2.19% for 5 years at £567.91 a month (we pay £515 a month rent and saving £1000 so very doable)

however this is where it gets tricky.

1. If we were to go for the house we are told we dont have to have the 5% until October until the house completes is that correct?
2. looking at the above figures does it seem correct that i would be able to get the rate offered to me, even though i have 2 defaults (appreciate no one knows until you apply but based on experience) ?
3. if they are only using my salary then i can still put my wife on the application / deeds?
4. if its only my salary thats going onto the mortgage then can my wife use her credit card / overdraft if needed to help with household things while we try save more money for the deposit - as they wont be checking her accounts? currently she has a balance of £0 but available about £4000 over overdraft / credit card)
5. valuation and completion fee are on the mortgage, is there any other costs required (broker is fee free its via mortgage company) (i would get a snagging company i think but that wouldnt affect mortage)
6. is there anything else i have missed / not considered?

we will have the 5% by the completion date of the house hence our attractiveness to the home - and theres nothing else like it around for a good year as they are all still being built so if we didnt go for it we would be renting for around 6-12 months longer.

Thanks for getting this far if you reached the bottom!

Noobie2011

Grezz24 wrote: »

Hi all,

so myself and my wife went to view a house yesterday to get a feel for what was out there, but have got to a point where we love the house and are being told it is possible to do in our current situation.

Details are:

House - £221,995
5% deposit required- 11099
Help to Buy mortgage cost - £166,496
House Completion in October (offered extra stuff free such as fully fitted kitchen with appliances, turfed lawn etc etc which is causing us to consider doing it)

Our details
My Salary - £41,001 (monthly take home after tax £2,435.38)
Bonus - 3-5% depending on company year (say £1000 a year for ease as its never been below that in the time ive worked there - 3 years - its usually around 1500-2000)

Wifes details
Salary - £8580 (this is over the last 12 months - she is currently self employed but is on the books with a school - so she gets wage slips from the school and has 12 months worth. However she will be leaving self employed in August and starting with the school on a contracted role at a salary of £13,358 - starting sept)

we have a 1 year old son and pay around £200-300 a month on child care but told natwest dont look at this, and thats out of my wifes salary while mine is used purely towards saving)
Current savings £6000
Saving £1000 per month

Credit:
Wife has good credit, old default but disappeared off her file a while ago
my credit isnt so good - my score is showing as 801
appreciate my score means nothing so looking at my file i have 3 current accounts open
1 - store card - limit of £800 but currently at a balance of £0 as i rarely use it
2 - halifax ultimate reward account - due to overdraft it shows on my file but thats been green for years
3 - mobile phone contract - all updated

I have no outstanding debt or money owed - currently i pay £170 per month back on my student loan but thats via my earns and doesnt appear on my file for the usual reasons. Only other outgoings are usual stuff like sky/tv licence/ mobile/ council tax/ gas&elec etc but i do have two defaults:

1. Capital One - Default amount - £1,264 - default date 31/10/13 (showing as satisfied as i offered part payment a few years ago)
2. Lowell (bought from a previous company) - £1,668 - default date - 31/05/13 - (showing as satisfied as i paid it off)

Mortgage adviser (Mortgage bureau) said due to wife's complicated pay it made sense to just use my salary in the affordability - and that i fit all the criteria and passed etc.

said i could potentially get (subject to application and including the fact i have defaults)

Natwest - fixed 2.19% for 5 years at £567.91 a month (we pay £515 a month rent and saving £1000 so very doable)

however this is where it gets tricky.

1. If we were to go for the house we are told we dont have to have the 5% until October until the house completes is that correct? - I was under the impression it was given at Exchange but then just assumed that as normal process but we are doing HTB so may check that out myself
2. looking at the above figures does it seem correct that i would be able to get the rate offered to me, even though i have 2 defaults (appreciate no one knows until you apply but based on experience) ? - The HTB rates for the main banks are fixed as far as I am aware so you either get it or you do not
3. if they are only using my salary then i can still put my wife on the application / deeds? - I do not think you can as most lenders we went through required it as a joint application if married plus I am not sure of what the HTB conditions are if any
4. if its only my salary thats going onto the mortgage then can my wife use her credit card / overdraft if needed to help with household things while we try save more money for the deposit - as they wont be checking her accounts? currently she has a balance of £0 but available about £4000 over overdraft / credit card) - In theory yes but if possible the best course of action is to not change any of your circumstances until completion as her being associated with you on your credit file means any change in her circumstances could affect you.
5. valuation and completion fee are on the mortgage, is there any other costs required (broker is fee free its via mortgage company) (i would get a snagging company i think but that wouldnt affect mortage) - Usually the Key illustrations will detail any costs you will have direct to the lender and what can and cannot be added to the mortgage. Only other main fees will be listed on your Solicitors Quote.
6. is there anything else i have missed / not considered? - Just list everything such as moving costs and also when bills will stop at one property and start at the next as this can work out you sometimes save or lose money depending how it falls. Also remember your 1st months Mortgage payment could be higher than your normal month as it will include extra interest but would check that with your Lender or Broker. Also if it is only until completion for the 5% just check the proof the lenders require as they still might want proof you have it already or may be happy with you showing your savings plan to get it by the required date

we will have the 5% by the completion date of the house hence our attractiveness to the home - and theres nothing else like it around for a good year as they are all still being built so if we didnt go for it we would be renting for around 6-12 months longer.

Thanks for getting this far if you reached the bottom!

1. If we were to go for the house we are told we dont have to have the 5% until October until the house completes is that correct? - I was under the impression it was given at Exchange but then just assumed that as normal process but we are doing HTB so may check that out myself
2. looking at the above figures does it seem correct that i would be able to get the rate offered to me, even though i have 2 defaults (appreciate no one knows until you apply but based on experience) ? - The HTB rates for the main banks are fixed as far as I am aware so you either get it or you do not
3. if they are only using my salary then i can still put my wife on the application / deeds? - I do not think you can as most lenders we went through required it as a joint application if married plus I am not sure of what the HTB conditions are if any
4. if its only my salary thats going onto the mortgage then can my wife use her credit card / overdraft if needed to help with household things while we try save more money for the deposit - as they wont be checking her accounts? currently she has a balance of £0 but available about £4000 over overdraft / credit card) - In theory yes but if possible the best course of action is to not change any of your circumstances until completion as her being associated with you on your credit file means any change in her circumstances could affect you.
5. valuation and completion fee are on the mortgage, is there any other costs required (broker is fee free its via mortgage company) (i would get a snagging company i think but that wouldnt affect mortage) - Usually the Key illustrations will detail any costs you will have direct to the lender and what can and cannot be added to the mortgage. Only other main fees will be listed on your Solicitors Quote.
6. is there anything else i have missed / not considered? - Just list everything such as moving costs and also when bills will stop at one property and start at the next as this can work out you sometimes save or lose money depending how it falls. Also remember your 1st months Mortgage payment could be higher than your normal month as it will include extra interest but would check that with your Lender or Broker. Also if it is only until completion for the 5% just check the proof the lenders require as they still might want proof you have it already or may be happy with you showing your savings plan to get it by the required date

kingstreet

Grezz24 wrote: »

1. If we were to go for the house we are told we dont have to have the 5% until October until the house completes is that correct?

Normally, your 5% deposit is required by your solicitor ahead of exchange of contracts.

2. looking at the above figures does it seem correct that i would be able to get the rate offered to me, even though i have 2 defaults (appreciate no one knows until you apply but based on experience) ?

I wouldn't second guess NatWest. Maybe, maybe not. They lend on that rate, or they don't lend. They don't have higher rates for less attractive borrowers.

3. if they are only using my salary then i can still put my wife on the application / deeds?

Yes. If you pass affordability on that basis.

4. if its only my salary thats going onto the mortgage then can my wife use her credit card / overdraft if needed to help with household things while we try save more money for the deposit - as they wont be checking her accounts? currently she has a balance of £0 but available about £4000 over overdraft / credit card)

Not if she's an applicant she can't. Her commitments are taken into account even if you choose not to use her income.

5. valuation and completion fee are on the mortgage, is there any other costs required (broker is fee free its via mortgage company) (i would get a snagging company i think but that wouldnt affect mortage)

Valuation fee is paid upfront when you apply for the mortgage. The product fee can be added as long as you have headroom in your affordability.

6. is there anything else i have missed / not considered?

Dunno. Check the NatWest and HTB Affordability Calculators if you haven't already.

Grezz24

so it is possible to apply now, knowing that the build completes october (or later) with the knowledge the 5% deposit will be ready for October?

will the defaults i have still allow me access to the main lenders? i expected to have to go down the adverse route?