How to get the best mortgage for a first time buyer (26y/o single male)

jdotpeacock92

Hello all,

To cut a long story short I'm looking to get my first mortage for a property.

My mother has a property that she is going to sell that will free up £135,000 towards a deposit.

I'am a single male, on an £18k a year job before tax. However I'am good with money and have available £580 for the mortage payments, plus £140 thereabouts for utility bills and £120 for council tax.

We have been looking a 2-bed flats and properties in the region of £250,000 to £325,000.

Due to my income we have decided to do a joint mortgage with my mother, thereby increasing out joint income. The goal however is for me to be able to pay the full mortgage thus not needing to rely on anyone, currently I have never missed a payment on anything, my credit score is very good, I can only truly rely on myself hence why I don't want to start a mortgage with a possible future partner that may fall apart.

According to mortgage calculators a £325,000 property, minus £135,000 (44%) deposit on a 2.5% fixed five year interest mortgage from HSBC over 40 years puts the monthly payments at about £627 a month. The main goal is to secure a mortgage with the lowest possible monthly payment.

I could actually afford that myself however I give myself atleast £100 after £580 for living basically, but my mother has agreed to contribute £350 towards the mortage so really from both sides it is very affordable.

However my mother had a meeting with a mortgage advisor from LLoyds bank which we both use today and they only offered a measly £98,000 loan.

Their argument is my mother will retire in 12 years thus as a guarantor she cannot be relied upon to have her current £30k+ wage to back me up saying I'am only just going to be able to afford payments myself. Thus the won't offer a 40 year mortgage only a 25 which increases the monthly payments. However in retirement if push came to shove I'am sure she could afford £50 a month for me. From my perspective I will eventually focus on my career and thus look to increase my income so I will comfortably be able to afford the mortage even when the interest rates normalise after the 5 years, also I may have a partner which she will contribute money towards but will not be on the mortgage thus not relying on her.

Can anyone advise me on what to do to secure the £190,000 loan as opposed to the £98,000 we are currently being offered I feel there are better options available, can I consult other banks in regards to mortgages which I do not bank with to look for the best deals?

Should I put both parents on a joint mortgage as opposed to my mother even though both will retire in under 12 years, or should I re-book an appointment and detail my income and outgoings thus clearly showing how much I can comfortably contribute towards a mortage payment instead of them trying to deduce your affordability based on just your income.

Thanks in advanced,
Joe.

ACG

I am not one to say it cant be done as I like to think where there is a will there is a way but you are not going to get anything more than £100k on your income alone. You may be able to take your mothers income into account but her age will limit the term.
You could potentially look to use her pensionable income but that will probably limit your lending ability and will result in higher rates.

The other thing is that you say you can afford £580 a month which is great that you have worked that out, but lenders determine how much they will lend you based on their own calculations and that typically takes into account a rate of around 6-8%. You are doing it based on todays rates, they are building in a buffer for when rates will inevitably rise.

General rule of thumb is 4.5x income if over a 25(ish) year term. Because of your deposit and low expenses, you can probably get to around 5x income, but probably not with mums age/income.

Imagine being given an eleastic band, you can stretch it in every direction so far or one direction a little bit further.

jdotpeacock92

Oh yeah, I completely understand the banks logic and the point you are making.
Its strange though, usually when I personally speak to an advisor on the phone / in person regarding a loan or other I usually am able to get them to understand my situation alot better by putting my personal spin on it and they usually come round. I've secured big loans in the past which others have failed to do.

I mean for instance I don't intent to stay in this 325k property in hertfordshire for long, definitely not the full 5-year fixed term. I plan on selling, and moving up north for a cheaper but larger property thus ending up in a much more affordable situation. Also the situation of me being on 18k will not be like that forever, however if you can survive and pay a mortgage on a minimum wage, surely thats a good situation as you literally can do no worse, you could walk out of one job and into another and your financial situation would not change.
I've rented with partners and it all depends on the quality of the relationship, surely thats a greater risk for a bank.

Its like the flat I'm in at the moment, its a 2-bed at 950 a month, on my own I couldnt gain a tenancy so my mothers the guarantor, however I can afford the full rent myself. But to a landlord I'm a risk on my own, however I can prove I'am not. I'm a single man who leaves his properties looking better than when he moved in, I do think I'm a little different to the norm.
If I secure a cheaper property, the ability to up-size will be nearly impossible hence why I'm trying for the best I can go for even if it is a stretch at the moment.

At the banks current offer we could stretch to a £250k 2-bed flat, however that im my opinion is very limiting for a future, family, it will also be leasehold e.t.c whereas for £75,000 more I could find a property that would tick every box, with garage, garden, plenty of rooms, and be freehold e.t.c, it would be a much more comfortable way of living.

I don't want to appear self-entitled as its not my money, it is my mothers however I will fight for the best outcome.

I think the main issues are:
- They are taking into account a current loan I have and thus not think of my disposable income once its paid off in february
- They are not giving me a 40 year mortgage only 25 due to my mother retiring in 12 years
- They are looking at my disposable income based on a £950 rent payment as opposed to a £627 mortgage payment
- Not taking into account possibly future situations of partners, lodgers, higher wages e.t.c, but they are taking into account future possible interest inflation

enthusiasticsaver

If your parents are retiring in 12 years time there is little chance of you getting a long mortgage with them named on it. On a mortgage of that size over a short period then repayments would be extortionate so you are in a tricky situation. Even if you feel your mum can support you still in retirement no bank is going to take that for granted. There is also the possibility of interest rate rises meaning that on such a large mortgage on one salary the next time you fix it could be a much higher repayment. If you don't intend staying in your current expensive area for long then why not save up for longer until you go up north or wherever you plan to move to? Otherwise it is go for a cheaper property. Securing a big loan on a relatively low salary is not particularly sensible so I can see why the banks are reluctant.

ACG

Someone on here described this type of thing quite well. You are looking at your situation from the bottom up. The lender is looking at it from the top down. By that I mean the bank has hundreds or thousands of customers. They can not physically sit there and look at every case on all of its merits.

There are some lenders with manual underwriting where they will spend a little more time understanding but even they have limits.

A lender will not accept you downsizing in a few years and in fact that could go against you.

---

I think the main issues are:
- They are taking into account a current loan I have and thus not think of my disposable income once its paid off in february - Some will if it has less than 6 months left to run. But even with that gone you will not get close.
- They are not giving me a 40 year mortgage only 25 due to my mother retiring in 12 years - If you want to use your mums income, they will use her age. You cant have the best of both worlds.
- They are looking at my disposable income based on a £950 rent payment as opposed to a £627 mortgage payment - No theyre not. Sounds like a misunderstanding. They will be looking at a monthly payment taking in to account their buffer for rate rises, it wont be the £950 or £627.
- Not taking into account possibly future situations of partners, lodgers, higher wages e.t.c, but they are taking into account future possible interest inflation - That is because you might not get a partner, a lodger or a pay rise. They are building in buffer for rate rises, because rates WILL go up in 25 years and 40 years.


You are not the first in the situation, but you appear to want a lender who will:
Lend on your income and your mums income and possibly a lodgers rent/partner paying towards the bills and pay rises BUT at the same time ignore your debt, ignore your mums age, ignore the fact your mums income will stop/drop during the next 40 years and the fact that interest rates will rise.

You can get a mixture of some of the things you want, but not the majority and definitely not all.

jdotpeacock92

Makes senes what you are saying, obviously I'am more invested, emotionally too, banks are logically thinking of the risk and return, understandable.

From a logical standpoint. Is it possible to go ahead with the £98,000 we are being offered, I pay the full mortgage and my mother takes out a seperate personal loan / bridging loan of 20k at £230 p/m which is what she was going to contribute to the mortgage anyhow. That would atleast give us £98,000 mortgage, £155,000 deposit able to go for properties up to £253,000.
Mortgage calculators show a £98,000 mortgage over 25 years at 3.9% £513. I could afford that and would atleast stretch to a decent 2-bed flat.

Is there anything that can be done on her 'pensionable income' at all, I mean she lives with her partner and has no actual contributions, no rent, no car insurance e.t.c

One more question, if I did take out a mortgage with a girlfriend who earned the same wage, so 2x £18000, at 5times (at a stretch) hypothetically speaking being able to afford a £180k mortgage over 40 years (26 y/o's), what would happen if the relationship fell apart and the girlfriend requested to be taken off the mortgage? If I could technically still afford the mortgage and my mother was a guarantor could they disolve the mortgage even though I could afford it? I mean that would be an ideal situation.

Thanks again.

ACG

They would refuse to take the gf off the Mortgage as you would be assessed as a sole applicant and would then fail affordability on your own.

Mum can take out an unsecured loan sibject to the normal stuff. She can not take out a bridge or a secured loan on a property she is not on.

Mum can only guarantee a Mortgage for as long as her income stacks up. I have been in your shoes and you will think of 100 ideas to get 10x your income, but even with a guarantor it will not happen.

Guarantors actually limits your options because there are not many lenders who will do them and those that do tend to have criteria and rules that need to be met. Using your mums income in any way is affecting your term. You may be able to use her pensionable income but if she is living in a different property, it will need to be significant to have any sort of positive effect on your lending ability as she is not unlikely to give you 100% of her pension. The lender will assume an element is held back for her every day living expenses if nothing else.

I know I sound like a no man at the minute, but it is just a non starter in any form.

I would be relatively confident of around 4.8x your income or 4.5x your mums pension and your income. But the other thing to consider is if your mum is on the deeds of another property, you would be liable for higher rate stamp duty on this purchase.

jdotpeacock92

Ok so basically my two choices are
a) Mother and son (My income plus her pensionable income)£18,000 x4.5 + £3000 =£98,000(12years)
b) Me and partner (2x £18,000 x4.5) (40 years) £162,000

My mother is not on any deeds, the £135k is her share from her amicable split from her husband.
I'am banking on the First buyer stamp duty discount but am confident I should make it. Do the banks take into consideration my mothers state pension or private or both, I think she has a pretty sizeable private pension from 25+ years at one of her jobs.

I suppose the plus side is I could potentially pay off a mortgage in 12 years and have £250,000 to put down on a deposit for the next property, and then I might have a partner.

Regards,
Joe.

YHM

Your mothers pensionable income can be accounted for within an application, but don't expect to get a FTB Stamp Duty discount if your mother is going on the deeds of your new property, if she has already owned a property.

jdotpeacock92

YHM what about a joint mortgage sole proprietor where we borrow together but only one name on the deed thus enabling me to benefit from the under £300,000 FTB no stamp duty discount?

Pixie5740

[STRIKE]HSBC offer a joint mortgage sole proprietor but I think your chances of getting a mortgage with HSBC are slim to none.[/STRIKE]

Pish