Fixed Term vs Variable Rate

davidjames_96

Hi everyone,

Me and my partner have found our dream home, everthingbwas going amazing however we have been rejected by two lenders in two days for a mortgage :eek:!

We have been using a mortgage broker and the situation was very clear.. affordability wise we are fine, we have a 10% deposit and credit ratings are all fine.. but we have failed in both attempts because my partners employment contract is a 1 year fixed term contract (I believe all newly qualified teachers receive these in their first year of teaching). We are so stuck!

We have heard of the The Teachers Building Society, they might be able to help, however in order to get accepted we would need to clear a 6k loan we have, reducing our deposit to 5%. Their 2 year variable mortgage is reasonable, there’s no 2 year fixed option and the 5 year fixed is too expensive.

Any advice on any of the above would be great!

Thanks

davidjames_96

Sorry I would just like to add in - the TBS mortgage would be 40 years I!!!8217;m hoping that in 2 years time we can remortgage to a 30 year mortgage, is it as easy as that?

I!!!8217;m an accountant and my partner is a teacher, we pay £700 a month on rent and we manage a monthly budget extremely well, they don!!!8217;t half make it hard to buy a house these days!!

Thrugelmir

davidjames_96 wrote: »

we have a 10% deposit

we would need to clear a 6k loan we have, reducing our deposit to 5%.

For some lenders this is the issue. As 50% of the deposit is borrowed. In essence you only do have a 5% deposit. Savings and borrowing do not sit in different buckets.

davidjames_96

Hi,

No sorry that!!!8217;s not the situation. We have a 10% deposit in cash, no borrowings it!!!8217;s 100% Savings. However we currently pay £179 a month for a car loan.. in order to meet affordability for TBS we would need to use £6k of our cash deposit to clear the loan, which will mean we can only afford a 5% deposit. Sorry for any confusion!

Thanks

julicorn

But that's fundamentally the same thing (or at least very similar) for a lot of lenders. £10k in savings + £6k in debt only gives you net savings of £4k.