FTB Mortgage Advice

Jennaturner

Hi everyone,

I’m looking for someone to put my mind at ease about mortgages. As I’m driving myself crazy/worrying myself silly about it all and we’ve not even really begun yet.

Myaelf and my husband are currently in the process of buying a new build property and have a meeting with our mortgage broker next week to go through everything, choose a lender that fits our criteria and submit an application to our chosen lender. Both of us are first time buyers and so we don’t really have a clue what we are doing and I am worried sick we won’t get the house of our dreams we have fallen in love with.

The property value is £318,995. We have a deposit of £34.5k. My husband is self employed and has 4 years of accounts and tax returns. His latest accounts show a net profit of £39,755 and my annual salary is £21.5k so combined we have quite a decent income. We don’t have any children. We have no car finance, no loans and a single credit card with a balance of £1200 (limit £3000) which we are planning on clearing in the next few months. We have a DFS higher purchase plan on our sofa of £90 a month, which ends in March. My husband has no defaults on his credit report but I have 2 satisfied defaults from almost 6 years ago (one will expire in September and the other in January 2019). My credit score is showing as good on Experian, Noddle and ClearScore. I just want some reassurance that there is a mortgage out there for us somewhere! Please can someone reassure me?

middleclassbutpoor

Exciting times..

Are you using help to buy or were you looking to purchase in the traditional way?

Do you have other funds set aside for stamp duty and legal costs etc.?

Are your husbands accounts fairly consistent in his earnings or have they varied massively if you were to look at the last 2 years?

Not saying you will have to do this but have you considered getting your debts cleared by using some of your deposit money?

kingstreet

A 90% mortgage on a newbuild at over 4.5x income is going to be interesting.

It's his average net profit for the last two years which is going to be used. No lender offering 90% on a newbuild takes latest year only.

Have you tried the affordability calculators for the handful of lenders open to you?

AnotherJoe

Jennaturner wrote: »

Myself and my husband are currently in the process of buying a new build property and have a meeting with our mortgage broker next week to go through everything, choose a lender that fits our criteria and submit an application to our chosen lender. Both of us are first time buyers and so we don’t really have a clue what we are doing and I am worried sick we won’t get the house of our dreams we have fallen in love with.

Most of us as FTB's couldn't buy our "dream house" straight off, I suspect you are stretching too far? A better plan would have been to investigate what you can borrow before looking at houses that are most likely out of your affordability. Seems to me you are looking for 5x income multiple.

What do affordability websites for lenders say you can borrow? I would guess not enough?

Good luck but i think you should spend the BH weekend looking at cheaper houses (at least 10% cheaper)

EDIT: I see Kingstreet already asked this Q about affordability. Did you do that before looking at this house? Maybe in that case the broker can find you a lender.

Jennaturner

I have spent the last few months looking at so many different mortgage calculators online. Halifax say they can lend more than we would need, nationwide say they can lend about £5k less than what we would need and Santander say they can lend more than what we would need also. I’ve also looked at NatWest, Barclays and lots of other lenders and have been as accurate with figures as I can be. We have received an agreement in principle with our broker and passed the affordability check with them but I know that mortgage calculators are only an estimate and they don’t always mean that we can borrow as much as they say. I understand that most first time buyers can’t buy their dream house as their first house but from doing all these online calculators, this is what led us to look at houses for that sort of price. This one is slightly more than we initially were looking at (we were looking at £300k) however if we need to we are fortunate that our parents could gift us the extra deposit we may need.

phillw

Jennaturner wrote: »

Myaelf and my husband are currently in the process of buying a new build property and have a meeting with our mortgage broker next week to go through everything, choose a lender that fits our criteria and submit an application to our chosen lender.

There are good and bad mortgage brokers, I know someone who recently bought a house that another mortgage broker told them they wouldn't get a mortgage for. I can't speak for the one you chose, but I would be wary if you will owe them commission even if you are turned down for the mortgage.

I'm not sure what your criteria are, but it's the lenders criteria that is more important. You may not be in a position to get your dream mortgage as well as your dream house.

Jennaturner

We do have other funds set aside for legal fees and the developer has agreed to pay the stamp duty for us on the £18,995. My husbands net profit has increased over the last 3 years by about £5k each time. So his net profit for 2016/17 was just under £34k.

kingstreet

Jennaturner wrote: »

I have spent the last few months looking at so many different mortgage calculators online. Halifax say they can lend more than we would need, nationwide say they can lend about £5k less than what we would need and Santander say they can lend more than what we would need also. I’ve also looked at NatWest, Barclays and lots of other lenders and have been as accurate with figures as I can be. We have received an agreement in principle with our broker and passed the affordability check with them but I know that mortgage calculators are only an estimate and they don’t always mean that we can borrow as much as they say. I understand that most first time buyers can’t buy their dream house as their first house but from doing all these online calculators, this is what led us to look at houses for that sort of price. This one is slightly more than we initially were looking at (we were looking at £300k) however if we need to we are fortunate that our parents could gift us the extra deposit we may need.

None of the lenders you have mentioned will lend 90% on a newbuild - not Barclays, Santander, NatWest. Halifax may, but only if you buy from one of their panel builders. Otherwise the max is 85%.

Jennaturner

Is it because it’s a new build property that they won’t lend at 90%?

kingstreet

Yup.

NatWest, Nationwide, Santander, Halifax, HSBC, TSB, Accord etc all restrict their lending on newbuilds with lower than normal LTVs on newbuild houses/flats than on previously-owned property.

Apologies - Barclays is one of the small pool of lenders offering 90% on newbuild houses. They recently changed from 85% max.

Jennaturner

Ok, perhaps I can speak to my parents about gifting us some money to top our deposit up. They offered but we wanted to try and do it ourselves. But better to be safe than sorry I guess.