FTB and absolutely PETRIFIED

scaredycat94

Hi everyone,


I'm a first time buyer - or at least, I want to be. I've found a house I adore, its £115000.
But I am absolutely terrified of the idea of applying for a mortgage.


I only have enough deposit saved for a 95% mortgage to be achievable. So I'd be lending £109,250, and my deposit would be £5750.


Savings in a nutshell:
I have £5000 in a savings account.
£2200 in my Help to Buy ISA (so as it stands right now we can call it £2750 with the bonus on top?)
I never let my debit account drop below £1500 and try to budget to avoid this.


On the other hand, my debt worries me. Its not unmanageable for me, I'm just saying its there -I wish it wasn't - but it is, and I don't know how much of a significant effect its going to have on my mortgage chances.
I have a car via PCP - this costs me about £270 a month
I have £3800 on a credit card, 0% interest till 2021 - I currently pay £100 a month towards reducing this.
I have £1800 on a credit card, 0% interest until 2020 - I'd plan to pay this off before my mortgage starts with my savings, but again I pay £100 a month towards reducing this right now.


I've had one single missed credit card payment in my entire life, it only shows up on my Equifax report, I can't see it on any other credit report- it happened 4 years ago on a new card for which I'd simply overlooked my initial direct debit set up and I've been mortified about it ever since.


My credit rating currently shows as excellent on every credit report source I've checked.


Salary wise -
I've been employed by the same company for almost 7 years now. My annual income before tax is £33500. I receive an annual bonus, the value varies based on company and personal performance multipliers etc, but it is usually 6% of my annual salary. for the past 3 years its been between £2000 - £3000.


I guess I just want to get a good idea from someone in the know what my chances are in being successful applying for a mortgage based on what I've summarised here. Or maybe hear from someone who has been in a similar financial situation whether their mortgage application has been a nightmare experience or it was fine.


I've got a MIP from my bank, Barclays, after giving them the information I've quoted in this message for 109250, but I just don't really know how much I can rely on this. Same goes for Natwest, Virgin money, and 'Trussle'.


And whether it makes any difference or not, I'm 25, I'd be hoping for a mortgage over 25 years but 30 would be fine.


Any help/advice/criticism etc is welcome.


Thanks!

ACG

From an affordability point of view it is fine.

I know what you mean though, with a mortgage you get to see you are over £100k in debt, which is scary. However, it is no different to rent. The only difference is that you can not really quantify what your rent will be for the next 25 years so it does not appear like you have a massive debt around your neck although technically you do, it would probably also be more than your mortgage will be in the long run.

Housebuy12345

AFAIK 30 year mortgages are more expensive

Don’t stress. Would you rather pay rent or a house? Either or, you are paying money a money.

sazandy25

Firstly being nervous is normal, every person who has bought a house for the first time was nervous, no matter what they say.

Talk to a mortgage broker, we use London & Country, great service & they talk you through every stage. They will search for the best mortgage deal out there for you & will answer any questions you have.

Go for it.......

Frugal_Saver

Hi, I would advise speaking to a mortgage advisor rather than your bank to get the best deal.

I’m a FTB in the process of applying for a 95% mortgage which is not far off the same as you (£109k). I only have one debt which is a £4,500 on a credit card at 0% until 2021.

My salary isn’t as much as yours so my mortgage broker advised I have to take it out over 35 years to meet affordability criteria, however I can overpay to reduce this. Even with overpayments my monthly mortgage would be less than I’m paying in rent just now.

The way I look at it is I’m going to be paying either rent or mortgage for most (if not all) my working life. I’ve considered the pros and cons of both and I’d rather have the responsibility of owning a house.

Good luck with whatever you decide to do.

AnotherJoe

ACG wrote: »

From an affordability point of view it is fine.

I know what you mean though, with a mortgage you get to see you are over £100k in debt, which is scary. However, it is no different to rent. The only difference is that you can not really quantify what your rent will be for the next [STRIKE]25[/STRIKE] 50 + years so it does not appear like you have a massive debt around your neck although technically you do, it would probably also be more than your mortgage will be in the long run.

Excellent point. If your mortgage is say £100k you can see you owe £100k. If you didn't have a Mortgage no one would be telling you "you owe rent for the rest if your life which is approximately £500k" but that's the situation.
Edit : I changed ACGs 25 year figure above to 50+ because you pay your mortgage for a fixed period but you'd be paying rent forever. So if like most people your mortgage will be lower than your rent don't forget it's not just cheaper for the period of the mortgage, rent carries on after the mortgage ends.

connors07

I can only echo the excellent points already raised. Sinking even more money into rent is more expensive than a mortgage and you'll have something at the end of it; its an investment even if that isn't your primary goal. Just get a mortgage that is fixed for a good amount of time so that you have peace of mind. There is some amazing rates around.

It is normal to be scared. It would be weird if you wasn't. Fear is what makes you make good decisions which is why I consider you to be in an excellent position for anyone let alone being only 25 years old. Just don't let it keep you awake at night. Strike the right balance.

scaredycat94

ACG wrote: »

From an affordability point of view it is fine.

I know what you mean though, with a mortgage you get to see you are over £100k in debt, which is scary. However, it is no different to rent. The only difference is that you can not really quantify what your rent will be for the next 25 years so it does not appear like you have a massive debt around your neck although technically you do, it would probably also be more than your mortgage will be in the long run.

Thank you for your reply.

I'm currently not paying any rent, living with parents so I pay some board and thats about it - I've struck renting off my list as a possibility just simply because I don't like the thought of it.

I guess my fear exists around the mortgage application, not really the thought of having that debt over my head. I'm terrified I'd get turned down the moment I apply. I don't really know if I'm in a good position or a bad position.

Another issue, I'm really just scared of sitting down in front of a mortgage adviser and saying - this is my financial situation - as like I said before, I don't know if its good or bad.

Frugal_Saver

I wouldn’t worry too much about the initial conversation you have with an advisor, just explain your whole financial situation to them and they will help explain things.

Sounds like things shouldn’t be too bad for you and if they say no I’m sure they will offer advice on how to improve the situation, if not you’ve got this forum to turn to for advice.

Zero_Sum

As you're only 25 you could opt for upto 40 year mortgage. And just because its 40 years doesnt mean you have to last the term. What it does do is offer more flexibility, just over pay to the level of what a 25 year one would cost but you if anytime you need a bit more cash you can reduce payment accordingly

HampshireH

How much outstanding do you have on finance?

Others have said your affordability is fine.

I would personally be wanting to evidence more savings than debt going into a mortgage. Currently your debt is more than your savings.

Where is the rest of your money currently going as your income is reasonable? They will want to see bank statements etc to show this.

Would it be more beneficial to the application to clear the debt which is worrying you. Focus on rebuilding the savings and then applying?

This removes your debt and your worry and you go into your application with a clear set of numbers to work to. Also gives you a safety net for any unforeseen circumstances.

Don't forget about all the other costs you will have aside of mortgage payments. Insurance, bills, repairs, legal costs, etc