Mortgage Affordability help

KatieMoo

Hi all looking for some advice.
Myself and other half have found ourselves in the position of needing to buy a house in the first half of next year as parents are selling the house after moving away.

Buying a house was always going to be in our reasonably soonish future but this has brought things forward considerably and I have a couple of questions RE mortgage affordability.

Between us we make about 48k a year and will be looking at a house in the 85-100k range which is the bottom end of houses available in our area. We are really going to be looking for a 95% mortgage as there are a couple of things we need to pay off and then of course save a deposit and there just won't be enough time to do this and save 10% before the house is sold.

First off is a 95% mortgage intrinsically harder to get than a 90% one?

Would having a balance on a credit card (say £1000) have a significant effect, even though its interest free until 2022?

I signed up to MSE credit club, I have a decent credit score but I have car finance (18k over 4 years PCP) which seems to be destroying my debt to income ratio but is perfectly affordable to me along with all other expenses and my fianc! and I don't have separate money as such as all wages go into a joint account and all bills come out of the same account. Also I got the impression that debt to income ratio was calculated monthly so taking a 4 year car finance against my entire annual wage looks bad but month to month along with credit card would only equate to about 25% debt to income. Does anyone have any insight into how the lenders look at it?

In an ideal world we would have gone down the 10% deposit route and have minimised everything else but we are no longer in an ideal world and on a reasonably strict timeframe. A mortgage at the price point we are looking at would work out about 80 a month more than the rent we are paying my parents and with all our other bills we would still have around 1k disposable a month but I just don't understand how the banks look at things.

[Deleted User]

Speak to a broker.
Can you not but your parents house maybe!?

Ignore your credit scores as they’re not used in lending decisions.

scholesfan88

What about your partners credit history? Any late payments, defaults etc... between either of you?

Does your partner have any debts?

Have you tried any of the online mortgage calculators or an AIP?

ACG

Your incomes are a lot more than you need.

I do not know what rates you are paying on your other debts, but I would consider saving towards a 10% deposit rather than paying off your debts - but it would be worth doing the sums.

You should not have a problem from an affordability point of view.

KatieMoo

I said house but should have said flat! Specifically a 15th floor flat in a Local Authority high rise which from my research lenders are not fans of and would probably prove very difficult to sell on if we did buy it from my parents. The factors fees are also mental they replaced the elevators last year and have more expensive modernisation works planned this year

KatieMoo

Also both our credit records are squeaky clean if I may say so myself not even so much as a late phone bill payment. All he has is a PCP car finance agreement for much the same amount as mine.

We have a couple of other things which will be finished paying by the end of the year such as our sofa so by the start of the year we will be able to put even more away each month but just don't think that we could reasonably come up with 10% deposit plus associated fees by next April and unless one of our parents win the lottery we are on our own! Interest is also next to nothing as only a small part of amount on credit card is interest bearing and will be paid by next statement, I just wasn't sure how lenders view having a couple of grand sitting on a credit card when you're after a mortgage!

Needhelpsaving

Hi!

I don't know much about the affordability rules, but I'm thinking more of the deposit/debt pay off route ... is there anything in your budget that could be temporarily cut to increase your debt payoff/savings?

Is there anyway you could temporarily increase your income (a second job each maybe?) Anything you are no longer using that could be sold? Are you due any bonuses at work that could be ring fenced for savings?

These are just ideas and you need to work out what is feasible for you, but there maybe some temporary changes that could boost your savings for your longer term plans of buying a home x

Good luck on your home buying journey x

mobidavid

I'm very new to this process too so just sharing what I understand.

So your income is a combined £48K and you both had PCP deals over 4 years at a joint £36K (or a combined £750 per month). Assuming little other debt you affordability seems fine using my own banks mortgage calculators. Maybe doing an AIP with your bank might be a decent option? When I did my AIP the other week in banch I could clearly see (and they explained) that their internal credit scoring needed to 'score' me at a certain level to be eligable for a 95% mortgage vs a 90% mortgage. On screen I could see it checked me first for a 90% mortgage (then said pass and had my internal score) and then another line on the screen showed it checked me at the 95% level (again saing pass and the same internal score).

ACG

5% deposit,
Debt in the background,
LA high rise flat.

None of these in themselves are a deal breaker, together they could be or at least limit your options (more so the high rise flat than anything else). You are asking if getting a 95% mortgage is going to be difficult - potentially, but not impossible.

Getting to 10% will help. But you are saying you can not get to 10% so forget about it. You work with what you have. If it can be done, great. If not, then you need to put off buying until you can up your deposit.

Crumble2018

Yes it can be done.

We earn 65k, have 18k outstanding on a loan, and 2 car PCP’s at around 12k each. Have been approved for a £215k mortgage with 5% deposit with Nationwide.

KatieMoo

Thanks everyone for your input. I've taken some time to go through our finances and have worked out what we can put away each month to get us to our goal. I also applied to our bank for an AIP as suggested and even in our current position they would be willing to loan us more than enough to buy a house within the range we are looking at with a 5% deposit so we must be doing something right!