FTB - Looking at Options

Liam92

Hello all,

Looking at options as First Time Buyers; I work full time (Armed Forces) and with our first child recently arrived and a less than ideal (out of our control) house move the wife is currently not working.

Household Income: 34,000

We have absolutely no debts/loans etc between us, no CCJ's, pay day loans etc. Both Credit Ratings are good (mine is 970+ through MSE Credit Club and expect the Wife's to be similarly positive).

Our deposit is currently comprised of the following:

£9,200 - 2 Year Fixed Savings Account
2 x HTB ISA with £3,800 in each (£200 added to each, per month)
Approx. £800 in an ISA (£150 added per month)

We also have other savings for other elements we add to monthly (Car, Christmas, Holidays) but not included in the deposit.

House Price: £220,000 (New Build with HTB available)
We will have 10% available by early next next year but assume won't be able to obtain 90% LTV on current salary and therefore would require HTB?

We are in no great rush, we live in Married Quarters but would like to move back to our hometown before our daughter reaches school age (at the absolute latest but preferably beforehand).

Any advice is good advice, just trying to get a feel for our potential options and accepting a dose of realism!

amnblog

You can borrow a maximum £153,000 under the Help to Buy scheme. The is the cap on your lender, affordability calculation likely to be less. You are on the very margins for affordability at £220,000.

Have a Broker check affordability for you if you are seeking a purchase over £200,000.

Liam92

Thanks for the swift response, I'd figured we would be at the absolute upper limit if not beyond it.

As stated we are in no rush to move on this necessarily, so would you advise continuing with our savings strategy (and increase it where possible) and revisit this in, say, 24 months time where I'd expect us to have 15% deposit?

[Deleted User]

Ultimately thr help to buy scheme will cap you at 4.5x income so that will always be a hard limit even if a lender, in theory, offers more. Max mortgage will be 4.5x your income.

Your lack of outgoings is good but obviously having a couple of dependants will bring affordability down.

20% equity loan of 220k is 44k so need to find £176k. Max mortgage of 153k so deposit of 23k which is just over your 10%.
Add maybe 3-4k for legals and moving and you are sitting at needing 27k

These are all ballpark figures of course but I would echo the comment above. You are very close so worth sitting down with a broker maybe a few months before your deposit will be available and getting things firmed up

Liam92

To revive this a little with a slightly different property outlook;

Figures as above, though I am told (through a friend who is a Mortgage Advisor) that Child Benefit (£84 every four weeks so 13 payments per year) can be included within the household income, so let's switch that to £35,000 (assuming that is correct).

Property is £180,000 (likely to offer slightly below asking price but just for arguments sake) and being none new build, HTB EL is not available.

5 x £35,000 is £175,000 + £18,000 (10%) Deposit = £193,000 but clearly the affordability is reduced due to OH not working and 1 x child in the mix for good measure.

Actual mortgage requirement would be circa £162,000 with 10% deposit which, whilst it falls within the 5 x household income, the query is more in relation to the likelihood of affordability?

Is this a more realistic prospect?

Also, I referenced the OH Credit Score and my own previously, he's is 991 (MSE Credit Club) so, as expected, is strong.

The irony being that, even with a £700 p/m mortgage we'd be (marginally) better off without having to pay our current rent, but clearly I'm aware mortgages don't work that way!

[Deleted User]

Number of lenders doing 5 x income and taking child benefit whilst not reducing affordability for a non working applicant on the case with a child in the background will be quit slim.

Safer to do some actual affordability calculations or see a broker to get a feel for how the numbers stack up