Will I get a mortgage?

John4207

Hi All,

Me and my partner have an agreement in principle with Nationwide using help to buy scheme so the LTV is 75%.

My partners credit history is excellent and squeaky clean and mine not so much. I have a default from 2013 (£240 phone bill) which has been satisfied and a default from 2016 which has been satisfied (£160 catalogue account). I was in a bad situation back then but since then i've been 48 months without a late payment/default according to Equifax (even though the default date shows on there as 2016). Equifax score is very poor and Experian is Poor despite being so long since having a late payments.

I pay my credit card off in full every month for 4 years same with my car finance (10k oustanding on this) for the past year, do you think I will get accepted for a mortgage?

Thanks,

John

jashdown

Probably... dependent on income, expenditure, property details etc.

If you’ve got the AIP that’s half the battle. Underwriters will check statement and salaries etc so if nothing there and the property checks out you’ll more than likely be fine

John4207

I earn around 23k my partner earns around 19k, the house is £185,000 so we will be putting £9250 down as a deposit and the HTB gives us £37000 so our deposit is £46250.

outgoings for car finance and insurance is 250 and phone bill 50 and my partner just has a phone bill of 40 and insurance of 60 per month so affordability shouldn't be an issue I don't think?

jashdown

Your combined income will be cutting the lending amount quite fine.

Looks like your using every pound you can get for your mortgage?

Have you found a property yet? A lot of new build estates will whack you for estate fees etc which could easily tip this into unaffordable territory

John4207

After doing calculations we have plenty of room with money, the agreement in principle for 138k with them came back as £460 per month 3 year fixed at 2.05%. Submitted our wages etc when doing AIP and they advised they would borrow us 200k when only 138k is needed.

Yeah property has been reserved, with no extra fees from the builders.

spadoosh

Whilst id say you probably will get a mortgage with the credit issues i suspect affordability could be an issue at that level.

I dont think your starting off in a particularly good position. Nothing to do with the credit issues and completely to do with putting in very little of your own capital.

Our incomes arent too different, we earn marginally more than you. We went with a £90k mortgage. And overpay quite a bit. Our mortgage is cheaper than yours and we dont pay for things like car finance. Whilst i appreciate everyone budgets differently, i suspect i would struggle to pay for the mortgage youre wanting.

Assuming FTB and no kids too? If kids are on the card any time soon you need to be accounting for drops in incomes and or £300+ a week in childcare costs.

Personally id be reluctant to commit myself to those numbers. Id only be doing so if expected my circumstances to be picking up soon enough or went with a long term fix over quite a long mortgage period (thus making the cost of borrowing considerably more expensive)

spadoosh

John4207 wrote: »

After doing calculations we have plenty of room with money, the agreement in principle for 138k with them came back as £460 per month 3 year fixed at 2.05%. Submitted our wages etc when doing AIP and they advised they would borrow us 200k when only 138k is needed.

Yeah property has been reserved, with no extra fees from the builders.

Yeh so a 35 year mortgage

Just so you know the full implications. Total cost of your mortgage will be ~£195,000

And youve got to repay the £37k from year 5 onwards so make sure thats always accoutned for in your budgets. Id say most people have kids in the first 5 years of getting their house, so ermhhh dont have kids just yet.

And youve got your own deposit of £9250

So total cost of house is £241250 not including any interest charged for the HTB loan. Realistically your house should be worth more than that after 35 years.

John4207

spadoosh wrote: »

Whilst id say you probably will get a mortgage with the credit issues i suspect affordability could be an issue at that level.

I dont think your starting off in a particularly good position. Nothing to do with the credit issues and completely to do with putting in very little of your own capital.

Our incomes arent too different, we earn marginally more than you. We went with a £90k mortgage. And overpay quite a bit. Our mortgage is cheaper than yours and we dont pay for things like car finance. Whilst i appreciate everyone budgets differently, i suspect i would struggle to pay for the mortgage youre wanting.

Assuming FTB and no kids too? If kids are on the card any time soon you need to be accounting for drops in incomes and or £300+ a week in childcare costs.

Personally id be reluctant to commit myself to those numbers. Id only be doing so if expected my circumstances to be picking up soon enough or went with a long term fix over quite a long mortgage period (thus making the cost of borrowing considerably more expensive)

I've budgeted for the worst (IE bills & mortgage coming to £1400 a month) and it still leaves us with plenty of room in terms of expendable money £500+ each month and that's with everything taken away including fuel/food etc.

We are FTB and kid's most definitely aren't on the cards for the foreseeable :rotfl:

In terms of the HTB loan, we'd be looking to remortgage after the 5 years to pay that off as i'm due a 4k payrise next year and my partner should get around 2k in the next few years.

spadoosh

John4207 wrote: »

I've budgeted for the worst (IE bills & mortgage coming to £1400 a month) and it still leaves us with plenty of room in terms of expendable money £500+ each month and that's with everything taken away including fuel/food etc.

Kid's most definitely aren't on the cards for the foreseeable :rotfl:

In terms of the HTB loan, we'd be looking to remortgage after the 5 years to pay that off as i'm due a 4k payrise next year and my partner should get around 2k in the next few years.

Your numbers so up to you how confident with them you are.

As said id be tightening my purse string committing myself to that and we earn a bit more. With no car finance. I suspect my kid costs as much as your car does at the moment (30 hours fee childcare... whoop whoop!!).

Im really not trying to put you off, just encouraging you to be careful. You asked for advice presumably because the knowledge is lacking a little. One of the biggest problems FTB have is overstretching themselves. Theres very little capital being put in, so a slight downturn in property could see you in negative equity.

To offer some perspective, i bought my house in 2011 for £104k. My neighbour bought theres in 2007 for £135k. Theyve been trying to sell since about a year or two after we moved in and are unable to as everyone logs on zoopla, sees that i paid a lot less than them and inevitably get offers that are below settling their mortgage.

O and youve reserved a plot, so a new build, which typically drop in value over the short term, although under the impression this might be beneficial for you with regards to the HTB loan, dont quote me on that though.

Im usually quite pro buying houses. Its not half as difficult as most people think but your numbers look tight.

jashdown

You mention builders fees.... check out ‘fleece hold’ on google. Assuming you’re buying freehold house, you have none of the same rights that leaseholders do, so if you’re on a new build estate chances are that your property is on a private road not adopted by the council - paying council tax and annual management charges etc? These are unregulated and you have to pay whatever the demand or run the risk of being repossessed