First time mortgage with payday loans

suparman

Hi everyone,

Me and my partner are now in a position to start looking to buy a home somewhere.

We will have a £40k deposit, £75K joint income and are hoping to secure a 90% mortgage.

The negatives we have are payday loans that were taken out in 2015. My partner also has a late payment in October 2014.

We have zero debt, and have been up to date with payments since then.

I know people have been successful getting mortgages with payday loans on their credit file but I'm not sure what sort of LTV, deposit size and multiples on income they got.

Would anyone with similar circumstances be able to share their experiences so I can get a bit of a picture?

An online broker suggested we could borrow up to 360K with 90% LTV but that sounds too good to be true. I am also approaching a second broker to see what they think we could get.

ACG

£360k @ 90% sounds reasonable, I would argue you could probably even go a touch higher.

The pay day loans may be an issue for some lenders but I think normal rates will be available from what you have said.

suparman

Wow, 4.8x income seems a huge amount with payday loans and a late payment. Am I just being too cautious? I know they will apply a much higher interest rate to offset the risk, but am pleasantly surprised with that amount.

Is anyone with a similar history who got a mortgage able to share their multiples?

ACG

The late payment is a one off and historic.
The pay day loans are historic.
Those things do not affect the loan amount you can get in the main. They may affect the rates but because they are all 4-5 years old, I dont think you will be paying higher rates. You may not get the best buys but I would be surprised if you are stuck paying higher rates.

You have a very good deposit and a good solid income.

Obviously it is subject to the rest of the case, if you have a football team worth of children then you are not going to get as much.

suparman

That’s really reassuring. Thank you.

I’m glad we got our act together when we did!

No kids and we’ve been really careful not to accumulate any outgoings or spend a lot on our bank statements so hoping lenders would look favourably on us.