Mortgages as a single person??

ambzzy

Hi, I have just graduated from uni and have a savings plan for 11k for a deposit (using a lifetime ISA). I have been offered a job as a teacher (30k a year) and have been with HSBC for as long as I can remember! Never switched banks or anything and my credit score shows as “excellent” on Experian. With no debts, a good score and this kind of salary, as a single person would I be unrealistic to look at houses that are around 220k? That would mean I’d have a 5% deposit but I’m just not sure how far a credit score, stable career and loyalty to a bank can get you in terms of extension of lending in comparison to their mortgage calculators. I don’t want to steam ahead and get a DIP just yet, as I still have a few more months until my ISA will have enough savings. I know at the moment no banks are willing to give 95% mortgages due to coronavirus but I’m hoping when I househunt next year this won’t be the case.
Any advice would be much appreciated so I can be more realistic with my expectations!

MaryNB

Unfortunately with a 30k salary, the highest mortgage you could get (if you had a high % deposit) is probably £150k (Virgin Money & Natwest sometimes stretch to 5x salary) but £135k (4.5x your salary) is more realistic. With a 5% deposit, your choice of lenders is extremely limited, most banks who did 95% mortgages now will only go to 90% for first time buyers, HSBC included.

Also, the smaller your deposit the lower the salary multiplier (for some banks anyway). 

foxy-stoat

You say you have no debt, do you use a credit card?  If not maybe it would be wise to get one for your monthly shopping or fuel and settle it once the statement comes in.  That will build some positive credit markers on your file.

Good lucks.

HummingBird76

Have you tried using HSBC's online calculator which would indicate how much they may lend?  Sorry, but yes you are being unrealistic looking at properties for £220k.  I earn a couple of thousand more than 30k and my AIP from HSBC was around £148k

cooltt

ambzzy said:

Hi, I have just graduated from uni and have a savings plan for 11k for a deposit (using a lifetime ISA). I have been offered a job as a teacher (30k a year) and have been with HSBC for as long as I can remember! Never switched banks or anything and my credit score shows as “excellent” on Experian. With no debts, a good score and this kind of salary, as a single person would I be unrealistic to look at houses that are around 220k? That would mean I’d have a 5% deposit but I’m just not sure how far a credit score, stable career and loyalty to a bank can get you in terms of extension of lending in comparison to their mortgage calculators. I don’t want to steam ahead and get a DIP just yet, as I still have a few more months until my ISA will have enough savings. I know at the moment no banks are willing to give 95% mortgages due to coronavirus but I’m hoping when I househunt next year this won’t be the case.
Any advice would be much appreciated so I can be more realistic with my expectations!

Hello OP, i'm with HSBC and have been for years so i'll tell you how they will view you.

As an HSBC customer they will have assigned you an internal behaviour score on how you've run your account in the time you've been with them. This score will contribute significantly to their lending decision even before they credit score you. Don't worry about the Experian score it's not important because lenders have their own lending criteria and thus their own internal scoring. 

Now the challenges you face are:
* New job, short / no employment history, is there a probation period? HSBC want to see an established income stream.
* 5% deposit, it's not very much and your lending amount will be nowhere near 220K, as others have mentioned it's 4.5x salary, on a good day! Try get that deposit to 10% as a minimum at the moment. 

Go ahead and submit the DIP, it won't leave a hard marker on your credit file just a soft marker not impacting anything that matters. At least you will know what they will possibility lend you in your current situation. You can edit the DIP for a 10% deposit too and it won't affect the full application when you chose to proceed, just make sure the DIP you proceed with has the deposit amount you intend to make the full application with. 

Any other questions just ask. 

sam121285

Your done really well to get a starting job as a teacher on 30k  Is this as an NQT too? Main pay scale one is usually 24-26k (the higher amount being if you live in London. 

Have you thought about a new build. Banks will usually will accept 5% deposits as The builder tops up with 15-20% on the help to buys sheme. So effectively you will have a 25% deposit. This may be one of the ways in which you can increase the price of the houses you can look to buy. 

Hannimal

Hello colleague! Well done on the job!!!

As others have said, you are quite far from getting enough to buy something at £220k. This also came to me as a shock when I started looking at mortgages as I feel like my affordability is much more than I can get. The max mortgage I can get is only about same as my monthly rent, even though I manage to save an additional 500-1000gbp each month on top of it. The 'system' is entirely rigged against people wanting to get onto the housing ladder without huge deposits. 

I would recommend concentrating on saving for a bit more unless there are properties in your area for around 100k - you would probably be able to get a decent mortgage for something like this. When you buy, the amount you can borrow will also depend a little on the deposit. For example, on a 10% deposit I was offered £180 000 but when I had a 20% deposit, I could get £192 000. You would really struggle to find a 5% mortgage, I don't think these exist at the moment at all, and even on 10% you will find it hard. You'll also have to have been in your job for a good year or so before most lenders will consider you. So why not concentrate your first year of being a teacher on saving up a little bit more. Next year the situation might be better and 5% mortgages might become available again. 

sorry that the response isn't more positive. It is a long and daunting process to get on the housing ladder and doing it alone is of course harder than doing it with someone else. It's possible but you probably need to save a bit more. 

ambzzy

foxy-stoat said:

You say you have no debt, do you use a credit card?  If not maybe it would be wise to get one for your monthly shopping or fuel and settle it once the statement comes in.  That will build some positive credit markers on your file.

Good lucks.

Hi, as a student I got a credit building card and used it, like you said, just to pay for groceries and then pay off in full at the end of each month. I also had finance on all the equipment I needed for uni, which has been fully paid off (early) on a 4 year contract. I have also used HSBC student overdraft which I paid off in full before my time as a student ended. 

ambzzy

Thanks for the advice guys! In my heart I knew I was being unrealistic, even if I am thinking 12 months ahead. I guess when the time is right I should just get an appointment and take it from there. I do have a tendency to run before I can walk lol!

Thrugelmir

ambzzy said:

foxy-stoat said:

You say you have no debt, do you use a credit card?  If not maybe it would be wise to get one for your monthly shopping or fuel and settle it once the statement comes in.  That will build some positive credit markers on your file.

Good lucks.

Hi, as a student I got a credit building card and used it, like you said, just to pay for groceries and then pay off in full at the end of each month. I also had finance on all the equipment I needed for uni, which has been fully paid off (early) on a 4 year contract. I have also used HSBC student overdraft which I paid off in full before my time as a student ended. 

That ticks a few boxes for demonstrating good personal financial management. The harder part is to save in a committed fashion. If property ownership your aim.