Mortgage broker - ask me anything

2006eyo

hello, thanks for running this thread btw before it start.  i have asked this question in a different manner but with less detial so here goes

me and my partner have £17K in a l ISA and another £4k to add in after April cut off date that takes us to £22k we want a mortgage for a property in range of £170k-£220k so 10% LTV.  our wages are  i earn basic £41k but this years P60 shows £51k but that was lots of over time which isnt guaranteed. my partner earns £24k  we have no car outgoings or large loans. although we have £3k over 2 credit cards (which we dont use just paying it off slowly) using 20% of available credit   now the crap bit.  my credit is soso  my current score on equafax is 363 its just touching on the poor/fair score the main reasons  are: i have a ccj that is due to come off in 07/21 and 1 default is due to come off 05/21   that would leave me with 1 default thats is settled and due off 06/22.  i currently  have 39 months without any missed payments or any marks or anything against my name.  there is some late payments from 2017 also   i had 4 pay day loans over 3 years ago as i thought they was a good way at showing you can handle credit  (silly mistake) my partner has good credit history  no marks no late payments nothin.  we are both on electrol roll etc. 

couple of questions  will my score (i know the actual score isnt a big deal its the history) improve must after the ccj drops off in july leaving just 1 default.   do you think it would be possible to find a mortgage in the current climate.  would is it prudent to start the ball rolling now and speak to a MA or best sitting tight for the next 4 months.  obviously theres not loads of news on 95%  mortgages yet but would these be in our range and criteria with not so perfect history or you think will deffo need to use the full 10% for a deposit 

my partner is asking for us to go to a MA now and just checking where we stand but i feel ashamed going with CCJ's and payday loans and stuff being the higher earner  i feel i will look stupid so keep trying to kick the ball into the grass as feel i have let myself down by being crap with money years ago
    
  sorry for the story long  story  :-) thanks for any help and info

ry      

K_S

@2006eyo

- If you can wait till 07/2021 when all you'll be left with is one 5 year old default, that'd give you the best chance at a 10% deposit mortgage. 

- My base assumption would be that 95% mortgages won't be available with your profile, even after 07/2021

- It depends on the specifics, but in principle you *may* qualify for a 90% LTV mortgage with an adverse lender now. But it depends on the details.

- No broker will be able to predict 4-6 months ahead, as the current lending environment is quite volatile so if you're only looking to buy in the summer, I would recommend just keeping your credit history clean and talking to a broker closer to then.

Just want to add that there's no need to be ashamed of approaching a broker, they've seen every financial situation there is and a good broker isn't going to tut-tut at applicants' financial histories. And there's a lender for almost every scenario, it's just a matter of matching up the applicant with the right lender, if there's one for them.

Capri84

Regarding credit ratings, what sort of an indicator are they?

for example, if you have a credit score of 999 on Experian, does that put you in a hugely better position to perhaps be allowed the 95% offers? Or is it more based on income/outgoings? 

Also - if for example after all outgoings you are currently saving £1500 per month... what amount of that figure would a lender consider ‘affordable’ each month for going toward a mortgage? (Living rent free just now but paying all other bills that would be ported to new home when bought) 

K_S

Capri84 said:

Regarding credit ratings, what sort of an indicator are they?
for example, if you have a credit score of 999 on Experian, does that put you in a hugely better position to perhaps be allowed the 95% offers? Or is it more based on income/outgoings? 

Also - if for example after all outgoings you are currently saving £1500 per month... what amount of that figure would a lender consider ‘affordable’ each month for going toward a mortgage? (Living rent free just now but paying all other bills that would be ported to new home when bought) 

@capri84 Lenders don't take into consideration the Experian score. Having said that, from my experience, a 999 score usually indicates that there are unlikely to be any major issues or errors on the individual's credit history so it's a definite positive on that front.

With regard to how much you can borrow, it's based on two aspects -

- income (lenders will have their own loan-to-income multiple cielings based at different products etc, for 95% it's 4.5x generally speaking)

- affordability calculations as per the individual lender which takes into account commitments, debt levels, etc. The regular expenses (groceries, clothes, holidays, etc) are all taken automatically and mostly based on assumptions. To get a very very general idea, you can play around with a few lender calculators to see how it looks for you.

Capri84

Cheers KS

Also - I have 2 credit cards with a combined limit of £31k. Now I only have two as one is a barclaycard that (some years ago) had an amazing balance transfer rate so I used it to help me become debt free. Over time both cards have upped their limits - hence now being at £31k

is this amount of ‘available credit’ advisable? And/or would it help (or be looked on more favourably - perhaps) if I were to get rid of one and reduce the limit on another? Or does the availability but non-use of credit look like you are sensible with regards spending? 

Capri84

Also (sorry!) - when saving I’ve always tended to stick a lump sum aside on payday. Sometimes I’ll have maybe slightly overestimated and I may end up between 0-£100 in my authorised overdraft each month (but having saved £1500). When looking at statements - would this be frowned upon? 

K_S

Capri84 said:

Cheers KS
Also - I have 2 credit cards with a combined limit of £31k. Now I only have two as one is a barclaycard that (some years ago) had an amazing balance transfer rate so I used it to help me become debt free. Over time both cards have upped their limits - hence now being at £31k
is this amount of ‘available credit’ advisable? And/or would it help (or be looked on more favourably - perhaps) if I were to get rid of one and reduce the limit on another? Or does the availability but non-use of credit look like you are sensible with regards spending? 

@capri84 It's impossible to say what marginal impact it might or might not have on the opaque automated "credit scoring" that all mainstream lenders will do (based on their individual criteria) on your application. But generally speaking, as long as they aren't carrying debt, whether you close/leave-open one/both of those cards, I wouldn't expect that on its own to have any material impact on your chances.

K_S

Capri84 said:

Also (sorry!) - when saving I’ve always tended to stick a lump sum aside on payday. Sometimes I’ll have maybe slightly overestimated and I may end up between 0-£100 in my authorised overdraft each month (but having saved £1500). When looking at statements - would this be frowned upon? 

@capri84 Moderate use of authorised ODs is unlikely to be an issue on its own.

Muzziovis

Thanks so much for answering all these questions – this thread is an amazing resource!

Do any of the mortgage brokers know whether there’s any chance of a 5x lending multiple if there’s a self-employed component to the borrowers’ income?

Our situation: Husband earning £80,000 in PAYE employment. I’m self-employed, 2020-21 income will be £73,000, 2019-20 £62,500, 2018-19 £49,000. LTV likely to be either 80% or 85%. We had been planning to apply with Halifax as soon as I submit my latest tax return to show income in the tax year that’s about to end, but we’ve noticed that they’ve lowered their multiple if any of the applicants are self-employed, and this seems to be the case with a few of the mainstream lenders. I’m in the fortunate position where business hasn’t taken a hit and is steadily increasing, so this is a little frustrating.

K_S

Muzziovis said:

Thanks so much for answering all these questions – this thread is an amazing resource!

Do any of the mortgage brokers know whether there’s any chance of a 5x lending multiple if there’s a self-employed component to the borrowers’ income?

Our situation: Husband earning £80,000 in PAYE employment. I’m self-employed, 2020-21 income will be £73,000, 2019-20 £62,500, 2018-19 £49,000. LTV likely to be either 80% or 85%. We had been planning to apply with Halifax as soon as I submit my latest tax return to show income in the tax year that’s about to end, but we’ve noticed that they’ve lowered their multiple if any of the applicants are self-employed, and this seems to be the case with a few of the mainstream lenders. I’m in the fortunate position where business hasn’t taken a hit and is steadily increasing, so this is a little frustrating.

@muzziovis How much are you looking to borrow. And how is your SE structured - sole trader or ltd. co.? 

Are you tied to Halifax for any reason? Best case, I doubt they'd go above 650-675k max borrowing in this scenario, very roughly speaking.