Mortgage application & big payday loan history

MaryNB

moxxey said:

RyanT1992 said:

Carl2510 said:

Is there no chance you can do better than 10%? 15% I reckon at the least will do much better for you.

We can, but means another 6-12 months of saving, which, considering I’ve lived with family for 7 years of my adult life, I was hoping not to have to do... If we’re looking at a £400k property, is an extra £20k savings, which is a huge amount. Do you think that post-pandemic, we’ll struggle to get a 4.5x mortgage at a half decent interest rate in our 10% situation then? I presumed that post-pandemic, the mortgage market would return to what it was a year ago. Also, does 11% make a difference, or is it only 5% increments? 

The difference between 10% and 15% is really in the interest rate and a lender's likelihood to offer the full mortgage you require. Lenders are really tough at the moment. I'm going through weeks of checks and have a 40% deposit.

Could you not potentially borrow from family, to secure a higher deposit, then make sure they are paid off over the next 6-12 months? ie. if you can afford to put aside enough money to move you up to 15% through savings, simply ask them if you can secure the extra 5% and make sure you pay them instead?

Any money for a deposit will have to be gifted. Lenders won't accept a deposit from family if come with any conditions. 

RyanT1992

MaryNB said:

moxxey said:

RyanT1992 said:

Carl2510 said:

Is there no chance you can do better than 10%? 15% I reckon at the least will do much better for you.

We can, but means another 6-12 months of saving, which, considering I’ve lived with family for 7 years of my adult life, I was hoping not to have to do... If we’re looking at a £400k property, is an extra £20k savings, which is a huge amount. Do you think that post-pandemic, we’ll struggle to get a 4.5x mortgage at a half decent interest rate in our 10% situation then? I presumed that post-pandemic, the mortgage market would return to what it was a year ago. Also, does 11% make a difference, or is it only 5% increments? 

The difference between 10% and 15% is really in the interest rate and a lender's likelihood to offer the full mortgage you require. Lenders are really tough at the moment. I'm going through weeks of checks and have a 40% deposit.

Could you not potentially borrow from family, to secure a higher deposit, then make sure they are paid off over the next 6-12 months? ie. if you can afford to put aside enough money to move you up to 15% through savings, simply ask them if you can secure the extra 5% and make sure you pay them instead?

Any money for a deposit will have to be gifted. Lenders won't accept a deposit from family if come with any conditions. 

True. In my situation though, I can’t borrow or be gifted any money from my family, as they don’t have it. Is an 11% deposit better than a 10% deposit, or do the improvements in mortgage only happen in 5% increments?  

ACG

Affordability in the sense of checking the term of the mortgage, kids, debts, income. If you have no kids and no debts and you are young enough to do a 25+ year term, I think 4.5x income should be enough (assuming 92 is the year you were born, you should be fine). 1992! Im only 8 years older but when I see someone born in the 90s getting a house, it makes me feel ancient. 

RyanT1992

ACG said:

Affordability in the sense of checking the term of the mortgage, kids, debts, income. If you have no kids and no debts and you are young enough to do a 25+ year term, I think 4.5x income should be enough (assuming 92 is the year you were born, you should be fine). 1992! Im only 8 years older but when I see someone born in the 90s getting a house, it makes me feel ancient. 

ACG said:

Affordability in the sense of checking the term of the mortgage, kids, debts, income. If you have no kids and no debts and you are young enough to do a 25+ year term, I think 4.5x income should be enough (assuming 92 is the year you were born, you should be fine). 1992! Im only 8 years older but when I see someone born in the 90s getting a house, it makes me feel ancient. 

Yeah I think our current situation is good (decent combined wage, no kids, no debt, no dependants), it’s only that appalling payday loan history (but as I say, most were 2018 or earlier, didn’t default on any, never missed a payment, no negative marks etc). Just didn’t know how much impact that history would have, as we really will need 4.5x (or more) as there’s just no value in homes anywhere near London! But you make me feel much better about it! Would you say 11% deposit is better than 10%, or does it not matter unless it’s a 5% incremental increase? As saving 5% extra on a £400k property is still £20k, which is a huge amount of money for us... And as for your age, if it helps, my back does not feel like it’s under 30! And I’ve been living with my Nan for my entire adult life post-uni, so I’ve not really experienced freedom yet... 

MaryNB

RyanT1992 said:

MaryNB said:

moxxey said:

RyanT1992 said:

Carl2510 said:

Is there no chance you can do better than 10%? 15% I reckon at the least will do much better for you.

We can, but means another 6-12 months of saving, which, considering I’ve lived with family for 7 years of my adult life, I was hoping not to have to do... If we’re looking at a £400k property, is an extra £20k savings, which is a huge amount. Do you think that post-pandemic, we’ll struggle to get a 4.5x mortgage at a half decent interest rate in our 10% situation then? I presumed that post-pandemic, the mortgage market would return to what it was a year ago. Also, does 11% make a difference, or is it only 5% increments? 

The difference between 10% and 15% is really in the interest rate and a lender's likelihood to offer the full mortgage you require. Lenders are really tough at the moment. I'm going through weeks of checks and have a 40% deposit.

Could you not potentially borrow from family, to secure a higher deposit, then make sure they are paid off over the next 6-12 months? ie. if you can afford to put aside enough money to move you up to 15% through savings, simply ask them if you can secure the extra 5% and make sure you pay them instead?

Any money for a deposit will have to be gifted. Lenders won't accept a deposit from family if come with any conditions. 

True. In my situation though, I can’t borrow or be gifted any money from my family, as they don’t have it. Is an 11% deposit better than a 10% deposit, or do the improvements in mortgage only happen in 5% increments?  

Unfortunately benefits are only seen in 5% increments. At the moment there's quite a difference between 85LTV and 90LTV.  85LTV mortgage will be easier to get than 90LTV. Lenders are being fairly restrictive when it comes to 90LTV (last year barely any would even do 90LTV).  From 85LTV to 80LTV and below (in increments of 5) the difference isn't as significant but you get a lower interest rates. 

RyanT1992

MaryNB said:

RyanT1992 said:

MaryNB said:

moxxey said:

RyanT1992 said:

Carl2510 said:

Is there no chance you can do better than 10%? 15% I reckon at the least will do much better for you.

We can, but means another 6-12 months of saving, which, considering I’ve lived with family for 7 years of my adult life, I was hoping not to have to do... If we’re looking at a £400k property, is an extra £20k savings, which is a huge amount. Do you think that post-pandemic, we’ll struggle to get a 4.5x mortgage at a half decent interest rate in our 10% situation then? I presumed that post-pandemic, the mortgage market would return to what it was a year ago. Also, does 11% make a difference, or is it only 5% increments? 

The difference between 10% and 15% is really in the interest rate and a lender's likelihood to offer the full mortgage you require. Lenders are really tough at the moment. I'm going through weeks of checks and have a 40% deposit.

Could you not potentially borrow from family, to secure a higher deposit, then make sure they are paid off over the next 6-12 months? ie. if you can afford to put aside enough money to move you up to 15% through savings, simply ask them if you can secure the extra 5% and make sure you pay them instead?

Any money for a deposit will have to be gifted. Lenders won't accept a deposit from family if come with any conditions. 

True. In my situation though, I can’t borrow or be gifted any money from my family, as they don’t have it. Is an 11% deposit better than a 10% deposit, or do the improvements in mortgage only happen in 5% increments?  

Unfortunately benefits are only seen in 5% increments. At the moment there's quite a difference between 85LTV and 90LTV.  85LTV mortgage will be easier to get than 90LTV. Lenders are being fairly restrictive when it comes to 90LTV (last year barely any would even do 90LTV).  From 85LTV to 80LTV and below (in increments of 5) the difference isn't as significant but you get a lower interest rates. 

Appreciate that advice. Food for thought. What were our chances of getting a 4.5x mortgage at a decent interest rate with a 10% deposit pre-Covid? As we’ll wait until the market settles down and hopefully banks return to pre-Covid lending levels

HannahMasiko

Hello, hoping somebody could help. 

Me and my partner are looking to buy a house. We have 10% deposit what we have saved ourselves, my partner has excellent Credit History with no issues at all. Whereas myself, I have okay Credit but I have history of payday loans, they have all been paid off and. Dot not have any defaults. We earn a combined income of 60k+. Will we still be able to get a mortgage or is there no hope? 

MovingForwards

HannahMasiko said:

Hello, hoping somebody could help. 

Me and my partner are looking to buy a house. We have 10% deposit what we have saved ourselves, my partner has excellent Credit History with no issues at all. Whereas myself, I have okay Credit but I have history of payday loans, they have all been paid off and. Dot not have any defaults. We earn a combined income of 60k+. Will we still be able to get a mortgage or is there no hope? 

Please start your own thread to ensure you get answers to match your circumstances.