Preparation of bank account prior to FTB mortgage application

Dennis_UK

Apologies in advance if this is posted in the wrong place, happy to repost if advised. 

Myself and my partner are hoping to be ready to put a deposit on our first property by mid-2021, we currently have approx £16,000 saved and have a clear path to being ready with a 10% deposit by next year.  My issue / concern is this:  

I am the main earner in the house, I earn approx. £80k annually, my partner about £28k.  As she was not working until about 6 months ago, almost all bills are set up to go out of my account, and my account continues to be used for daily household purchases, such as groceries, fuel, etc...  These expenses total in excess of £3.5k a month, which means I am often left at the end of the month with very little in my account before my account is then topped up with the following month's salary.  Inversely, my partner, although still having some bills going out of her account, has most of her salary left over each month which she then puts straight into a Moneybox Help To Buy ISA account in her name that we are using towards our deposit (she is under 40, I am not, so didn't qualify).

I am truly grateful that she is putting so much money away each month towards our deposit, but I am concerned that when it comes to mortgage application time, it is going to look like I am barely able to make my money last from one month to the next, whereas my partners account will look the complete opposite.   We're discussing whether we should balance out the bills a little more so that she takes some of these on - she's happy to look at it, but it's causing tension between us.

We're both first time buyers, so haven't been through this process with a bank before.  Am I right to be concerned ?  Does a bank care as long as they have a deposit ?  Or will I be looked upon negatively from an affordability assessment perspective ?   

Appreciate any advice anyone has. 

DR

moneysavinghero

I presume you meant by mid 2022.

Most people don't end up with much in their account before their wages top it up. Only difference is you have a much higher wage than most. They all manage to get mortgages so you can too.

As long as you are not borrowed more than 4.5 times income and you don't have any large debts then you should not have a problem. You will need to show proof of deposit and you can just show your partners statement.

* I am presuming that your rent is either the same or less than your mortgage payments will be

princeofpounds

Your affordability will be assessed mainly over the two of you. You should be fine. Bear in mind that you're presumably currently paying rent - how does that charge relate to your anticipated mortgage payment?

dappadanboy

I don't think they will comment on who pays what provided the combined income v outgoings meets their checks assuming it's a joint application.

I thought the most you could put into Help to Buy ISA each month was £200?

grumiofoundation

Myself and my partner are hoping to be ready to put a deposit on our first property by mid-2021, we currently have approx £16,000 saved and have a clear path to being ready with a 10% deposit by next year.  My issue / concern is this:  

I am the main earner in the house, I earn approx. £80k annually, my partner about £28k.  As she was not working until about 6 months ago, almost all bills are set up to go out of my account, and my account continues to be used for daily household purchases, such as groceries, fuel, etc...  These expenses total in excess of £3.5k a month, which means I am often left at the end of the month with very little in my account before my account is then topped up with the following month's salary. 

This seems quite high for daily household purchases - I assume includes rent is a significant portion of that?

 Inversely, my partner, although still having some bills going out of her account, has most of her salary left over each month which she then puts straight into a Moneybox Help To Buy ISA account in her name that we are using towards our deposit (she is under 40, I am not, so didn't qualify).

You mean lifetime ISA (Moneybox don't offer HTB ISA). Since this is limited to £4,000 per tax year. If she is putting most of her salary into this then this will be filled in a few months. 

So once this is filled you could even up the bills/savings?  

Obviously how you should split the bills etc is a personal thing, no right or wrong answer but should be so you are both comfortable with it and not causing tension. 

I am truly grateful that she is putting so much money away each month towards our deposit, but I am concerned that when it comes to mortgage application time, it is going to look like I am barely able to make my money last from one month to the next, whereas my partners account will look the complete opposite.   We're discussing whether we should balance out the bills a little more so that she takes some of these on - she's happy to look at it, but it's causing tension between us.

We're both first time buyers, so haven't been through this process with a bank before.  Am I right to be concerned ?  Does a bank care as long as they have a deposit ?  Or will I be looked upon negatively from an affordability assessment perspective ?   

We had to provide 3 months bank statements to lender as part of application. Whether this was to look at the spending or just to confirm salary being paid I I don't know. As above I assumed they looked at combined not in isolation. Although our spending/saving is roughy equal we are pretty lopsided in terms of what we spend on - Looked at in isolation it would look like I don't pay any bills (apart from transferring half rent each month) and wife doesn't eat!

We applied for  just over 5x salaries so I suspect they needed to examine in a bit more detail. Since you will be applying for less than 4.5x your combined salaries* I would expect they may not feel the need to delve much?

 (*since property price will be limited to 450k)

Dennis_UK

Thanks heaps for the different responses, I really appreciate it. Just to clear up on a few of the questions asked, which I should maybe have made clearer in the original post:

@moneysavinghero - Yes, I meant mid-2022! And yes, I think our rent and expected mortgage amount will be approximately the same, £1,400.

@princeofpounds - as above, the rent vs expected mortgage payment should be about like for like.

@dappadanboy - You're right, yes. She's been limited in how much money she can put in the HTB ISA, we're essentially machine this out reach year and placing the overspill of savings into a generic joint savings account.

@grumiofoundation - Yes, our rent is a significant portion of the monthly expenses at £1,400.  Though I should've been clearer, the £3.5k expenses is the total of all bills and household expenses.  

It's been super insightful to read all your comments and advice, our sounds like I shouldn't have too much to worry about and that's comforting.

Thanks guys. 

Dennis_UK

Dennis_UK said:

@dappadanboy - You're right, yes. She's been limited in how much money she can put in the HTB ISA, we're essentially machine this out reach year and placing the overspill of savings into a generic joint savings account.

* "maxing this out each year...!"

Slithery

Dennis_UK said:

Dennis_UK said:

@dappadanboy - You're right, yes. She's been limited in how much money she can put in the HTB ISA, we're essentially machine this out reach year and placing the overspill of savings into a generic joint savings account.

* "maxing this out each year...!"

You do know there's an 'edit' button?

grumiofoundation

@dappadanboy - You're right, yes. She's been limited in how much money she can put in the HTB ISA, we're essentially machine this out reach year and placing the overspill of savings into a generic joint savings account.

If the provider is Moneybox it is a lifetime ISA.

Assuming the savings account interest is pretty low you might consider premium bonds as an alternative to this savings account - although not guaranteed with ‘average luck’ would expect ~0.9% (could be less, could be more...)

Gavin83

To be honest ignoring the question at hand for the moment this is a pretty terrible setup from your point of view. If you were to split up tomorrow she’d have a healthy deposit for a house and you’d have nothing. I’d suggest making it a bit more even so you can build some savings of your own.

Why is this causing tension between you? What’s her objection?

Thrugelmir

Dennis_UK said:

We're discussing whether we should balance out the bills a little more so that she takes some of these on - she's happy to look at it, but it's causing tension between us.

What does your partner do with the remainder of her money, if you are footing all the household bills?  Is there something she hasn't told you.