First time buyers

Almostinnocent

Hi, I need some guidance on a mortgage. Shame on me, I have always been terrible with money, spending most of it on clothing, restaurants, trips, gadgets etc. My husband likes to travel as well; we were childfree and very silly. We got married very young, and in the space of 10 years, we didn't save any money. Now we have two kids and decided that it is time to get a mortgage (we are currently privately renting). Both of us recently got a pay rise, and now we can easily save £3,500 - £4,000 a month without sacrificing our stadard life quality. We already have almost £20,000 in savings, but looking at websites like Zoopla, we understand that we need a minimum of £40,000 for deposit and around 20,000 for stamp duty tax and paperwork. Property that we have in our mind will be about £600,000. Are those websites showing more or less realistic figures? If yes, then on paper our situation looks promising; Experian shows high score for both of us. But I am afraid to manage our finances, this is all coming from my childhood (long story), and till recently I was shaking every time I had to check my bank account. I have stopped spending money on unnecessary things, full stop. I have a finance diary, as it helps me keep things on track. But I am afraid to get a consultation with a broker; I keep thinking that even when we have over £60,000 in savings, it won't be enough, and they will laugh. I have this feeling that everyone has hundreds of thousands of pounds in their accounts while I am a complete loser. My husband is very confident that by the end of the summer, we will have enough money to start looking for a mortgage advisor, and by the end of this year, there will be no problems in getting the mortgage. Still, I keep thinking that there is something else we are missing and we will be turned away. I keep bringing negative thoughts to my family. Please reassure me or advise me what I am missing and how to get that financial confidence in myself. 

To explain our situation further: 

I am full-time employed, my husband is self-employed, has been working for the same company for over seven years, and he is very valuable for his employer, so his boss can guarantee further self-employment and write any sort of reference if needed. My husband gets a set daily rate, and his employer pays for 28 days of holiday on top of that, plus all his travel expenses are covered. So apart from holidays, he works every day Mon - Fri. 

Our joint income since October 2021 will be £130,000 per year onwards. It was around £80,000 per year for four previous years. 

We have a car on a lease, my employer pays monthly for my student loan (I think there is around £4,000 left to be paid), husband has around £3,000 left on his loan (we got it around 18 months ago to buy our previous car), the rate is low, so we are not sure if it is better to pay it early or carry on paying monthly. What would you advise? We don't have any other debts. 

We both have credit cards, but we don't use them (shall I start using one?).

We have never missed any single payment on any loans, credits, utilities, rent etc.  

Even when I was writing all of it down, I understood that we are probably in a relatively good position. Still, at the same time, that terrible feeling that there is something else missing from the whole mortgage application procedure never leaves me. It all seems like a rocket science. Even after reading lots of mortgage-related articles, I know nothing about it. When it comes to anything else, I am a quick learner, but once I need to think about personal finances, I am at my worst. 

user1977

That's a big wall of text. Can you summarise what your query is?

jeaniemsm

Summary:
Joint income as of Oct 21: £130k
Current deposit amount £20k
Save £3.5k-£4k/ month

Looking at house prices of £600k
2 kids.
Small car lease £3k


Op, stop worrying, if you're able to save £3k + a month I think you're doing more than fine.

Where are you looking to buy?
£600k in London can get you a decent small house or a 5 bed semi somewhere up north, so depending on location you may be over budgeting, meaning you have some room to actually enjoy your hard earned cash insted of worrying

MaryNB

Check all three credit reports, not just Experian. Ignore the score (lenders don't see it) focus on the data - make sure you and your partner have no CCJs or defaults you weren't aware of.

Use credit karma for free access to TransUnion, Clearscore for free access to Equifax, mse credit club for free access to Experian. 

A broker won't laugh. There are many many people on this forum with much poorer financial history than you. While you don't have the funds you need right now for a deposit and stamp duty, you have good saving potential. Your current level of savings is the main issue, focus on getting a deposit together. Don't forget to budget for legal fees, surveys, moving costs etc. You might want to speak to a broker to check the minimum deposit you'll need since your partner is self employed.

Use your credit card every month (keeping the balance within about 30% of the limit) and pay then off in full every month. Lenders like to see responsible usage. 

Avoid using overdrafts, avoid taking cash out using credit cards, avoid any new credit applications about 6 months before you apply for your mortgage.

The finance diary is a really good idea. I did that before I bought a house and found by just watching what I spent I was able to save a lot more without impeding on my lifestyle. I was just more careful with money and kept a better eye on it.

Flugelhorn

you'll be fine - I have that excess each month and it adds up very quickly. 

just checking though - you say your husband is self-employed but has an employer and has holidays paid, when some of my colleagues were doing sort of thing the tax man didn't consider them to be SE - particularly if they did regular work and were "employed" for more than a few months 

Almostinnocent

Flugelhorn said:

you'll be fine - I have that excess each month and it adds up very quickly. 

just checking though - you say your husband is self-employed but has an employer and has holidays paid, when some of my colleagues were doing sort of thing the tax man didn't consider them to be SE - particularly if they did regular work and were "employed" for more than a few months 

His taxes are paid correctly, his "employer" just pays him even when my husband is off work. All his self-assessments are real, no excess expenses claimed etc. We usually even overpay taxes and get a few hundred pounds back from them. 

Almostinnocent

jeaniemsm said:

Summary:
Joint income as of Oct 21: £130k
Current deposit amount £20k
Save £3.5k-£4k/ month

Looking at house prices of £600k
2 kids.
Small car lease £3k


Op, stop worrying, if you're able to save £3k + a month I think you're doing more than fine.

Where are you looking to buy?
£600k in London can get you a decent small house or a 5 bed semi somewhere up north, so depending on location you may be over budgeting, meaning you have some room to actually enjoy your hard earned cash insted of worrying

Thank you!

£3,000 is a loan reminder that we took to buy our previous car, already sold it. But still paying monthly for a loan, as we are overpaying very little and we are not sure if it is good to pay early. (Shall we settle it?)
Lease for a car is £420 and already included in our spendings. 
We are thinking about a house in south east London within M25, 4 bedroom if possible

Almostinnocent

MaryNB said:

Check all three credit reports, not just Experian. Ignore the score (lenders don't see it) focus on the data - make sure you and your partner have no CCJs or defaults you weren't aware of.

Use credit karma for free access to TransUnion, Clearscore for free access to Equifax, mse credit club for free access to Experian. 

A broker won't laugh. There are many many people on this forum with much poorer financial history than you. While you don't have the funds you need right now for a deposit and stamp duty, you have good saving potential. Your current level of savings is the main issue, focus on getting a deposit together. Don't forget to budget for legal fees, surveys, moving costs etc. You might want to speak to a broker to check the minimum deposit you'll need since your partner is self employed.

Use your credit card every month (keeping the balance within about 30% of the limit) and pay then off in full every month. Lenders like to see responsible usage. 

Avoid using overdrafts, avoid taking cash out using credit cards, avoid any new credit applications about 6 months before you apply for your mortgage.

The finance diary is a really good idea. I did that before I bought a house and found by just watching what I spent I was able to save a lot more without impeding on my lifestyle. I was just more careful with money and kept a better eye on it.

Thank you, I am 100% we don't have any CCJ's, but I will check all your suggestions 

K_S

jeaniemsm said:

Summary:
Joint income as of Oct 21: £130k
Current deposit amount £20k
Save £3.5k-£4k/ month

Looking at house prices of £600k
2 kids.
Small car lease £3k

@almostinnocent Sorry I didn't read the initial post but based on the above summary, assuming no credit issues or other complications in the background, you should have mainstream options once you hit a 5% (30k) deposit.

jeaniemsm

Almostinnocent said:

jeaniemsm said:

Summary:
Joint income as of Oct 21: £130k
Current deposit amount £20k
Save £3.5k-£4k/ month

Looking at house prices of £600k
2 kids.
Small car lease £3k


Op, stop worrying, if you're able to save £3k + a month I think you're doing more than fine.

Where are you looking to buy?
£600k in London can get you a decent small house or a 5 bed semi somewhere up north, so depending on location you may be over budgeting, meaning you have some room to actually enjoy your hard earned cash insted of worrying

Thank you!

£3,000 is a loan reminder that we took to buy our previous car, already sold it. But still paying monthly for a loan, as we are overpaying very little and we are not sure if it is good to pay early. (Shall we settle it?)
Lease for a car is £420 and already included in our spendings. 
We are thinking about a house in south east London within M25, 4 bedroom if possible

I would work on building up your deposit (double check % amount needed as hubby is SE) and SD (probably around the £20k mark), aim for £3k legal fees, £2k survey fees, £2k moving cost and another £3k buffer - this is all worst case scenario I doubt it'll come to this amount.

And just keep an eye on Rightmove/zoopla with the aim of possibly looking to buy at the end of this year/ early next.

But don't forget to actually enjoy your hard earned cash too.

£600k on the outskirts of London seems doable for a 3 possibly 4 bed house in SE, I'd check out the Hither green area

Almostinnocent

MaryNB said:

Check all three credit reports, not just Experian. Ignore the score (lenders don't see it) focus on the data - make sure you and your partner have no CCJs or defaults you weren't aware of.

Use credit karma for free access to TransUnion, Clearscore for free access to Equifax, mse credit club for free access to Experian. 

A broker won't laugh. There are many many people on this forum with much poorer financial history than you. While you don't have the funds you need right now for a deposit and stamp duty, you have good saving potential. Your current level of savings is the main issue, focus on getting a deposit together. Don't forget to budget for legal fees, surveys, moving costs etc. You might want to speak to a broker to check the minimum deposit you'll need since your partner is self employed.

Use your credit card every month (keeping the balance within about 30% of the limit) and pay then off in full every month. Lenders like to see responsible usage. 

Avoid using overdrafts, avoid taking cash out using credit cards, avoid any new credit applications about 6 months before you apply for your mortgage.

The finance diary is a really good idea. I did that before I bought a house and found by just watching what I spent I was able to save a lot more without impeding on my lifestyle. I was just more careful with money and kept a better eye on it.

I have checked all listed credit reports, all looking great for both of us except one thing. My husband is not on a electoral roll and he cannot be added due to his nationality. He has indefinite leave to remain in UK, but that doesn't affect electoral roll. How important is it? If everything else will be good. Also, yes, he is self-employed, but he can provide every single monthly payslip since 2006. His montly salary is very consistent. I am just trying to understand how bad is it to be self-employed. And should he apply for citizenship before mortgage application?