£84k income, £36k debt, 0% deposit – any mortgage routes left?

_Penny_Dreadful

l_go said:

Hi

I have been with my landlord for 12.5 years, currently paying £1,700 per month and never missed or been late paying. He has now said he wants us out before the new renters bill comes in May.

I’ve been looking at my options as I am 40, I have a stable career and started a new senior role 5 months ago (with no probationary period) where I earn £84k plus I get £8.4k (10%) guaranteed bonus due in June.

My husband is 53, he has a chequered job history in sales, was recently made redundant and has been out of work for 6 months. Each time he’s out of work our savings are used to fund his share of the bills. He’s due to start a new job soon, but a mortgage advisor said to just do a sole application in my name as I will get a longer term which I agree with.

My issue is that I have zero deposit, £36k in debt across two loans and a credit card, but I do have a good credit score of 919.

Snapshot each month me paying everything:

Take home: £4730

Rent, bills and debt: £3,967

Disposable income: £760

Reality with husband input:

Take home: £4,730

Rent, bills and debt: £3,539

Disposable income: £1,191

Also in April I start paying my postgraduate student loan at £259 per month.

I have gone onto the Skipton online calculator to try and get a decision in principle for a mortgage of £300,000 with zero deposit. But every time it says I don’t meet their application scorecard.

Is owning and having stability just too much of a silly dream. I don’t want to be renting forever.

It’s keeping me up at night and I just don’t know when to apply or what to do. One mortgage advisor said wait 3 months, because December is a slow dull month on the market, but said make sure I keep as much surplus cash in the bank as possible. Another advisor said apply now?

Does anyone have any advice please, especially on eligibility or what underwriters are looking for with different situations.

It’s your debt that’s holding you back. I believe Skipton are the only mortgage lender offering a truly 100% LTV mortgage but you’d need to significantly reduce your debt first. I’m also curious as to whether your husband will be counted as a dependent due to his checkered employment history. 

There are guarantor mortgages that allow you to borrow up to 100% of the purchase price but a family member would have to use savings or equity in their own home as security. 

HTB shared ownership is another option but there are pros and cons to it. The forum has plenty of threads on the topic if you have a search. 

RedFraggle

Shared ownership is unlikely except in London with a salary over £80k

BungalowBel

You might be better off if you could offer at least your £8.5k bonus as a tiny deposit (rather than no deposit). 

kimwp

All lenders will have their own criteria for mortgages, but fundamentally they will be assessing your risk of defaulting on payments and what their likely losses are if you do and they need to sell the house.

A deposit reduces the risk of their losses in case of needing to recoup their money (they would likely sell the house at less than 75% of the value to sell it quickly, which is why interest rates get significantly better at 25% deposit and generally better the higher your deposit.)

Having debts on an income of 84k doesn't give a good impression of someone who is handling their finances well (spending less than you are earning). People do obtain mortgages while holding debt, but it makes it harder.

You need to tackle the debt and build up a deposit to present as a better risk to the lenders. Normally the most lucrative approach would be to get rid of debt first, then build up savings. However it might make sense to focus on building up a deposit to get a mortgage. Your SOA will help with how best to achieve this.