possible to have an "informal" chat with mortgage advisor?

morg_monster

Hi
Me and the OH are hoping to buy a house in the summer (FTBs). Firstly I ought to say I've been an avid reader of this board for months and you don't need to tell me about the current condition of the housing market, etc etc (well you can if you want, but I've already read it - and I do share all but the most pessimistic world-ending anarchy-reigns worries!).

I earn 25k gross and the OH 46k. Between us we will have about 15k deposit by the summer. There is also a "substantial donation" coming from my wonderful mum and dad, but this is dependent on us being engaged - the OH knows this and it is on the cards - but I don't want to ask how much this gift is until the question is popped! So we don't know how much we're going to be able to borrow for a mortgage, and not certain how much deposit we'll have (I'm fairly sure we will have at least 10%). It means we are looking at rightmove and trying to get an idea of what/where we can afford but really have no clue yet!

Is it possible to get an idea of how much we can borrow which is more accurate than the online calculators, but not actually starting the formal application for a mortgage? IE can we go into a bank and have an informal appointment or will it just become a nightmare sales pitch? I'm assuming you can't go to a broker at this early stage? I know there is a sticky about FTBs etc but I read through it all and didn't find an answer to this. Ta very much guys.

sugarpants_2

We saw an independent advisor and he had a chat with us then rung round mortgage com panies and got us quotes.

We just have to pay off our debts then we will be getting our first mortgage, hopefully this year if all goes to plan.

Good luck!

morg_monster

well done on the less-debted-ness, sugarpants! (might have to add that one to the list of names to call OH when in company...)
Did you have to pay anything for the consultation?
thanks

Phirefly

You're probably expecting a tirade of 'rent and see!' but I'll buck the trend...

OP, your situation is so similar to my best friends' that I almost thought it was them!

Like you, they're aware of the current situation with house prices, but my best friend's reckoning is that he doesn't care. He's fed up of renting, and having no security of tenure. They want a place of their own that they can decorate themselves, invest effort in the garden and feel settled. He's not looking at it as an investment in an asset, he sees it as buying a commodity that is expensive but desirable. He's investing his money elsewhere. They've a reasonable deposit and their income is spookily similar to yours, so things will be tight but manageable, and he's on a mangement training scheme with a top company so their income is set to rise. As far as he's concerned, if they can afford the mortgage repayments, he's not bothered about short-to-mid term drops in value. We're lucky to live in an area where houses are still relatively affordable.

Back to your original question, you should speak to London and Country about your mortgage options. They get mixed reviews round here but I have nothing but praise for them. No nightmare sales pitch, complely FOC and as impartial as you're going to get.

bandraoi

Don't ask what the banks will give you, ask what you can afford to pay back and do the maths, it's not that difficult.

Do up a budget and work out how much you want to spend on your mortgage each month. Take into account that as house/flat owners you will have basic maintenance to pay for.

Then work out what term of mortgage you're looking for, personally I would base it on a 25 yr mortgage but shorter and longer terms are available.

From your payment and mortgage length you can work out what you should borrow at an absolute maximum. You should play with the interest rate, and budget with some slack so that you can cope with interest rate rises and unexpected costs.

morg_monster

Haha Phirefly def not us, neither of us are on a management training scheme!

Their thinking is the same as ours though. We've been renting together for 2 years and separately for 1-2 yrs before that since uni. We know we are going to stay together and want to put down some roots and look to the future. We know what we can afford now, and considering what could happen in the future. We'll be staying in the place we buy for at least 5 years, and are planning to buy in a "nice" area so as to hopefully minimise drops in value.

The complication is that I'm starting a full time PhD in the autumn, and although my take home pay will actually increase, I know many banks won't consider my studentship as income even with guarantors and a good deposit. Hence we either need to buy before then, or wait and buy while I'm studying with potentially lower house prices but a much restricted range of mortgages to choose from, or wait 3-4 years til I finish by which time we will have gone mad from renting, prices may be on the up again, and I'll probably be getting broody...

So although we we may not sell this first place for all that much more than we bought it for, we will have a good deposit to cushion us somewhat, and above all we are looking for a home and not an investment vehicle. (oh and we will def be getting a repayment mortgage too!)

bandraoi

Excel formula

=PV(A,B,C) will give you a rough idea
PV - means present value

A - is the rate, this should be the monthly interest rate, eg if it's 6% apr, than it's (1.06^(1/12)) - 1 = 0.004868
B - is the number of payments to be made, so if it's 25 years then it's 12*25 = 300
C - is the amount of the payment to be made, as you've worked out from your budget - eg £2500

Those figures would give you an upper limit of £394,000 at 6% but if say you were worried about interest rates rising to 8% then your limit would be £332,000

donkeyman18

If my parents were bribing me to get married I'd tell them where to stick it.

bandraoi

donkeyman18 wrote: »

If my parents were bribing me to get married I'd tell them where to stick it.

Seems like a sensible suggestion to me.

Marrying is a legal and financial contract and dividing any joint assets in the event of a split is the subject of tried and tested legal procedeedings. A couple co-habiting have far fewer of the same legal fallbacks and build up of case law.

Donating a significant deposit to two people buying a house as "friends", which is effectively the legal standing in a boyfriend/girlfriend situation is quite different to donating it to a married couple.

dannyboycey

donkeyman18 wrote: »

If my parents were bribing me to get married I'd tell them where to stick it.

Me too. Especially if my earnings were almost twice that of their daughters. I'd personally be really offended that they came up with such a proposition.

With a joint income of 71k and a 15k deposit for a first house, I fail to see why you'd accept this kind of 'donation'. I'd prefer to be independent and happy in the knowledge that the house is my own.

....but then it's none of my business!

GoToGal

dannyboycey wrote: »

....but then it's none of my business!

And none of anyone else's but the OP

Back to the original query, as previously advised, you could work out how much you can afford to pay back at Low (4%), Now (6%) and Stretch (8-12%) to give you a range of values to pick from. I went for the max figure at Stretch when I bought my house as I'm single and needed to be able pay it even in an adverse financial climate