Advice needed

Puma21_2

Hi,

I am in the process of applying with GE Money for a 95% mortgage for £175k. We are first time buyers. Combined wage is about £60k.

The house has been valued and credit check done. I had an overdraft with my bank that was getting out of control so I took a £2.5k loan to settle it. I did this after the credit check by GE Money. The loan works out to be £60 per month over 5 years.

I am now becoming a little concerned that this will risk my mortgage. I can afford the £60 per month. I have just cancelled my gym membership which was £80 per month, so it is affordable.

Do GE do another credit check before realising the money?

Any constructive advice would be welcomed as I am becoming increasingly nervous!!

Puma21_2

...or shall I pay off the loan from my deposit savings and then this extra borrowing will not be seen??

Puma21_2

I need some advice if possible.

dimbo61

wait and see what GE money say.
But i think you need to take a long hard look at your finances.
cancel the gym, run round the block if you need exercise or better still
get a second job and earn more money.
cancel the SKY , trips to the shops, pub, nights out, and look at everything and I mean everything you spend money on.
take packed lunches, collect clubcard points, brit trips( WALKERS) and go to
national trust sites for the day ( WITH A PACKED LUNCH/ PICNIC)
You earn £60K a year joint income and have £8k in savings !
and have run up a £2.5k overdraft BEFORE you have bought your first home
Do not spend money you have not got on new furniture ( even 0% )
look in the buy and sell for fridge/freezer, check out charity shops for items.
The bills will come rolling in for the first six/nine months so save like mad
Build up savings of 6 months worth of income as an emergency fund
After all that GOOD LUCK in your new home

Puma21_2

Thank you for thr advice. But my main point was will GE find out about the loan before mortgage draw down...or should I get rid of it??

Tiddler_2

If you have actually received your mortgage offer in writing, then it's unlikely that GE will do another credit search.

Have you made the application via a broker/packager or have you gone direct to GE?

I'm also wondering why you had to go to GE for the mortgage when you are looking to borrow less than 3 times your joint incomes? Have you had credit problems previously?

GE are one of the higher rate charging lenders and if I recall correctly work on 40% of your gross monthly income (for a 95% LTV) being sufficient to cover all of your credit commitments, and they also charge a HLC on 95% mortgages.

Puma21_2

Hi Tiddler,

Thank you...first sensible response!!

They did a credit search at the start of the application...the flat has been valued. We went through a broker...I have adverse credit history.

Will they do another credit check when they give us the offer in writting?

I am just concerned that they will give us the offer letter and then just before we pick up the keys they will do another credit check and realise this extra loan and revoke the agreement?

Do they do more than one credit check? As I say they have done one when we starting 3 weeks ago.

Thank you for your help.

Tiddler_2

Just basing it on the incomes you have quoted I'd have thought you'd be ok, as long as your total monthly outgoings on other credit are less than £600 per month on a 25 year term.

I would speak to your broker to get him to double check, as he should know your full details.

There are no set rules for the mortgage companies to follow at the moment so it's not possible to say whether or not they will do another credit check.

Puma21_2

Thank you Tiddler.

Do you mean £600 per month just for me or joint between myself and my gf?

Tiddler_2

Joint, if its a joint mortgage.

I'm assuming it's First National that you are going through.

As mentioned previously they use 40% of your gross monthly salaries. So £60k/12 x 40% = £2000 p.m available for all mortgage and credit payments.

The mortgage itself is worked out on the reversion rate (rate after any initial deals have finished) so a £175k mortgage at 8.19% over 25 years is £1373 pm so leaving a little over £600 pm for other credit (loans, credit cards etc)

Puma21_2

Ok cool. Yes it is First National. My monthly credit excluding the mortgage would be £260 and hers £255.

Do you think that will be ok?

Do I need to tell them about the new loan?

Also if I wated to drag out exchange/completion could I? The only reason I'm thinkinng that is that I could pay off an existing loan that is costing me £200 per month, but this would come out of my deposit so I would need another 2 months to save that...this would mean that my monthly credit outgoings would be £60 per month...big difference.

Once again thank you for your help.