First time buyer - mortgage with FTC at work and car finance?

kamalious · 4 January 2018 at 12:34PM

Hi all,

I'm planning to buy my first house by the end of the year, maybe around September. I'm only 24 and I'll be buying by myself, so I'm really excited!

I've been in my current role for 6 months, but I've just seen a great position in a major TV company that I want to apply for. The only snag is that it's a 9 month fixed term contract. This isn't an issue for me, as I'd hope I'd be made permanent or the experience gained would make finding a new job much easier. My only concern is applying for a mortgage, as I've read that most lenders won't consider you if you're on a FTC.

Also, my current car finance finishes in September and I'm most likely just going to get a new one as I don't want to buy it outright. Would applying for a new car finance just before my mortgage really hinder my chances, or would I be better in applying for a mortgage before (say, July as an example) and then going for the car?

So to sum up...
- Should I go for the FTC role and how would it affect a mortgage application?
- How should I go about renewing car finance in relation to a mortgage application also?

Sorry for two questions, but I can't think of anywhere better to ask! Advice would be much appreciated!

hazyjo · 4 January 2018 at 2:03PM

Apply for the job - you may not get it anyway. If you do - just hold off buying and keep saving. Any rush to buy? You are not guaranteed to be made permanent and some companies often keep jobs as temporary/contract. You also don't know where you'll end up working so don't tie yourself to one area until you know the job is permanent.

The car finance will affect what they'll lend you. Again, no rush, so delay buying a car. See how you afford to live before deciding if you want to replace it. Or do you have to give the current car back? Buy cheaper, second hand, cash. Even if just for a year.

No, don't get a mortgage offer then apply for ANY finance (or buy expensive items on a credit card, get a new credit card, change jobs, etc). Do it after completion not before. And not directly after as that also won't be looked upon favourably by whoever you're asking for credit from. It usually takes around 3 months from offer to completion (presuming chain is complete).

Good luck.

kamalious · 4 January 2018 at 3:17PM

Thanks for the reply!

I think I probably will apply, as you say there's a chance I might not get it anyway.

There is a bit of a rush for me to buy this year. I'm originally for down south and now living in Manchester, but my Mum's selling our family home, and her and my brother are moving up near here also, so it means I wouldn't have a proper base. Most of my stuff is still there as I visit regularly.

I've also had quite a few bad experiences with landlords so I'd prefer to just have my own place. I'll be able to afford a nice new build near where I live this year thanks to the HTB schemes.

I have to give my current car back in September, but the dealership did call me a while back to see if I wanted to change my car for a new one. If I did that now and then applied for the mortgage in 6 months, would that still work against me? As a rule of thumb, how long should one leave before applying for credit and then a mortgage?

Cakeguts · 4 January 2018 at 3:42PM

Do not buy cars on finance it is a waste of money. Somewhere to live is more important than a nice metal box. If you live or want to live in Manchester or work there you do not need a car. Manchester has got a very good public transport system.

If you want a car for weekends you buy an old second hand one that doesn't have much depreciation in value left. A new car drops in value as soon as you drive it out of the showroom. If you then leave it parked outside your home or in a carpark at work you might as well just go out and burn £50 notes. The depreciation on new cars is high. If you don't fancy the idea of burning £50 notes don't buy a new car on finance. Second hand cars are due to get cheaper because there will be more of them due to people being stupid and buying on finance so you should be able to get a 4 or 5 year old car much cheaper as it will have lost most of its value by then. Cars are not status symbols. They are machines that you drive to get to places. A really old reliable car will get you from Manchester to Liverpool in exactly the same way as a much newer one.

People wonder why older people could afford to buy houses. The answer to that is that 24 year olds often did not have a car and they certainly did not havce a new one. Older people didn't buy new "things" they concentrated on having somewhere nice to live.

Get the home first and then keep saving. Owning a home is expensive you are responsible for all bills. You have to have savings. You cannot afford the finance for a new car all spare money goes into savings for repairs to your property or appliances.

kingstreet · 4 January 2018 at 3:47PM

A first fixed term contract is a deal-breaker for most lenders.

Once it's been renewed once, a few lenders will fall back into your potential pool.

kamalious · 4 January 2018 at 4:29PM

@Cakeguts, I appreciate you taking the time to reply but in future, there's no reason to be so patronising. I agree with your point re: saving being a necessity, but people buying cars is not responsible for a broken housing market which is making it almost impossible for younger FTBs to get on the property ladder.

@kingstreet, thanks for the advice. I'll rethink my plans if need be!

Cakeguts · 4 January 2018 at 4:43PM

kamalious wrote: »

@Cakeguts, I appreciate you taking the time to reply but in future, there's no reason to be so patronising. I agree with your point re: saving being a necessity, but people buying cars is not responsible for a broken housing market which is making it almost impossible for younger FTBs to get on the property ladder.

@kingstreet, thanks for the advice. I'll rethink my plans if need be!

I am not being patronising. The housing market in the Northwest where you are intending to buy is not broken. Houses there are affordable it is only the Southeast where there is a problem. Houses have never been cheap. When I bought my first house at slightly older than you in the 1980s I had a car that was about 6 years old and I needed it for my job, second hand carpets, second hand furniture, second hand washing machine, second hand baby belling cooker. Black and white television (couldn't afford colour.) I could have spent money on "things" I didn't need but I didn't because to me the house was the more important than anything else. That was in a town outside Manchester so don't try to tell me that the housing market in that area is broken because it isn't it is the same as it has always been.

kingstreet · 4 January 2018 at 4:47PM

As a broker, I'd like to say I find it astonishing the number of mortgage applicants who are paying £250+ a month in car finance payments.

This is impacting heavily on mortgage affordability as a result.

As an example, someone on £25k can borrow £118,750 over 30 years from one high street lender. With a £250 monthly credit commitment, that falls to £97,655. Over £20,000 of mortgage affordability is lost.

kamalious · 4 January 2018 at 5:04PM

It's true, Manchester and the NW are a lot cheaper than elsewhere in the country. In the SE where I'm originally from, I'd have had no hope in buying for at least another few years. I definitely wouldn't say it's the same as it always has been, and all of my friends and family who live here currently would disagree with your statement also.

I only pay £100 a month for my car finance so it doesn't impact my monthly budgeting hugely, and a new deal will be around that mark too. A new car is a lot easier, in the three years I've had mine, I've had no problems with it and it's never spent any time in the garage. Buying a house is really important for me, which is why I save in all other matters where possible.

From you experience as a broker, @kingstreet, is 6 months enough time between credit applications?

Cakeguts · 4 January 2018 at 5:04PM

kingstreet wrote: »

As a broker, I'd like to say I find it astonishing the number of mortgage applicants who are paying £250+ a month in car finance payments.

This is impacting heavily on mortgage affordability as a result.

As an example, someone on £25k can borrow £118,750 over 30 years from one high street lender. With a £250 monthly credit commitment, that falls to £97,655. Over £20,000 of mortgage affordability is lost.

In other words if you can give up your feeling of entitlement to a nice new metal box on finance you can afford a much better house. I know what I would do.

kingstreet · 4 January 2018 at 5:17PM

Cakeguts wrote: »

In other words if you can give up your feeling of entitlement to a nice new metal box on finance you can afford a much better house. I know what I would do.

Yep, me too. I drive a 1999 Saab.

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First time buyer - mortgage with FTC at work and car finance?

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