Applying for a mortage

spadoosh · 22 May 2018 at 12:11PM

clocourtney wrote: »

I agree, I wasn't planning on going for one so quick but it seems to have happened that way in the last week or so.

We are going through the help to buy scheme so for the first 5 years it is between £450-£500 for mortgage repayments but cannot remember if it was 30 or 40 years.

We have never ran out of money, just haven't been the most careful lately i.e booking a holiday to Texas for summer. We have also never thought about emergencies as it is not our house. But it is something we would think about once we owned a house

I am thinking of cancelling the holiday and just paying off the overdraft.

Youre earnings are good and healthy, your debts levels arent particularly large. Youre not going to be too different from your average FTB. The car finance is going to effect affordability quite a bit but theres probably not much you can do about that.

You shouldnt be in too bad of a place but then it sounds like you dont really pay too much attention with money and quite possibly rushing in to buying this house. Its well worth getting your head screwed on regarding finances and the sooner the better. Like me a lack of planning seems to cause set backs. These 'so,ethings that pop up' are normally all ways predictable, for us its the annual tv licence that always catches us out, but it is so predictable.

Budget and plan. You cant do it enough.

Candyapple · 22 May 2018 at 12:14PM

I haven't taken into account the OD.

Loan = £3,300
Your CC debt = £300
BF CC debt = £450
BF car finance = £4,400
Total = £8,450

I'm just working on your baseline salary for now for argument's sake of £46k.

So £46k minus £8,450 = £37,550 is what your salary multiples would be due to the debt.

Let's say x3.5 salary for the mortgage calculation = £131,425 bank would be willing to lend you for the mortgage = not enough for what you need.

Let's say x4 salary for the mortgage calculation = £150,200 bank would be willing to lend you for the mortgage. Although you said you only £146k, this leaves a very tight margin for affordability as you are at the high end of their lending scale which means that the bank will scrutinise your outgoings.

Don't forget that I haven't taken into consideration and the banks definitely will:
a) Any stress testing of interest rates (banks do this up to 5-8%)
b) Your other monthly outgoings which can affect your affordability such as food, travel costs, mobile phone etc.
c) If you have any children

So you can see just how much carrying debt affects your mortgage application.

clocourtney · 22 May 2018 at 12:21PM

spadoosh wrote: »

Youre earnings are good and healthy, your debts levels arent particularly large. Youre not going to be too different from your average FTB. The car finance is going to effect affordability quite a bit but theres probably not much you can do about that.

You shouldnt be in too bad of a place but then it sounds like you dont really pay too much attention with money and quite possibly rushing in to buying this house. Its well worth getting your head screwed on regarding finances and the sooner the better. Like me a lack of planning seems to cause set backs. These 'so,ethings that pop up' are normally all ways predictable, for us its the annual tv licence that always catches us out, but it is so predictable.

Budget and plan. You cant do it enough.

I agree. We are both going to scrimp as much as we can and get back on top of things. Thanks for your advice

DCFC79 · 22 May 2018 at 12:27PM

Any family who could potentially pay the overdraft and car loan off or clear the car finance.

clocourtney · 22 May 2018 at 12:28PM

Candyapple wrote: »

I haven't taken into account the OD.

Loan = £3,300
Your CC debt = £300
BF CC debt = £450
BF car finance = £4,400
Total = £8,450

I'm just working on your baseline salary for now for argument's sake of £46k.

So £46k minus £8,450 = £37,550 is what your salary multiples would be due to the debt.

Let's say x3.5 salary for the mortgage calculation = £131,425 bank would be willing to lend you for the mortgage = not enough for what you need.

Let's say x4 salary for the mortgage calculation = £150,200 bank would be willing to lend you for the mortgage. Although you said you only £146k, this leaves a very tight margin for affordability as you are at the high end of their lending scale which means that the bank will scrutinise your outgoings.

Don't forget that I haven't taken into consideration and the banks definitely will:
a) Any stress testing of interest rates (banks do this up to 5-8%)
b) Your other monthly outgoings which can affect your affordability such as food, travel costs, mobile phone etc.
c) If you have any children

So you can see just how much carrying debt affects your mortgage application.

Thank you for the breakdown. We are just so desperate to get out the "renting rut". Travel costs are minimum and we have no children. Mobile phone costs are low as we only pay for one which is £12.

I agree, I have always been good with money but let luxuries get in the way. I am going to speak to my boyfriend tonight about cancelling the holiday and getting things back on track. Thanks

DCFC79 · 22 May 2018 at 12:36PM

clocourtney wrote: »

I agree, I have always been good with money but let luxuries get in the way. I am going to speak to my boyfriend tonight about cancelling the holiday and getting things back on track. Thanks

Have you looked at what you could be paying in bills eg water, council tax etc etc ?

clocourtney · 22 May 2018 at 12:39PM

Water is around £36 per month and Gas/electric has just gone down to £46 from £76. Council tax is £155 which is high but is correct. If we got a mortgage, the council tax would go down for sure but not sure about everything else. Also to your other question unfortunately no we cannot get money off family to pay off the car finance. thanks

[Deleted User] · 22 May 2018 at 12:47PM

clocourtney wrote: »

Water is around £36 per month and Gas/electric has just gone down to £46 from £76. Council tax is £155 which is high but is correct. If we got a mortgage, the council tax would go down for sure but not sure about everything else. Also to your other question unfortunately no we cannot get money off family to pay off the car finance. thanks

Why would the council tax go down just because you have a mortgage?

clocourtney · 22 May 2018 at 12:53PM

!!! wrote: »

Why would the council tax go down just because you have a mortgage?

Different council. We would be going from East riding council to Hull council. We have checked and it seems it would go to the band below

MarcMCFC1986 · 22 May 2018 at 1:01PM

Don't worry too much.

I applied for my first mortgage about 18 months ago, and both myself and my partner have a loan each, a credit card each, had overdrafts when at University, she has store cards etc.

As long as all your debt is under control i.e. you're making regular payments each month and haven't missed any, and you stay within your overdraft limit, you'll be fine!

Applying for a mortage

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