Chances of getting a mortgage - first time buyer

[Mikeyplum]

big_boz said:

Sorry Op i wasnt clear, in your case looking for 95% mortgage would be on an "old" or not new at least home. Did a quick Right move on your area of Hengoed and looks like there is lots at the money you are talking about say £120k as a max (110 mortgage, 7.5k deposit plus a bit of haggling), no equity loan to have to worry about in 5 years time then.......

Ann I see your point! Sorry, got confused and caught up in the whole new build thing...

Yes that would be an idea, and. Good one at that! M just worried that I won't be accepted onto a 95% mortgage

[big_boz]

Mikeyplum said:

Ann I see your point! Sorry, got confused and caught up in the whole new build thing...

Yes that would be an idea, and. Good one at that! M just worried that I won't be accepted onto a 95% mortgage

The worst they can do is say no!

[Mikeyplum]

big_boz said:

The worst they can do is say no!

Won't that affect any other application I make, though?

[big_boz]

Mikeyplum said:

Won't that affect any other application I make, though?

Regardless of what mortgage you apply for the first step will be to do an application in principal, this will access your affordability and general credit score above all else.

I bought my first house when i was your age with the OH at the time (now wife.....if you think buying a house is expensive...wait for your wedding!) in 2002 at the time i was on £24k the missus was on about £15k so not miles away from where you are now, we got a 100% mortgage at the time from HSBC, but applied for 2 other mortgages and at the time with Natwest and Lloyds, my credit history was appalling, I was a terrible risk, loads of finance, crappy record, basically at the time i wouldn't have lent me £5k let alone £100k.

I would suggest you go and speak to your bank, ie the one you have your current account with and see what they say.

Remember at the moment the market is pretty bad for lenders and home buyers so although they are not going to lend to anyone its not the same criteria as applying for a credit card.

If you have a sufficient deposit and can demonstrate that your outgoings will cover what you are applying for i would see little reason for a high street bank to not accept you. Have a look on money supermarket to check rates and see what is available based on your finances as a start point.

At the end of the day the longer you rent, the more money you are pissing away, so if you are of the mindset to buy you might as well see what is available to you. If its not possible now at least you know, leave it another 6 months, save some more deposit and try again.

I worked in consumer finance for 10 years, and your credit file doesn't sound that bad by the way. It is possible that a lender might want you to clear your CC but you wont know unless you ask. I know my mum had to get rid of her car finance a few years ago to get a new mortgage when she moved out of her key worker house so it does happen.

Edited by big_boz on Thursday 23 May 07:56

[Sarnie]

Mikeyplum said:

I'm just worried that I won't be accepted onto a 95% mortgage

It concerns me if people are thinking this way.

Why would people think that they are more likely to be accepted on a Newbuy scheme than a standard 95% product.

Lenders that offer Newbuy mortgages do not suddenly take on customers with worse credit scores, just because the government are supply a 20% equity loan.

The idea of these schemes is to stimulate the market to allow people with lower DEPOSITS, not lower CREDIT SCORES to get on to the property ladder.

[big_boz]

Sarnie said:

Lenders that offer Newbuy mortgages do not suddenly take on customers with worse credit scores, just because the government are supply a 20% equity loan.

Sarnie, Given your day job, can you expand on what the 95% mortgage with no government equity stake is all about? Homebuy i think its called?

I struggle to see what benefit (if any) is afforded by this scheme to the buyer, only that is restricting the buyer into a new home. As you say, a 95% mortgage is a 95% mortgage, as there is no government financial backing offered to the buyer there is no less risk to the lender, so i don't see what the government is doing on this scheme......

[Steve Evil]

big_boz said:

Sarnie, Given your day job, can you expand on what the 95% mortgage with no government equity stake is all about? Homebuy i think its called?

I struggle to see what benefit (if any) is afforded by this scheme to the buyer, only that is restricting the buyer into a new home. As you say, a 95% mortgage is a 95% mortgage, as there is no government financial backing offered to the buyer there is no less risk to the lender, so i don't see what the government is doing on this scheme......

There are 95% mortgages out there that aren't part of any scheme, just 95% mortgages that you can use to buy pre-owned homes. I think this is what Sarnie is suggesting. In my mind, for someone with a small deposit, moving into a house that's immediately going to drop in value the second it's no longer 'new', sounds like a big mistake, as they're immediately in negative equity and don't have the luxury of that deposit buffer.

[big_boz]

Steve Evil said:

There are 95% mortgages out there that aren't part of any scheme, just 95% mortgages that you can use to buy pre-owned homes.

Indeed, so my question was given that there are already 95% mortgages around from high street lenders, what exactly is the government input into the "home buy" 95% mortgage which has to be used on new homes, not the "help to buy" scheme that OP is talking about where there is an equity stake provided by the government.

Is the lending criteria relaxed for these mortgages to encourage people to buy new homes, if so is the government therefore providing some sort of indirect support to the lenders, like cheaper cost of funding for mortgage's taken out on this scheme or something like that? There doesn't seem to be any indication that there is any rate benefit or similar for the borrower.

So for my circumstance, i have a £50k deposit, i could sell my current home and make feck all profit for the 8 years i have been in it, and use my deposit on my next house, or i could use the £50k i have to pay a c30% deposit on a BTL mortgage and refinance and then rent out my current house, probably generating something in the region of £250 "profit" per month on the rent, then leave about a 5% deposit to allow me to go and buy another house up to about £300k. It just so happens that school and location wise there is a new development that suits my needs perfectly and i can tick all my new house requirement boxes, these homes are available on the 95% mortgage (no equity) government scheme, but as you say, why would i go on the scheme when i could probably get a high street 95% mortgage, more over i could sell some shares and get a bigger deposit together if needs be, so i just want to know what benefit to me the government scheme offers @ 95% LTV. If i can get the same rate as bigger deposit would afford me on the high street, then i would see that as a benefit of sorts......

[Steve Evil]

big_boz said:

Indeed, so my question was given that there are already 95% mortgages around from high street lenders, what exactly is the government input into the "home buy" 95% mortgage which has to be used on new homes, not the "help to buy" scheme that OP is talking about where there is an equity stake provided by the government.

Is the lending criteria relaxed for these mortgages to encourage people to buy new homes, if so is the government therefore providing some sort of indirect support to the lenders, like cheaper cost of funding for mortgage's taken out on this scheme or something like that? There doesn't seem to be any indication that there is any rate benefit or similar for the borrower.

So for my circumstance, i have a £50k deposit, i could sell my current home and make feck all profit for the 8 years i have been in it, and use my deposit on my next house, or i could use the £50k i have to pay a c30% deposit on a BTL mortgage and refinance and then rent out my current house, probably generating something in the region of £250 "profit" per month on the rent, then leave about a 5% deposit to allow me to go and buy another house up to about £300k. It just so happens that school and location wise there is a new development that suits my needs perfectly and i can tick all my new house requirement boxes, these homes are available on the 95% mortgage (no equity) government scheme, but as you say, why would i go on the scheme when i could probably get a high street 95% mortgage, more over i could sell some shares and get a bigger deposit together if needs be, so i just want to know what benefit to me the government scheme offers @ 95% LTV. If i can get the same rate as bigger deposit would afford me on the high street, then i would see that as a benefit of sorts......

My understanding is that the government acts as a kind of guarantor for you and adds security to the lender.