Mortgage Lending Criteria

[Muncher]

Whilst I appreciate most of the answers to this will depend upon specific lending criteria I was hoping for some general pointers.

I'm looking to buy a first house I guess in the next year or two, probably around here so I guess I'm looking at ~£160k for something reasonable.

The questions I have are largely related to how lenders would view my job. I'm training to be a solicitor in the City, but due to the tough competition and the state of the economy it could take some time to secure one and in any case most companies recruit two years in advance. There is also the question of once I'm qualified being offered a position as a newly qualified, as the training contract is for a fixed term of 2 years/18 months.

In short it's all a bit uncertain. In the meantime however I've got a pretty good role at a law firm so am able to save (or try to, damn car) for a healthy deposit. A problem with this is due to the nature of the role I am limited to 6 month contracts, though I can't see that not being renewed for the next 18 months due to the case I work on.

Additionally whilst my basic salary is reasonably low in the grand scheme of things, I have as much overtime available as I want, so averaged out over a year I double my basic salary comfortably.

This is not an immediate concern as I'm not looking to buy right now as I think the market has got a lot further to fall, but it is something I've been thinking about lately.

Whilst the career situation is reasonably uncertain from a lender's point of view I guess job security is an issue for a lot of people they lend to in any case?

That aside would a lender lend on the basis of say your salary as it appeared on your last P60 or would they lend on the basis of your basic salary?

Hopefully by the time I come to buy I should have a deposit in the region of 40-60%, so I am assuming a lot of these concerns on the part of the lender would be nagted by this?

[Muncher]

Anyone?

[stemll]

If the overtime is contractual (i.e. guaranteed and your employer will say so) then yes it's included otherwise no more that 50% of it will be considered..

Also, don't expect more than 3 or 3.5 times basic any more and not many offering more than 90% LTV.

[Muncher]

stemll said:

If the overtime is contractual (i.e. guaranteed and your employer will say so) then yes it's included otherwise no more that 50% of it will be considered..

Also, don't expect more than 3 or 3.5 times basic any more and not many offering more than 90% LTV.

As I thought. No it's not contractual, there is just as much of it as you want to do most of the time, as the firm gets to bill the client for it anyway.

I hope I'd be looking at no more than 75% LTV in any case.

[scotal]

stemll said:

If the overtime is contractual (i.e. guaranteed and your employer will say so) then yes it's included otherwise no more that 50% of it will be considered..

Also, don't expect more than 3 or 3.5 times basic any more and not many offering more than 90% LTV.

Neither of those statements are competely right.
There are plenty of lenders who will take 100% of overtime into account, whehther it is gurantee'd or regular. however some lenders have tightened up on this of late.

You can still get higher multiples thatn 3.5% . Although alot of lenders will now lend on affordability, so if you have a lot of loans outstanding you will not get as high a loan amount as someone with no other credit. (The 90% LTV thing is right though)

They also base lending on credit score, so make sure you are on the electoral role, and pay your bills on time.

Some lenders will have a problem with 6 monthly contracts, however, if you can show they are extended (usually at least twice) then they will treat you pretty much as employed.

[Muncher]

Credit history should be good, plenty of activity, no other credit other than student loan, which isn't exactly large and doesn't really count.

[scotal]

Muncher said:

Credit history should be good, plenty of activity, no other credit other than student loan, which isn't exactly large and doesn't really count.

The student loans co is so poor that these are ignored by most lenders.

[Muncher]

scotal said:

Muncher said:

Credit history should be good, plenty of activity, no other credit other than student loan, which isn't exactly large and doesn't really count.

The student loans co is so poor that these are ignored by most lenders.

Much in the same way as the SLC do!

[wargriff]

If you look at the first time buyers inititive from the gov, you can get a new property and have a large part of the purchase price paid for.
When you sell you get a figure equal to your share of the equity returned.
You hae to be a first time buyer and not had mortgage before.

My partner has just bought a very very nice 2 bed luxury flat sea views and private parking. She has paid £56,000 for it.

May be worth a look.

[pjac67]

Just to a add that you can further increase your credit score by having a credit card and/or loan to build up a bit of 'responsible credit history' (ironic though it may sound if you are squeaky clean with no borrowing history your score will be lower).

Did a mortgage this week with Woolwich (still 5 x income multiple subject to credit score and 'Fastrack' (why do they still do this....) if < 75% LTV) who took 100% of non gauaranteed bonus as had 2 year history of bonus payments.

HTH.