Chances of getting a mortgage - first time buyer
Discussion
Me and the OH are looking at purchasing our own property after renting since we were 18. We are both 22, I work full time and earn £22k and the OH works part time (nights, to look after our 2 kids in the day) and earns about £9k.
I've been looking into the new first time buyer equity loan that the government is offering as we find it nigh on impossible to save enough for a deposit. From my understanding, it's only available to purchase new builds, which isn't a problem to us. There are 3 bed new builds near us which tend to go for about £140/150k. On a £150k property, I would have to stump up £7500 and the Govt would supply £30k making the mortgage amount £112500.
Now, the kicker. I've been dealt some s
t cards in the past and subsequently, made some whitty decisions. As a result, my credit history isn't the worst, but by no means the best. I haven't got a massive amount of credit (less than £3k, on OD and CC) and have 2 missed payments on file, none within the last 12 months.
I have a little bit of an idea about mortgages, but am generally in the dark. So I have a few Q's:
), so every cloud and all that. But still, I can't help but feel it's £500pcm down the stter.
Any advice and comments, good or bad are much appreciated.
Cheers
Mike
I've been looking into the new first time buyer equity loan that the government is offering as we find it nigh on impossible to save enough for a deposit. From my understanding, it's only available to purchase new builds, which isn't a problem to us. There are 3 bed new builds near us which tend to go for about £140/150k. On a £150k property, I would have to stump up £7500 and the Govt would supply £30k making the mortgage amount £112500.
Now, the kicker. I've been dealt some s
t cards in the past and subsequently, made some whitty decisions. As a result, my credit history isn't the worst, but by no means the best. I haven't got a massive amount of credit (less than £3k, on OD and CC) and have 2 missed payments on file, none within the last 12 months.I have a little bit of an idea about mortgages, but am generally in the dark. So I have a few Q's:
- Based on my income, how much would I be able to borrow?
- With my credit history, what are the chances of even getting a mortgage in the first place?
- What rate am I likely to get, should I get accepted?
), so every cloud and all that. But still, I can't help but feel it's £500pcm down the stter. Any advice and comments, good or bad are much appreciated.
Cheers
Mike
combine your income and multiply by 4 , thats roughly what most lenders would be prepared to lend
at the end of the day it comes down to affordability and this is what lenders will look at.. how much spare cash do you have every month after bills etc
as long as you can afford it you should have no problem getting that mortgage from what you have described
i would go through a broker so they can worry about the best deals for you
at the end of the day it comes down to affordability and this is what lenders will look at.. how much spare cash do you have every month after bills etc
as long as you can afford it you should have no problem getting that mortgage from what you have described
i would go through a broker so they can worry about the best deals for you
andrew186 said:
combine your income and multiply by 4 , thats roughly what most lenders would be prepared to lend
at the end of the day it comes down to affordability and this is what lenders will look at.. how much spare cash do you have every month after bills etc
as long as you can afford it you should have no problem getting that mortgage from what you have described
i would go through a broker so they can worry about the best deals for you
Thanks.at the end of the day it comes down to affordability and this is what lenders will look at.. how much spare cash do you have every month after bills etc
as long as you can afford it you should have no problem getting that mortgage from what you have described
i would go through a broker so they can worry about the best deals for you
I have a spreadhseet (don't laugh, it really does help) with all my income/expenditure. If I delete out my £500 rent, our combined income allows £765.43 with all outgoings paid(even down to paying for a haircut etc).
We (read I) tend to be quite frivilous with any spare cash. It's a bad attitude to have, but if there is money left, I feel the need to spend it.
However, having seen the error of my ways and a new "been there done that" view, it's time to shape up and start looking to the future.
ETA - 1000th post!
Edited by Mikeyplum on Tuesday 21st May 12:14
Mikeyplum said:
On a £150k property, I would have to stump up £7500 and the Govt would supply £30k making the mortgage amount £112500.
Slightly O/T, but is this how it works? As in, does the government supply £30k, or do they act as guarantor for £30k of the mortgage? The difference is that you'd need to pay interest on the £30k if it's the latter. (If it's the former I assume it's in the form of an interest-free loan?)
Oli.
zcacogp said:
Slightly O/T, but is this how it works? As in, does the government supply £30k, or do they act as guarantor for £30k of the mortgage? The difference is that you'd need to pay interest on the £30k if it's the latter.
(If it's the former I assume it's in the form of an interest-free loan?)
Oli.
The loan is interest free for 5 years. Then interest of 1.79% of the loan amount is added in the 6th year, then at 1% above RPI thereafter. You can either pay the loan off as you go, or when the house is sold. (If it's the former I assume it's in the form of an interest-free loan?)
Oli.
To be honest, it's not the way I would choose to buy a house, but I have no other way of coming up with a deposit.
NightRunner said:
Given your admitted history, what are the odds you'll choose to pay the gov loan back upon sale...
Letting it eat into equity....
Appreciate your honesty. However, I'd like to be able to pay it off as soon as possible by either incorporating it into my monthly payments, or throwing chunks at it here and there. Letting it eat into equity....
BoRED S2upid said:
What deposit do you currently have? I don't think its mentioned in your post.
Not sure as yet. I know that sounds daft, but depending on how much we need, we might get it given to us. I do have access to a trust fund for housing and/or educational purposes left by my mothers mother. However, my mothers step-mother is now the trustee (my grandad has alzheimers) and she requires that your finances are in finer order than Richard Branson to release funds!
. But that's a whole different story! 
Mikeyplum said:
BoRED S2upid said:
What deposit do you currently have? I don't think its mentioned in your post.
Not sure as yet. I know that sounds daft, but depending on how much we need, we might get it given to us. I do have access to a trust fund for housing and/or educational purposes left by my mothers mother. However, my mothers step-mother is now the trustee (my grandad has alzheimers) and she requires that your finances are in finer order than Richard Branson to release funds!
. But that's a whole different story! BoRED S2upid said:
Would persuading her to release the money from your trust fund be easier than persuading a bank? Thats the route i'd be going down TBH. Banks are going to cost you a fortune in the long run.
The trust would be for the deposit - not the purchase price (sorry, should been more clear). But, trust me (pardon the pun), it would be easier to pursuade a Lioness from her cubs over the phone.
Mikeyplum said:
Cheers Sarnie.
Excuse my ignorance, but I thought these were few and far between and I'd be less likely to be accepted than a lower LTV mortgage?
Yes few and far between but there isn't a magic wand that means a lender will accept you moreso just because you are using the Newbuy scheme, they will either accept you or not......Excuse my ignorance, but I thought these were few and far between and I'd be less likely to be accepted than a lower LTV mortgage?
OP, I have been looking at the 2 schemes recently as me and the wife are looking to move anyway, i am sick of working on my bloody 200 year old house so a new build with straight lines would be great, and the schemes would get us into a bigger house.
As i understand it the 2 schemes are both based on 5% deposits up to 20% and there is some cap on the 20% where if you have more you can't use it, and then one is where as you say you stump the 5% (or whatever you have), the government then loans you a proportion of the value of the home interest free which you then pay back or re-finance in 5 years. The other scheme is a bit less clear and the government do something to back your (up to) 95% mortgage, so no equity loan so to speak of.
It is the later scheme that we are interested in as the deposit we have saved will allow us to get a BTL on our current house and keep it and then get a 95% mortgage on a new place, on paper this looks like a more attractive proposition as i don't want to be owning any less than 95% of my property, but i don't understand what the government are actually doing (financially that is) with my mortgage, as there are plenty of new home builders round our way that offer 95% mortgages anyway and were doing so before the schemes were announced. The government scheme does not appear to be offering a better rate from what i can see so not quite sure what exactly the deal is.
Assuming you have the 5% deposit have you just looked for a 95% mortgage anyway? As someone else said they do exist, i am fairly sure natwest and RBS offer them. It costs you nothing other than time to go and speak to an adviser and run an application.
Give that a go and see what they say you might be surprised with what the offer you.
As i understand it the 2 schemes are both based on 5% deposits up to 20% and there is some cap on the 20% where if you have more you can't use it, and then one is where as you say you stump the 5% (or whatever you have), the government then loans you a proportion of the value of the home interest free which you then pay back or re-finance in 5 years. The other scheme is a bit less clear and the government do something to back your (up to) 95% mortgage, so no equity loan so to speak of.
It is the later scheme that we are interested in as the deposit we have saved will allow us to get a BTL on our current house and keep it and then get a 95% mortgage on a new place, on paper this looks like a more attractive proposition as i don't want to be owning any less than 95% of my property, but i don't understand what the government are actually doing (financially that is) with my mortgage, as there are plenty of new home builders round our way that offer 95% mortgages anyway and were doing so before the schemes were announced. The government scheme does not appear to be offering a better rate from what i can see so not quite sure what exactly the deal is.
Assuming you have the 5% deposit have you just looked for a 95% mortgage anyway? As someone else said they do exist, i am fairly sure natwest and RBS offer them. It costs you nothing other than time to go and speak to an adviser and run an application.
Give that a go and see what they say you might be surprised with what the offer you.
big_boz said:
OP, I have been looking at the 2 schemes recently as me and the wife are looking to move anyway, i am sick of working on my bloody 200 year old house so a new build with straight lines would be great, and the schemes would get us into a bigger house.
As i understand it the 2 schemes are both based on 5% deposits up to 20% and there is some cap on the 20% where if you have more you can't use it, and then one is where as you say you stump the 5% (or whatever you have), the government then loans you a proportion of the value of the home interest free which you then pay back or re-finance in 5 years. The other scheme is a bit less clear and the government do something to back your (up to) 95% mortgage, so no equity loan so to speak of.
It is the later scheme that we are interested in as the deposit we have saved will allow us to get a BTL on our current house and keep it and then get a 95% mortgage on a new place, on paper this looks like a more attractive proposition as i don't want to be owning any less than 95% of my property, but i don't understand what the government are actually doing (financially that is) with my mortgage, as there are plenty of new home builders round our way that offer 95% mortgages anyway and were doing so before the schemes were announced. The government scheme does not appear to be offering a better rate from what i can see so not quite sure what exactly the deal is.
Assuming you have the 5% deposit have you just looked for a 95% mortgage anyway? As someone else said they do exist, i am fairly sure natwest and RBS offer them. It costs you nothing other than time to go and speak to an adviser and run an application.
Give that a go and see what they say you might be surprised with what the offer you.
The 95% mortgage option will price us out of the market (on new builds, at lease). Because of our earnings, we will only be able to borrow about £110. Most houses round our way, go for about £150k so even if we did stump up the £7.5k (5%) we would require a mortgage of the remaining £142.5k which won't be possible due to our earnings. As i understand it the 2 schemes are both based on 5% deposits up to 20% and there is some cap on the 20% where if you have more you can't use it, and then one is where as you say you stump the 5% (or whatever you have), the government then loans you a proportion of the value of the home interest free which you then pay back or re-finance in 5 years. The other scheme is a bit less clear and the government do something to back your (up to) 95% mortgage, so no equity loan so to speak of.
It is the later scheme that we are interested in as the deposit we have saved will allow us to get a BTL on our current house and keep it and then get a 95% mortgage on a new place, on paper this looks like a more attractive proposition as i don't want to be owning any less than 95% of my property, but i don't understand what the government are actually doing (financially that is) with my mortgage, as there are plenty of new home builders round our way that offer 95% mortgages anyway and were doing so before the schemes were announced. The government scheme does not appear to be offering a better rate from what i can see so not quite sure what exactly the deal is.
Assuming you have the 5% deposit have you just looked for a 95% mortgage anyway? As someone else said they do exist, i am fairly sure natwest and RBS offer them. It costs you nothing other than time to go and speak to an adviser and run an application.
Give that a go and see what they say you might be surprised with what the offer you.
If the Govt were to contribute another 20%, the borrowed amount would reduce to £112.5k which we could probably get a mortgage for. Like you said, in 5 years, I could then look at refinancing to include the equity loan.
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.......
Mikeyplum said:
If the Govt were to contribute another 20%, the borrowed amount would reduce to £112.5k which we could probably get a mortgage for. Like you said, in 5 years, I could then look at refinancing to include the equity loan.
Are you sure the government loan is not considered in the amount of money you can borrow ? (at the end of the day the government loan is a liability that has to be paid back)In other words you earn 20k so in theory you could borrow £100k + deposit
If with this new scheme you earn 20k so borrow lets say 5 times +20% deposit from the government so in theory one is leveaged up 6/7 their income?
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