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Confused - buying a house(7 Posts)
Just looking for some advice about what our options might be. Me and my DH have never owned a house - when we were first together we rented for about 4 years and we have been living abroad for the last 2.5 yrs. During this time we have worked very hard to save up and we have managed to save quite a lot considering we don't earn mega bucks. We are moving back to the UK to an area we've never lived in (north) and we really want to be able to buy a house ASAP as this is something we previously thought we'd be never be able to do (in London). However the nature of our jobs means that I will be on a 3 year contract and he is on a 2 year contract. Although I'm not too worried about that (used to it now and they usually get extended anyway), I have heard it will make it difficult to get a mortgage. So my questions are:
- will we be able to get a mortgage on fixed term contracts? Will we be offered worse rates because of it? I have some friends who have managed to find mortgages where they don't ask about your contract though, as long as you show reliable income. Which brings me on to...
- will it be hard to get a mortgage given that we have lived abroad for so long? We maintained all our UK accounts including ISAs. We can show proof of continued income during this time and I have kept our UK credit cards active too so will hopefully have a good credit rating. But I have heard that banks want several months of payslips which we obviously couldn't provide from the UK recently.
- if we can get a mortgage, how much could/should we borrow? nice 2 beds are around £140-150k and 3 beds around £170-200k. We could manage with 2 but 3 would be much better as we will be TTC soon and like to have family/friends visit. So not sure whether to get a bigger mortgage to get the right house or start small but face moving again in the next 2ish years.
Sorry for being very un-British but just for info and to avoid drip feeding, our combined income is about £65k and we have no debt other than student loans which I think we will be paying off forever so I try to forget about those ;-) In total we have saved up about £80k, and this is to pay for house deposit as well as fees/stamp duty and then we'd also like a bit of a buffer left over. Will also be buying a second hand car when we move back. So I think we could probably put down a deposit of £55k ish. Again, sorry if it is awkward to add this info but I kind of figured that it's hard to comment without knowing what sort of position we are in. Thanks for your help.
You may find lenders will require a significant deposit and will look at affordability of repayments . Btw you may not have been entitled to ISA while resident abroad. Did you continue to pay any UK tax or ni ?
I think youll have trouble getting a mortgage in the first 6 months of employment. There are so many variables these days, I would use a broker such as London and County - they are free and can sometimes get much better rates from even high street banks.
Eek thanks for the heads up LIZS. I have just googled the ISA issue and it turns out that I was allowed to pay into the ISA for most of the first year I was here because I started the tax year living in the UK, but I wasn't meant to during the second tax year. Oops! I had no idea. However I'm not too worried because it says I should just notify HMRC and they will remove the non-allowed money from the ISA and return it to me and then I should pay tax on the interest for that year. Given that the interest has been about 0.1% I think it will come to about twenty quid in total so should be fine! I will make sure I don't put any more money in there until I move back in June.
Our plan was to rent for 6 months and then buy - hopefully this will be long enough for payslips etc? I don't think the affordability of repayments should be too much of an issue - our take home after tax, student loan and pensions will be about £3600. Will that be ok for a mortgage of between 100-150k? And would £55k count as a significant deposit? Should be around 30%.
I would have thought your salaries would be fine and yes 30% is considered a good deposit. These days though mortgage applications are onerous and they seem to prefer not to lend money!
Not sure if this applies for non residents but as a first time buyer you could do a Help to Buy ISA.
I would recommend going through a mortgage broker rather than direct to a bank as they will often know who will lend under your circumstances. We went with one for our most recent purchase and it was definitely worth the £300 it cost us.
We returned from abroad and managed to get a mortgage within 6 months of being back in the UK. It was quite a few years ago though, so not sure if things have changed. As long as we were able to prove earnings. However I think they are a lot stricter now and look at all your outgoings.
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