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Getting ducks in row for mortgage application - advice needed please(14 Posts)
After four years of work and saving we are nearly in a position to start applying for a mortgage - in about nine months time.
This has not been easy because we have struggled to sell our home abroad - it has still not sold and is our only (mortgage free property). We are both UK citizens but with no property in this country.
Rather than wait indefinitely for that to sell (we have reduced price etc but the market is very poor) we have committed to trying to save at least a 10% deposit
To this end we are on-track.
DH has got a temporary job which may be extended (he is already past retirement age so this was a really great achievement for him and we are saving his salary at present - around £2.5K a month)
I have a good salary now (after working 4 years in UK and two promotions) and we could afford something reasonable. My job is permanent and full-time. However our options will be limited by DH's age - so they may just take my salary into account for the mortgage and not his "usual" incoming money from pensions.
We have been working so hard to get into a position to get a mortgage that we are now starting to flap about the "little" things. We will absolutely get an independent mortgage adviser when we have saved the 10% but wonder what we should do before then?
So we currently have a joint bank account which we are saving the deposit in, whilst I have a separate account where my salary is paid (this is historically because DH and DCs were abroad when I started work) - would it make sense just to have the one joint account. At present the rent and all bills go out of my account. We tend to juggle living expenses between the two accounts. We have a £500 overdraft on each account - but could clear this in a month if needed. Would having no overdraft be a good idea and looked on favourably?
We are on the electoral roll and have one "small" unsecured loan of less than £5K that will be paid off in full by the time we apply
I have two credit cards with combined limit of £6.5K on them but only use one and pay that off in full each month(usually less than £200 per month) - should we keep these or ditch them? I hear mixed opinions on whether credit cards are a good or bad thing credit-rating wise.
I have signed up to the free Experian trial and all looks well - no hidden surprises! Will do so again when we have deposit saved.
I know these may seem like very obvious questions but we have read some horror stories about what is scrutinised and what can trip you up when the time comes to apply. I know our circumstances are outside the "normal" scope but any advice or tips would be greatly appreciated. We have had and applied (successfully) for a mortgage before but that was in the 1mid-990s when the world seemed a different place!
I would call London & Country mortgages. What they don't know about mortgages and lenders is not worth knowing.
They have info and expertise to advise on a vast array of circumstances plus they are free.
I'm sure someone more knowledgable will be along but I got a mortgage a couple of years ago. I submitted my bank statements for the last six months from my own account, I offered to show them the statements from our joint account but they weren't interested. I had a mortgage advisor and he was fab, we had a slightly higher deposit but poorer credit rating.
I think it might hinge on your age really, my mom (a high earner) was turned down a mortgage because of her age (early fifties).
To be honest it all sounds ok. Having available credit didn't affect our mortgage. We both have credit cards that are paid off in full every month. We have unused overdrafts (if you use yours regularly then stop and get it paid off). I'm self employed and even this didn't cause us any issues. Don't worry about joint accounts versus single accounts. We applied with only single accounts as we didn't live together. We opened a joint one as part of the application (we went direct to a bank not a broker as my other half is a mortgage adviser and doesn't believe that brokers give unbiased or appropriate advice).
The only thing you need to watch out for is paying that loan off. It needs to be showing on your credit file as paid off or it will affect how much you can borrow. It can take several months to show up.
Make sure you don't incur any bank charges, don't withdraw cash on credit cards and steer clear of payday loans.
Delilah that's a really good point about giving the paid off loan time to show up - thanks
Moreisnnogedag yep age is a worry - it's concerning to hear about your mum. I'll be under fifty but not by much
Your age should be ok but it will depend more that your salary alone will cover the 90% of mortgage. I'm not sure what income multiples are used, what are you expecting to use (loan amount / salary = income multiple)
Pay off all credit card debt, only have a monthly balance that you can easily clear or have them empty and say they are for emergency only.
2 bank accounts are fine but you'd have to show you do not live in overdraft.
You'll only be able to have a mortgage term up to your retirement so factor that in, as a 15 year term will increase the monthly payments.
It's all about affordability. They will ask themselves can YOU service the loan and have enough to live on.
I recommend L&C too.
HSBC offer mortgages beyond retirement if you have sufficient income - I assume pensions.
Thanks again - really helpful.
On the overdraft thing is it best not to have any overdraft facility or to have one but never go into it?
Also Lion - would DH and I both apply and only 10% of his income is counted? Happy to just apply in my name (DH is too) but don't want him to be classed as a dependent
Sometimes I feel I may be "overthinking" this but just want to get it right!
An overdraft facility is fine, just don't be in it up to the max each month.
You can both apply, and it's better if you are, some companies will accept his pension income too - so checking this out to confirm is a good idea, so you will know exactly where you stand.
Off topic, but something to consider now, before buying is how you want to approach this property in terms of what happens when either of you dies. Depending on how the deeds are, you are able to leave each portion to your children in trust, rather than to each other. This enables you to ringfence half incase one of you needs to go into care - the whole house as an asset cannot be taken into consideration - only the half of the person who needs the car.
This would need to match up with your Wills to reflect this, but this is the perfect time to do this.
Are you on the electoral roll? Sounds daft I know but my friend recently bought a house and her mortgage application was delayed because she wasn’t on it. Not sure how it applies if been living abroad but worth checking. Good luck!
Hi mother - yep thankfully that's one thing sorted!
I bought my brother out of a house that we inherited when my dad died and I used London and Country - we completed last Wednesday :-)
I can't rate them highly enough - my credit record wasn't great, but I ended up with a high street mortgage at a great rate. Noddle.co.uk is a good free credit checker too, and it's free.
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