Any mortgage advisors around?

[HousingBladder]

Really desperate to get on the housing ladder. We will have access to 40K (20K saved, after selling jewellery, car and 20K gift) in the future. However our salaries aren’t spectacular. Dh has had a drastic pay cut and we’ve had bad luck for about 2 years now. He’s on 22500. I’m on 13500 as I’m part time because of childcare.

We manage our rent and bills fine. I’ve been doing my numbers and we could easily afford to pay our mortgage payment (1200-1300) and other bills and have around 700-800 a month for food/clothes and kids things.

I don’t want to embarrass myself but would we ever be accepted for a mortgage with such low salaries or would we be laughed at for even thinking it? Really worried

I'm not a mortgage adviser, but your go to place for advice for anything money related is Moneysavingexpert.

In the mortgage section linked to above, you can download a first time buyer's guide. There are also calculators linking to how much you can borrow and advice on getting the best deal and affordability etc. Sometimes if you have a history of being able to pay a certain amount of rent, this helps prove you can afford a mortgage with a similar payment, but don't forget that when you buy, you are responsible for the costs of maintaining your home, so it doesn't follow that you can afford the same mortgage as rent as you have to account for maintenance costs within that - broken boiler or similar.

Have a read through all that, but what I would say is look into special ISAs for FTBs as you can get your savings topped up by the government.

Also, don't forget about fees, moving costs and stamp duty, although you are unlikely to pay any or much stamp duty based on the price of the house you are likely to be buying.

Thanks for the info. I’ve checked our credit score this morning and we both are at the higher end of “fair” for loan approvals, so we’ll have to improve that.

I just feel so shit about this. I don’t understand why there is so much checking and delving when it comes to buying a house. Of course I DO understand and I’m being silly, but how are normal people supposed to buy a home?

I’m already looking to go full time at work, and applying for higher paid jobs to increase our incomings. We already spend the minimal amount for everything. I really thought that a big deposit for a house up to 300k, to avoid stamp duty (south east) would be good. But it seems it won’t happen because we are low earners.

Sorry but £40k isn't a particularly big deposit on a £300k house. Even if you can use all this money as a deposit, and pay fees separately, you'll still only qualify for the 90% mortgage deals as you would need an 86% mortgage.

You may think you can afford a mortgage payment of £1200, but that's probably not within affordability rules on your income, especially as they have to stress test you to much higher interest rates than the historically low rates that are currently in effect.

The rules may seem unnecessarily restrictive if you live frugally, as they assume that you carry on with discretionary expenditure like gym membership etc, instead of prioritising your mortgage, but those are the rules in place.

Have a play with the calculators [[https://www.moneyadviceservice.org.uk/en/tools/house-buying/mortgage-affordability-calculator here] to see what you could borrow, but when I put your salaries in, it seemed to suggest you'd be able to borrow a max of around £150k, so you need to save more, or buy a cheaper house. The gifted deposit may also be an issue as it's not money that you've saved.

Have you looked at shared ownership - you might qualify for the property you need in the area you want with one of those.

No there is no shared ownership offers here. There are some further out of the city, but we have family and school for our kids and moving away from here isn’t an option at all. They have some kind of other buying scheme but it’s only eligibility is if you’re a school teacher teaching at specific schools around the city, which is really unfair.

I’ve played around with the Halifax mortgage calculator and it seems to come up with a few mortgages they could offer. I was basing my calculations on that, but I’ll have a look at the one you’ve linked too.