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Original poster

Should we bother trying to get a mortgage?

22 replies

lillamyy1 · 23/04/2014 21:09

Between us, DP and I earn about 40k pa (I'm on a zero hours contract but have been working at the same company for over a year and a half).
We've got no deposit so were thinking of looking into trying to get a loan for a 5% deposit.
We haven't had any bankruptcy or CCJs in the past. DP has defaulted on a loan before but he managed to pay it off 4 years ago.
Apart from that, nothing serious but lots of reminders for bills and usually at our overdraft limits (in fact I'm always OVER my limit Blush ) by the end of the month.

Is there any point in trying to get a mortgage? Our rent's crippling (we live in a nice area of Bristol) and just don't want to feel like all our money's going down the drain.

OP posts:
Artandco · 23/04/2014 21:27

It really depends on how much you want to get and average house price in area

SpottyTeacakes · 23/04/2014 21:28

I thought you needed a much bigger deposit than 5% these days and you could only get a mortgage three times the value of your annual household income? I could be wrong though. I know how you feel about renting. I'd love to own our own house but unless I won the lottery or move to Wales I can't see it happening Grin

BuggerOffBieber · 23/04/2014 21:32

Don't forget that any loans you take out will lower how much they will lend you. Have you tried any of the online calculators? Halifax, Woolwich and Nationwide have good ones. Have you seen a copy of your credit report lately? Might be worth a look

Artandco · 23/04/2014 21:35

Oh yes and I think above is right. You need min 10% deposit plus it's x5 times annual income I think. Well that's what we were told 6 months ago. Livingbin central London means we need a rather late deposit to start with!

SpottyTeacakes · 23/04/2014 21:45

Ooo five times maybe I can afford that beach hut after all Grin

I thought I heard on the news recently they were going to make it even more difficult to get a mortgage? Although I'm not sure how...

BuggerOffBieber · 23/04/2014 21:51

'Mortgage market review' comes into force this Friday I believe, it's not supposed to make it more difficult as such but the lenders have to be seen to check affordability more closely, so will have to go through bank statements/payslips etc with a fine tooth comb. It's not really as simple as x times income, they have to look at your overall 'affordability'

Original poster
lillamyy1 · 23/04/2014 21:59

Oh poo! If we are eligible we could find a small place for £120k around here, I reckon... Where can I get a copy of my credit report?

OP posts:
SpottyTeacakes · 23/04/2014 22:02

That's interesting Bugger so will they be looking at how well you save/if you fritter etc?

Experian do a free credit report. 30 day free trial don't forget to cancel. Go via topcashback to get money back.

BuggerOffBieber · 23/04/2014 22:21

lil Experian and Equifax are the main companies, Experian is probably the most popular. Have you looked at the Help to buy scheme? I don't know much about it but if you are eligible for it the government basically give a guarantee to the mortgage lender and they are more likely to go for a 5% deposit. Also Might be an idea to try calling a few mortgage brokers, they might be able to give you some ideas and answer queries.

Spotty That's exactly it, they now have to take much more into account when looking at how much they'll lend, in all honesty, how much of an impact 'MMR' will have on the market is yet to be seen I think!

Original poster
lillamyy1 · 23/04/2014 23:16

Thanks for the advice Smile

OP posts:
OhTinky · 23/04/2014 23:19

Company called noodle does credit reports instantly and for free.

OhTinky · 23/04/2014 23:20

Sorry that should be Noddle!

PlinkyPlonker · 23/04/2014 23:22

Have you looked into the government deposit scheme, maybe that could also help you instead of taking out a loan for the deposit.

PlinkyPlonker · 23/04/2014 23:23

Sorry - already been suggested above :-)

namechangepro · 24/04/2014 00:08

You can't get a loan for a deposit.

An unsecured loan to get a secured loan? Madness OP.

The only way is to save and it is really really hard ! Good luck

Housepricewoes · 24/04/2014 07:36

Sorry OP but I think the honest answer is 'no you shouldn't even bother applying'

You on a zero hours contract and your DH having a defaulted loan in the last 6 years is bad enough to be a stumbling block but the deposit, or lack of, is going to be a deal breaker.

A lender is not going to give you a mortgage when you haven't managed to save a single penny towards a deposit and have taken a loan out for it.

In addition, the loan repayments will reduce your affordability and the fact you are constantly over your agreed overdraft limit will be the final nail in the coffin.

The mortgage market is focused on responsible lending and it wouldn't be responsible to lend to you.

Mothergothel1111 · 24/04/2014 07:50

No buy a copy of alvin halls book, spend the next year really sorting your debt and get some savings.

Can you move to to smaller place, sell a car, sell old stuff. You need to be mega frugal, looks at girl called jacks food blog. Don't buy anything.

I cleared all my debt and saved like crazy about 15 years ago to buy my first place. It was a hard year but became a game to see how little I could spend. ( one week only £5 of fun money I seem to recall)

You can do it but you need to get serious.

SpottyTeacakes · 24/04/2014 07:50

So, Houseprice, say someone gave you £20k for a deposit or you won it as is my plan Wink would they be unlikely to offer you a mortgage as you can't show that you can save etc?

Sorry for hijack op I'm just curios

Housepricewoes · 24/04/2014 08:03

I'm not an expert but know a bit about it and my understanding is the person making the gift would have to sign to say it was a gift and not a loan, ie, they have no further interest in it.

The biggest problem with a loan is it would need paying back at the same time as a mortgage would need paying back.

The problem about not having saved the deposit would come out in the affordability check element of the mortgage application- if you don't have enough money left each month to save for a deposit, lenders are unlikely to deem it affordable for you to pay a mortgage.

Spindelina · 24/04/2014 10:58

But in terms of affordability, surely the fact that you will no longer be paying rent comes into it?

(I get that a high LTV is risky for the lender and so they may want to avoid it for that reason alone.)

Housepricewoes · 24/04/2014 11:14

It's really not that simple spindelina.

Someone can chose to/ have to commit a huge percentage of their income to rent payments (50%+) but you wouldnt be allowed to borrow anything like that on a mortgage.

The new MMR rules are all about affordability so if you have childcare costs or travel costs, these are all factored into what you are able to afford, income multiples are not really relevant anymore.

The OP can't demonstrate financial responsiblilty at this stage so needs to try and save some money, clear debts, not use her overdraft and then have another look around in a year or so.

Original poster
lillamyy1 · 24/04/2014 14:21

Thanks for the advice guys! Sounds like it's best to move to a cheaper place for now and try to sort our finances!

OP posts:
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