ADP

Hi all,

My housemate(Im renting) is very seriously looking at buying a place with his girlfriend. She has a flat already, I guess worth £140,000. I think she may only have 10K ish equity.

They probably earn 70K between them, however I know for a fact he has something like 30k debt - on a loan and cards.

He seems to think it wont affect him when gets a mortgage - they want to buy for 210K ish?

How will this affect him? Will the banks give them a reduced mortgage or will they just say **** off NO!!!

Any ideas! thanks

Andy

Raartoot

he may get a mortgage but at a silly high rate due to his credit history....or yeah FEK off!!!!

ADP

think his credit history is quite good ie he pays monthly installments without fail, the problem is the amount he owes in total!

mattykimbo

try Yorkshire building society i work there and they ahve just released a range of mortgages i think called fresh start for people with bad credit or un amicable breakups.

or try http://www.accordmortgages.com/ they a subsiduary of the Yorkshire.

Raartoot

He would still have to tell the Potential lender of any existing loans or debts though and that amount could go greatly against him.
They earn 70K between them so maybe that will help them but perhaps not for that Large amount they wish to borrow.

ADP

they run credit checks right? it will show up?

Raartoot

Almost very likely yes, it will show up.
does she earn the 60k and him the 10k for him to have debts like that?

ADP

no I think they both earn about 35k each, he only recently(last 6 months) started to earn that, he has been spending like someone earning 50k for the last 10 years, has nothing to show for it either so cant sell a big car or anything to help! just crazy living above your means

Al Coholic

The card and loan debts WILL show on an Experian credit check, which the lenders will do even on a self cert mortgage.

If he's honest with a friendly broker there will be ways round it, such as an increase in the monthly income to cover the debt. He honest way is to just borrow less.

Raartoot

Ah right, I understand now, Easily done though.

I reckon he will have more chance of Getting somewhere with other than a high street Bank/Provider especially now you mentioned he hasnt been earning that amount for long (but that might not be a Question) as the Lender will want to know where he worked before and/or how much he earned previous to this Rise in his salary.

Raartoot

Yes thats another option like he says, If you know a decent chap who can tell a few fairys then that could be way round it but is that wise with his record of spending?

MikeCardiff

iTrader: (2)

Most lenders will work out all his and his girlfriends debts, and take that off the amount they are willing to lend them.

e.g. if based on their income, they would qualify for say a £210K mortgage, the lenders will only give them £180K as they have -£30K against them already.

But... sensible lenders will also look at how much he is paying in monthly repayments on all his debts already - its no point having mortgage payments of X, debt repayments of Y, and X+Y is 90% of his take home pay as he'll have nothing to live on.

Beware brokers who will fiddle the figures for you - it makes no difference to them as they get their commission, and its not them who will lose the house when he cant make the payments !

With the economy balancing precariously at the moment 'sensible borrowing' is definitely the order of the day - if they earn £35K each, will they be able to afford the repayments if one of them gets laid off and has to take a minimum wage job in a factory until they find something else ?

richs2891

There are morgages out there that will ignore credit card debts and personal loans, but wont ignore payment to the CSA ! MY advice would be to see a good independant morgage advisor.
As mention thinks its the broker arm of the Yorkshire - called the accord - I think.
Pm me if you want the name of an independant morgage advisor that did a good deal for me
Richard

fitzscoob

When I applied for a mortgage recently, they were told that I owed £3k on a personal loan.

They multiplied the amount, cant remember by how much, 2.5 times possibly then reduced the maximum borrow amount accordingly.

This was with Abbey, cant remember the exact formulae?

3times

the amount of poor advice given on forums regarding mortgages is appalling.

Best advice is to go and see an IFA, just make sure they are independant for mortgages as well as investment/life protection.

As a rule of thumb. The monthly payments of the o/s credit (work on 3% of o/s balance for credit cards) are deducted from the salary, the income multiple is then applied. It is possible to get up to 4 x joint income depending on credit score and loan to value, although 3 x is more common. Some lenders also work on affordability, which in some cases works out better.

to give you an idea;
£30000 x 3% = 900: 900 x 12 = 10800: 35000 - 10800 = 24200: 24200 + 35000 = 59200 (joint salary)

59200 x 3 = potential mortgage of £177600
59200 x 4 = potential mortgage of £236900

If they only have 10k for deposit/ fees (stamp duty 1%, solicitors fees etc) they will probably need to look at someone like Northern Rock or Coventry as they offer higher income multiples on certain mortgage products.

This assumes that their credit history is good. a way to check is to log onto experian or equifax and order a copy of thei credit report.

MikeCardiff

iTrader: (2)

I'm surprised Vorderman or Tuffnell arent advertising these on TV yet

"Got no money ? Owe tens of thousands ? thought you couldnt get a mortgage - DON'T WORRY ! take on another even bigger debt you can't afford at an uncompetitive interest rate - HAPPY DAYS !"

Small print - we hope you default on payments as soon as possible so we can repossess the house, your dog, and put your wife out on the street to pay back your debt. All debts will be secured on your personal organs.

The Rani

When I applied for my mortgage, they ran an 'affordability test', which was earnings minus outgoings per month. They base it on a minimum amount you need per month to live on. I had to get rid of a couple of payments per month (luckily for things I had almost finished paying anyway) before they'd let me have the mortgage.

fast bloke

Accord will ignore outstanding commitments and will lend 3.25 joint.

Abbey will take outstanding credit into account and will lend 4.2 times joint if both applicants earn over 35k.

Based on her having 10k equity and no other deposit, they are going to need to look to Accord, Northern Rock or Royal Bank of Scotland