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Topic: US debt applying for UK mortgage  (Read 1906 times)

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US debt applying for UK mortgage
« on: April 26, 2016, 05:14:29 PM »
Does having US credit card debt have any sort of affect when applying for a UK mortgage?


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Re: US debt applying for UK mortgage
« Reply #1 on: April 26, 2016, 05:23:37 PM »
Your mortgage company will want to know all of your outgoing expenses to calculate affordability.


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Re: US debt applying for UK mortgage
« Reply #2 on: April 27, 2016, 02:29:35 PM »
When calculating affordability we were specifically asked about travel, children, gym membership, car payments, credit cards, pets, and student loans.  It was surprisingly specific.  We were asked if we were willing to give up any of that if we needed to pay our mortgage.  Children and pets both automatically go into the category of expenses we cannot give up if it meant paying the mortgage which I thought was funny.

Even though we didn't go there, Nationwide had a very good online guide we used to prepare us for the questions which might be asked.


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Re: US debt applying for UK mortgage
« Reply #3 on: April 27, 2016, 02:41:53 PM »
Yup, it's amazing how much more house we could afford if we didn't have our childcare bill!


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Re: US debt applying for UK mortgage
« Reply #4 on: April 27, 2016, 07:56:57 PM »
Hi,

Lending for mortgages is tougher nowadays and rightly so after the financial crisis of 2008. Prior to that, money/lending was being thrown around like confetti for everyone and many people took out mortgages that were beyond their means in case of any changes in circumstances. I was offered a ludicrous EIGHT times salary multiplier back in 2002 for instance! I stayed safe and took a multiplier that was just under 4 times instead and a tracker type mortgage of which nowadays I don't think are offered, or if they are, they're very difficult to get!

Although some fixed rates have come down quite extensively recently, the acceptance for them means you have to have a very very good credit rating/risk analysis, along with proof of a good deposit/downpayment. The 'less' of these things you have, the higher the interest rate you'll be offered for a mortgage you could apply for.

I think it's been a very good thing for lenders to tighten criteria for mortgage lending, I remember back in 2002 and being over in Canada and they had the setup where all your monthly spending habits over a time in history were analysed prior to getting a mortgage and thought it an excellent way to do things. It's a large part of why Canada at the time of the crash in 2008, didn't suffer as badly as other countries did.

You'll need to show your outgoings accurately in order to go through the mortgage application process, I'd say don't try to hide anything.

Cheers, DtM! West London & Slough UK!


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Re: US debt applying for UK mortgage
« Reply #5 on: April 28, 2016, 08:54:38 AM »
The reason I asked is I've been reading on other forums and websites where UK citizens are buying a house in Australia and the Australian banks said that UK debt was not something that had a a bearing on whether or not they would be approved for an Australian mortgage so I was wondering if that same concept held here. In other words, US debt (student loans/credit cards/whatever) could not be used as a basis to approve or deny a mortgage here.


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Re: US debt applying for UK mortgage
« Reply #6 on: April 28, 2016, 08:56:50 AM »
Another thing... I have established UK credit but my wife (Norwegian) has not. How would this affect our changes of getting approved for a mortgage? If it does have a strong impact on it, then what is the best way for her to establish it?


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Re: US debt applying for UK mortgage
« Reply #7 on: April 28, 2016, 09:17:05 AM »
Yes, for a UK mortgage, they definitely look at your total outgoing expenses.  You have to complete a detailed spread sheet and provide bank statements in order to qualify.

Not having UK credit or permanent residence will have a big impact on your wife's ability to obtain a mortgage.

I managed to get on a mortgage with my UKC husband this past October, but after living in the UK continuously employed for over 5 years.  I also had two years remaining on my visa at the time (had it be closer to expiration, I would not have qualified).  We pay a higher interest rate due to my immigration status.

I do have a strong UK credit rating now (after 5 years of slow building).  I first transferred my US AmEx to a UK AmEx.  After living in the UK for a year, I was able to obtain a Capital One credit builder credit card with a £500 limit.  I used it and paid it off each month.  After living here for 3 years, I was able to get a one year interest free loan on some furniture at a shop.  And those things help lead me to a mortgage.   :)


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Re: US debt applying for UK mortgage
« Reply #8 on: April 28, 2016, 12:22:09 PM »
I first transferred my US AmEx to a UK AmEx.  After living in the UK for a year, I was able to obtain a Capital One credit builder credit card with a £500 limit.  I used it and paid it off each month.  After living here for 3 years, I was able to get a one year interest free loan on some furniture at a shop.  And those things help lead me to a mortgage.   :)

We did *exactly* the same thing. It's slow but worked.


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Re: US debt applying for UK mortgage
« Reply #9 on: May 01, 2016, 06:34:25 PM »
Talked to an estate agent/realtor this past week, in fact the ones that manage the property we are renting.

Told them we just sold our place in Norway and asked about UK mortgages and foreign debt, specifically student debt. Was told that foreign debt is not taken into account when applying for a mortgage. I remember that in Norway, they also didn't care about it.

Are they mistaken or is there something I'm missing here?


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Re: US debt applying for UK mortgage
« Reply #10 on: May 01, 2016, 07:50:27 PM »
It's not that they're mistaken, maybe this will be the case with your mortgage company.  With all due respect to estate agents, please take everything they say with a large pinch of salt.  Estate agents do not approve mortgages, they sell houses. 

When we were looking we heard a lot of yes' from estate agents which should have been no's.  We were told that we could complete within 3 weeks, but the searches alone took around 10 weeks.  Tube stations were suddenly closer than they actually are.  Professional builders did something that we found out the owner did far from professionally. Our flat is also being sold at the moment and good lord, some of the whoppers we've heard!  Funny our original to the flat kitchen was somehow redone within the last 3 years, our daytime porter is a 24 hour porter, and ground rent has somehow halved. Check with a mortgage provider, any of them, they are who approve your mortgage, not the estate agent.  The estate agent makes a commission on the sale, it's pretty easy for them to make the world a bit more rosy than it is.  We wanted to move quickly and our estate agent wore rose tinted glasses in this department.

For us, we had to do an affordability calculator with ours.  For us, that included details of all our outgoings.  We also had to provide bank statements.  It'd be pretty hard to hide a major outgoing ,such as regular payments on a loan, from our mortgage company to make it appear as though we could afford more.
« Last Edit: May 01, 2016, 07:51:40 PM by Larissa »


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Re: US debt applying for UK mortgage
« Reply #11 on: May 01, 2016, 08:12:55 PM »
When we were looking we heard a lot of yes' from estate agents which should have been no's.  We were told that we could complete within 3 weeks, but the searches alone took around 10 weeks. 

Yeah. 10-12 weeks is pretty standard. I've just bought a house and it was pretty much exactly 10 weeks from putting in an offer to completing... and that was faster than I was expecting.

The general timeline I got from my mortgage broker was as follows:

Start: Offer accepted
Days 1-2: bring in documents, instruct solicitor
Weeks 1-2: solicitor searches and survey
Weeks 2-3: mortgage offer and mortgage review
Weeks 8-10: insurances put in place, contracts exchanged and deposit paid
POINT OF NO RETURN
Weeks 10-12: Completion, pay legal fees, pay stamp duty, move in

Quote
For us, we had to do an affordability calculator with ours.  For us, that included details of all our outgoings.  We also had to provide bank statements.  It'd be pretty hard to hide a major outgoing ,such as regular payments on a loan, from our mortgage company to make it appear as though we could afford more.

Yep, lots of paperwork involved - as of about 2 years ago, they started being more thorough with checking your income and outgoings for mortgage applications, because I think people were finding they couldn't afford the repayments because of their high outgoings. So now the mortgage companies check to make sure you can afford to keep up the repayments even if they increase.

I had to bring in:
- photo ID... passport AND driving licence
- Proof of address (utility bill, mortgage statement, Inland Revenue document), dated within 3 months
- 4 months of payslips
- 4 months of bank statements
- P60
- Proof of deposit funds
- Mortgage Statement (if applicable)
- Last month's credit card statement
- Documents on any loans or hire purchase
- Proof of any benefits received
- Marriage or birth certificates if different from ID
- evidence of maternity leave (if applicable)
- Pension statement (if interest only or lending into retirement)
- Proof of residency/visa (if applicable)

I also needed to provide the following information:
- company sick pay allowance
- buildings/contents insurance
- existing insurance policy details

The mortgage advisor also went through all my monthly expenses to check out much disposal income I had each month (and she estimated high on most of them to give more leeway):
- rent
- bills
- council tax
- insurance
- food
- transport
- exact amounts on my current credit card bills
- clothing
- socialising


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Re: US debt applying for UK mortgage
« Reply #12 on: May 01, 2016, 08:17:14 PM »
Yeah. 10-12 weeks is pretty standard. I've just bought a house and it was pretty much exactly 10 weeks from putting in an offer to completing... and that was faster than I was expecting.

The general timeline I got from my mortgage broker was as follows:

Start: Offer accepted
Days 1-2: bring in documents, instruct solicitor
Weeks 1-2: solicitor searches and survey
Weeks 2-3: mortgage offer and mortgage review
Weeks 8-10: insurances put in place, contracts exchanged and deposit paid
POINT OF NO RETURN
Weeks 10-12: Completion, pay legal fees, pay stamp duty, move in

Yep, lots of paperwork involved - as of about 2 years ago, they started being more thorough with checking your income and outgoings for mortgage applications, because I think people were finding they couldn't afford the repayments because of their high outgoings. So now the mortgage companies check to make sure you can afford to keep up the repayments even if they increase.

I had to bring in:
- photo ID... passport AND driving licence
- Proof of address (utility bill, mortgage statement, Inland Revenue document), dated within 3 months
- 4 months of payslips
- 4 months of bank statements
- P60
- Proof of deposit funds
- Mortgage Statement (if applicable)
- Last month's credit card statement
- Documents on any loans or hire purchase
- Proof of any benefits received
- Marriage or birth certificates if different from ID
- evidence of maternity leave (if applicable)
- Pension statement (if interest only or lending into retirement)
- Proof of residency/visa (if applicable)

I also needed to provide the following information:
- company sick pay allowance
- buildings/contents insurance
- existing insurance policy details

The mortgage advisor also went through all my monthly expenses to check out much disposal income I had each month (and she estimated high on most of them to give more leeway):
- rent
- bills
- council tax
- insurance
- food
- transport
- exact amounts on my current credit card bills
- clothing
- socialising

Sounds very similar to our experience!  It's not that we were expecting to complete more quickly, just that the estate agent told us it was possible.  We'd read so much at that point that everything an estate agent told us we researched by going to the source rather than relying on their word.


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Re: US debt applying for UK mortgage
« Reply #13 on: May 02, 2016, 08:57:06 PM »
It could be the case that a mortgage company would only care about a foreign debt if it was being paid out of UK income, i.e. the income being used to quality for the mortgage.

We used a mortgage broker called Adam Lane at London and Country Mortgages. He was really good and answered all our questions with detailed answers specific to our situation. The service was free to us.

Andy


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Re: US debt applying for UK mortgage
« Reply #14 on: May 17, 2016, 04:10:01 PM »
Are they mistaken or is there something I'm missing here?

My husband [brit] and myself [american] just bought a house at the end of last year which only completed a few months ago. I can confirm that, in my case, they didn't look at my student debt at all. That didn't even come up and I wasn't in the most amazing position at that point [I was just coming out of default]. They take a look at your affordability in terms of bank statements and, I imagine if you have children, them as well. We don't have kids so we didn't answer any of those types of questions. To answer your previous question about your wife not having credit, I would say she probably needs to get a credit card of some sort and just put small amounts onto it every month that you pay off right away. You'll need to do this for 6 months or something similar [that's what our financial advisor told us I believe] unless you feel that you can take the mortgage out in your name only. If she doesn't really have credit, you are probably looking at much higher deposits/rates so I would at least try getting her a credit card of some sort to build her credit score over here.
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