Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • andyfordays
    • By andyfordays 8th Oct 16, 9:47 PM
    • 4Posts
    • 0Thanks
    andyfordays
    London First TIme Buyer Seriously needs advice
    • #1
    • 8th Oct 16, 9:47 PM
    London First TIme Buyer Seriously needs advice 8th Oct 16 at 9:47 PM
    So let's start with a bit of context.

    Firstly, I'm a single 32 y/o business co-owner that currently rents a 1 bed next door to Peckham Rye station. My rent is approximately £1250 a month. I have shares in the business but right now I strongly suspect that they aren't really worth anything. Even if they were I'm not sure if I could borrow against them. I also have around £30-35k available for a deposit.

    Now, my goals.
    My aim is to get on the property ladder in the best way possible (especially while I have the opportunity) but I'm not entirely sure on the best route to go about it. I've been eagerly reading about the NewBuy schemes in London but for the most part they seem to benefit those who don't have a biggish deposit in the first instance. Could I use this to my advantage? And if not what is the best alternative?

    I really enjoy living in Peckham and have alredy watched it change for the better in the short time I've been here but would be open to other areas close by.

    What borrowing options are open to me and how far can I go?

    Any answers will be HUGELY appreciated.

    Cheers

    Andy
Page 1
    • muhandis
    • By muhandis 8th Oct 16, 9:58 PM
    • 223 Posts
    • 82 Thanks
    muhandis
    • #2
    • 8th Oct 16, 9:58 PM
    • #2
    • 8th Oct 16, 9:58 PM
    First you need to establish how much you can borrow. And since you are a director in your company, that means ascertaining the self employed income that a lender will consider when deciding how much they can lend to you.

    I don't think NewBuy exists any more http://www.newbuy.org.uk/, do you mean Help 2 Buy for new builds http://www.new-homes.co.uk/help-to-buy-properties/ ?

    So let's start with a bit of context.

    Firstly, I'm a single 32 y/o business co-owner that currently rents a 1 bed next door to Peckham Rye station. My rent is approximately £1250 a month. I have shares in the business but right now I strongly suspect that they aren't really worth anything. Even if they were I'm not sure if I could borrow against them. I also have around £30-35k available for a deposit.

    Now, my goals.
    My aim is to get on the property ladder in the best way possible (especially while I have the opportunity) but I'm not entirely sure on the best route to go about it. I've been eagerly reading about the NewBuy schemes in London but for the most part they seem to benefit those who don't have a biggish deposit in the first instance. Could I use this to my advantage? And if not what is the best alternative?

    I really enjoy living in Peckham and have alredy watched it change for the better in the short time I've been here but would be open to other areas close by.

    What borrowing options are open to me and how far can I go?

    Any answers will be HUGELY appreciated.

    Cheers

    Andy
    Originally posted by andyfordays
    • andyfordays
    • By andyfordays 8th Oct 16, 10:02 PM
    • 4 Posts
    • 0 Thanks
    andyfordays
    • #3
    • 8th Oct 16, 10:02 PM
    • #3
    • 8th Oct 16, 10:02 PM
    Thanks Muhandis,
    Apologies, I think you're right, I mean Help 2 Buy. In terms of my Directorship, I am actually salaried at £57, 500.

    With the deposit in mind does that make things clearer? And if so what options do I have?

    Cheers again, really appreciate the help.

    Andy
    • Funny old game
    • By Funny old game 8th Oct 16, 10:14 PM
    • 177 Posts
    • 49 Thanks
    Funny old game
    • #4
    • 8th Oct 16, 10:14 PM
    • #4
    • 8th Oct 16, 10:14 PM
    A guided for self employed is whatever income you told HMRC you earned for 14-15 and 15-16 will help you when looking a mortgage loan sizes.

    Some take an average of the last 2 years, some the most recent year.

    Bear in mind we are in Octoberr, so a lot of lenders will expect a tax return for 15-16 even though you don't have to submit them yet.
    • andyfordays
    • By andyfordays 8th Oct 16, 10:16 PM
    • 4 Posts
    • 0 Thanks
    andyfordays
    • #5
    • 8th Oct 16, 10:16 PM
    • #5
    • 8th Oct 16, 10:16 PM
    I am on PAYE so don't think the directorship will have any influence. Will it?
    • andyfordays
    • By andyfordays 8th Oct 16, 10:24 PM
    • 4 Posts
    • 0 Thanks
    andyfordays
    • #6
    • 8th Oct 16, 10:24 PM
    • #6
    • 8th Oct 16, 10:24 PM
    Does anyone have an experience in the 40% help to buy scheme in London?
    • Rich2808
    • By Rich2808 9th Oct 16, 12:58 AM
    • 334 Posts
    • 315 Thanks
    Rich2808
    • #7
    • 9th Oct 16, 12:58 AM
    • #7
    • 9th Oct 16, 12:58 AM
    Does anyone have an experience in the 40% help to buy scheme in London?
    Originally posted by andyfordays
    New builds tend to be very overpriced in London relatively and after 5 years you will have to cover the inflation related interest charge on that 40 per cent.

    It's certainly a way in to buy a more expensive or bigger home than you can otherwise afford - but bear in mind the long term.
    • muhandis
    • By muhandis 9th Oct 16, 6:49 AM
    • 223 Posts
    • 82 Thanks
    muhandis
    • #8
    • 9th Oct 16, 6:49 AM
    • #8
    • 9th Oct 16, 6:49 AM
    1. Even though your income is all PAYE, some lenders will consider you as self employed if you own more than 20/25% of the shares in the company. A mortgage broker will be able to give you advice tailored to your situation.

    2. As a VERY rough guide (which will change based on current debt, outgoings, etc), you *should* be able to borrow 4.75x your income so that would be around £275k. Adding a deposit of (say) £25k to that will take it to 300k.

    3. Under Help2Buy in London, theoretically -
    - you take a mortgage out for 55% of the house price, the govt gives you an interest free (for 5 years) loan of 40% of the price and you put in a minimum deposit of 5%.
    - again, theoretically that should mean that you can buy a house costing £500k (275k / 0.55)

    As you can see, using Help2Buy significantly boosts your affordability (while limited to new builds) through effectively increasing the amount you can borrow.

    As for the negatives of Help2Buy (in my opinion)
    - The prices of these new builds are inflated simply because this scheme is available. Someone more cynical than me might say that is the very aim of the scheme.
    - You have to be comfortable with what is a huge amount of debt relative to your income.

    I would recommend meeting a broker to get a more accurate idea of how much you can borrow based on your current circumstances.

    Good luck.

    Thanks Muhandis,
    Apologies, I think you're right, I mean Help 2 Buy. In terms of my Directorship, I am actually salaried at £57, 500.

    With the deposit in mind does that make things clearer? And if so what options do I have?

    Cheers again, really appreciate the help.

    Andy
    Originally posted by andyfordays
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

1,881Posts Today

6,207Users online

Martin's Twitter