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  • FIRST POST
    • OtterBear123
    • By OtterBear123 13th Jun 17, 10:11 PM
    • 7Posts
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    OtterBear123
    FTB advice
    • #1
    • 13th Jun 17, 10:11 PM
    FTB advice 13th Jun 17 at 10:11 PM
    Hi all,

    Looking for a bit of advice from people more experienced…

    Keen to buy my first house soon and move out of my mother’s house. I'm 25 years old on a £30,000 salary with no debts (other than student loan). At the moment I have £9,000 savings trying to get to a deposit for a house of around £120,000 - £140,000. (Appreciate there are fees other than a deposit).

    I'm hoping to move out in a few months and aim to have savings of around £10,000-£11,000 by this time. This of course falls short of the magic FTB 10% deposit figure + fees. I've considered a few things:

    5% deposit
    Seen a few ok deals recently but worried about the worse rate compared to 10% and above. Does anyone have any experience or thoughts on these? Been reading up on concerns around negative equity and the added interest that will be paid.

    CC
    My Credit Card company have offered me a money transfer of £6,000 on a 0% offer for 18 months. I could use my savings in a few months plus part of the credit card transfer to get to that 10% deposit + fees. Affordability wouldn't be a problem and I'd pay off the card within the offer period, but I know it’s quite frowned upon from the point of view of borrowing money to borrow money.

    10% deposit
    I could wait and save further. Don't really want to do this as it feels my life is on standstill at the moment.

    Rent
    Would be able to move out and test the waters, but wouldn’t be getting on the ladder. Quite want to get stuck into DIY and this will be trickier with this.

    What are your thoughts on these? Appreciate any feedback that can be given!
    Thanks all!
Page 1
    • Crashy Time
    • By Crashy Time 13th Jun 17, 10:15 PM
    • 4,391 Posts
    • 2,020 Thanks
    Crashy Time
    • #2
    • 13th Jun 17, 10:15 PM
    • #2
    • 13th Jun 17, 10:15 PM
    Don`t enter a debt Ponzi scheme at one of the most tricky political moments in UK history, with interest rates at their lowest level ever. You are obviously stretching your finances and could go from being debt free and saving/investing every month to negative equity literally overnight.
    • glosoli
    • By glosoli 13th Jun 17, 10:29 PM
    • 553 Posts
    • 304 Thanks
    glosoli
    • #3
    • 13th Jun 17, 10:29 PM
    • #3
    • 13th Jun 17, 10:29 PM
    The interest rates that are applicable to 95% mortgages are higher, but if you need to move within the next few months then at least the option is there.

    Borrowing money from a credit card for your deposit is a non-starter, so there is no point on entertaining this idea further.

    The preferred option would be to wait until you have at least a 10% deposit, as you may be able to get a rate between 2-3% compared to >3.5% for over 95% mortgages, but I guess this depends on you and whether you can hold out this long before moving. If you think about it though, a year into a fixed rate at 95% you may look back in hindsight and wish you waited just that little bit longer.

    In regards to renting first, whilst obviously this has it's pros and cons, you are almost there in terms of deposit, i'd rather just buy rather than put money into someone else's pocket but that's just me.
    Last edited by glosoli; 13-06-2017 at 10:31 PM.
    • parking_question_chap
    • By parking_question_chap 13th Jun 17, 10:33 PM
    • 1,341 Posts
    • 1,129 Thanks
    parking_question_chap
    • #4
    • 13th Jun 17, 10:33 PM
    • #4
    • 13th Jun 17, 10:33 PM
    Save for another few months, no reason you cant put aside £1k per month. Interest rates are going nowhere.
    • OtterBear123
    • By OtterBear123 13th Jun 17, 10:53 PM
    • 7 Posts
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    OtterBear123
    • #5
    • 13th Jun 17, 10:53 PM
    • #5
    • 13th Jun 17, 10:53 PM
    Thanks all for the responses so far. My bank did say the cc option could work as long as I meet the affordability, which I would. But this is probably my least preferred option anyway.

    It's frustrating because I can afford everything on a monthly basis and it is just the deposit/fees which are proving tricky.

    Perhaps I do just need to be a bit more patient
    • glosoli
    • By glosoli 13th Jun 17, 11:49 PM
    • 553 Posts
    • 304 Thanks
    glosoli
    • #6
    • 13th Jun 17, 11:49 PM
    • #6
    • 13th Jun 17, 11:49 PM
    My bank did say the cc option could work as long as I meet the affordability, which I would. But this is probably my least preferred option anyway.
    Originally posted by OtterBear123
    Just out of curiosity, was it a regulated mortgage advisor that said this, or someone else?
    • OtterBear123
    • By OtterBear123 14th Jun 17, 12:15 AM
    • 7 Posts
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    OtterBear123
    • #7
    • 14th Jun 17, 12:15 AM
    • #7
    • 14th Jun 17, 12:15 AM
    @glosoli

    Good point. Perhaps not very good (or factual) advice from them? It was someone else I believe, it was an operative in the mortgage team at my bank,
    • SuboJvR
    • By SuboJvR 14th Jun 17, 12:23 AM
    • 214 Posts
    • 153 Thanks
    SuboJvR
    • #8
    • 14th Jun 17, 12:23 AM
    • #8
    • 14th Jun 17, 12:23 AM
    If you actually did the credit card thing, when you came to prove evidence of funds for deposit it would be realised and the lender and your solicitor would both raise an eyebrow at that, as you have taken on extra debt to buy the house alongside the long term mortgage commitment.

    If you want to take advantage of the better rates, save save save. And don't forget stamp duty, solicitor fees, other fees etc!
    • SuboJvR
    • By SuboJvR 14th Jun 17, 12:26 AM
    • 214 Posts
    • 153 Thanks
    SuboJvR
    • #9
    • 14th Jun 17, 12:26 AM
    • #9
    • 14th Jun 17, 12:26 AM
    The other option I suppose is the Help to Buy scheme government equity loan which seems to still benefit from better mortgage rates, but then you of course have the extra loan to think about later.

    We have gone down that road as it's the only way we can viably get on the ladder in the next few years, which is something we are aware of now in early 30s.
    • OtterBear123
    • By OtterBear123 14th Jun 17, 12:32 AM
    • 7 Posts
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    OtterBear123
    Just to mention, I'd be being totally up front and honest with all parties. I was thinking the money transfer would mainly pay for those fees and only a small part of the actual deposit.

    Can appreciate taking on extra debt to be able to purchase a house probably is the least favourable idea
    • OtterBear123
    • By OtterBear123 14th Jun 17, 12:36 AM
    • 7 Posts
    • 0 Thanks
    OtterBear123
    @SuboJvR

    Thanks for the replies, I'm new to this and can't seem to quote or reply directly (it is late also).

    I have looked into the HTB and would consider. Just difficult to find a new build in the areas I'm looking for
    • SuboJvR
    • By SuboJvR 14th Jun 17, 12:43 AM
    • 214 Posts
    • 153 Thanks
    SuboJvR
    Try not to feel too rushed by the offer from the cc company as well. You will find over the years they will continue to want to throw 'money' at you. I don't think there's a day go by I don't have some valid offer or another on mine! The more you ignore them, the more they send! :-)

    I found it hard to find new builds online as such but when we actually drove around we realised there were loads that we never paid attention to. All those little yellow signs with houses on. The big builders down here at the mo are Redrow, Bellway, Taylor Wimpey, Crest Nicholson and Bovis.
    • juniordoc
    • By juniordoc 14th Jun 17, 2:21 AM
    • 113 Posts
    • 66 Thanks
    juniordoc
    Be patient and hold out for the 10% deposit, it will be worth it to avoid the risks of negative equity!
    Look at your spending and try to really reduce your spending over the next few months to speed up the process.
    • Tiners
    • By Tiners 14th Jun 17, 5:44 AM
    • 142 Posts
    • 165 Thanks
    Tiners
    Living at home, earning £30k and you've only managed to save £9k? Where on earth is all the rest of your money going?
    • OtterBear123
    • By OtterBear123 14th Jun 17, 8:06 AM
    • 7 Posts
    • 0 Thanks
    OtterBear123
    @Tiners

    I got a promotion at work in January and haven't always earned that much. Plus living at home for me I still have to pay bills, food and rent.
    • glosoli
    • By glosoli 14th Jun 17, 10:26 AM
    • 553 Posts
    • 304 Thanks
    glosoli
    @glosoli

    Good point. Perhaps not very good (or factual) advice from them? It was someone else I believe, it was an operative in the mortgage team at my bank,
    Originally posted by OtterBear123
    It may be possible, but the teams who generate leads to pass onto mortgage advisors in my experience often get the ins and outs of bank policy wrong, or they misinterpret it, and this is one of the times you should take what they say with a pinch of salt until the MA confirms it.
    • saajan_12
    • By saajan_12 14th Jun 17, 11:50 AM
    • 557 Posts
    • 360 Thanks
    saajan_12
    A chunky credit card debt will affect your mortgage affordability calcs, and you don't want to fritter your deposit away on failed mortgage applications. I would save hard until you have a bigger deposit and inch over the 10% mark. Few other ideas:

    1) Can your parents let you stay rent free for a couple of months to build up your deposit? For a 120k property, say you're aiming for £15k for deposit + fees. On a 30k salary, say if you take home £2k and spend next to nothing, you can save £6k in ~4months.

    2) What size property are you looking at and how many people would be moving in? You could rent a room out to a lodger to generate extra income to overpay your mortgage. If you get a short fixed deal of 1-2 years, you could remortgage to a lower interest rate then as you'll have more equity in the property. However note interest rates are likely to rise at some point..
    • Crashy Time
    • By Crashy Time 14th Jun 17, 1:03 PM
    • 4,391 Posts
    • 2,020 Thanks
    Crashy Time
    Borrowing money to borrow money to take part in a bubble/Ponzi scheme is the sort of thing they write about in economic history books. Run away from this idea, fast.
    • OtterBear123
    • By OtterBear123 14th Jun 17, 8:56 PM
    • 7 Posts
    • 0 Thanks
    OtterBear123
    Definitely seems utilising a cc is a BAD idea and out of the question!

    @Saajan_12 thanks for the helpful response.

    Rent free will not be an option! With minimal spending I reckon I'd be able to save £1,000 - £1,200 per month.

    I have discussed with a friend about moving in at some point as a lodger and he would be more than up for it. This could definitely help with over paying. Think that would help outweigh the 5% option? I'll look into the numbers!
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