Would-be FTB needs advice...

ftbmartin

Hi all - this is really my first stage of enquiry as regards getting on the property ladder. I've done a little bit of research, but I'm quite overwhelmed so I was hoping for some advice.

I've listed my current circumstances below, along with a couple of potential avenues towards home ownership that I've identified.

Basically any practical advice people could offer would be massively appreciated. Am I deluding myself? What's holding me back the most? If it's viable, which option is best? You get the idea

Thanks for taking the time to read this!

Martin (25, London)


MY CIRCUMSTANCES

Job / education: I earn a paltry £17k (rising to £19k soon) as a journalist (actually not a bad salary for a start-up journo!). I also have a first-class degree from Edinburgh Uni.

Personal wealth: I personally have about £22k in savings, which rises healthily by about £500 a month as I'm living with the parents at the moment. I also have a £13k student loan debt though

Family wealth: Parents own 98% of their home (~£500k) and my grandmother owns all of her home (~£1m). Unfortunately while we have plenty locked up in equity, no-one in my family has any sizable savings to speak of.


POSSIBLE AVENUES

Guarantor mortgage - this is theory sounded great, but I believe that my monthly repayments would have to cover the FULL mortgage? So even if my parents guarantee £130k of £180k with their home (can they do that?), my £17k salary would make this impossible... right?

Offset mortgage - parents have no real savings, therefore not possible?

Joint mortgage - no girlfriend, but two of my (much wealthier) friends have broached this subject. Apparently people consider me an easy person to live with, but still I'm very wary about this.

Shared ownership scheme - this looks amazing! But given my relatively priveleged background I'm assuming it's a no-go area.

NB Obviously I have a very low salary, but I was wondering: if I get a two-bedroom flat and commit to renting the second room, will the mortgage provider factor that in? If so, that boosts my salary by thousands of pounds does it not?

Thanks people :j

poppysarah

Why do you want your own place?

oranges7

People recomment that you should only spend 25-30% of your take home pay on rent/mortgage payments. This is around £250-300 for you. That would get you a mortgage of upto £45k! (25 years, repayment with 6.5% interest).Adding your deposit (less £5k for fees/costs) it'll give you the buying power of £62k, which I doubt would get you anything in London :-(

You'll need to cover the mortgage with your own wages even on a guarantor mortgage (unless your parents will pay your monthly mortgage) so the guarantor mortgage won't help I'm afraid.

Shared ownership: you might find places that give varying percentages for £62k BUT after your 300 a month mortgage you'll also have to pay rent to whoever owns the rest of the property (this amount will vary).

oranges7

poppysarah wrote: »

Why do you want your own place?

I understand that at 25 he may no longer wish to live with his parents. I imagine that for £300 a month he'll also struggle to find anywhere to rent in London either so it's not really a case of buy vs. rent.

ftbmartin

oranges7 wrote: »

I understand that at 25 he may no longer wish to live with his parents. I imagine that for £300 a month he'll also struggle to find anywhere to rent in London either so it's not really a case of buy vs. rent.

Yes living with the parents at 25 isn't much fun.

I think renting would be an option even on my salary, but as you said it would be very tight - plus it just seems like money down the drain

ftbmartin

oranges7 wrote: »

Shared ownership: you might find places that give varying percentages for £62k BUT after your 300 a month mortgage you'll also have to pay rent to whoever owns the rest of the property (this amount will vary).

I didn't realise you pay rent on shared ownership schemes - damnit!

Chris2685

I really don't think you will be able to secure a mortgage on your income unfortunately (or not so unfortunate the way the housing market is going...).

barnaby-bear

ftbmartin wrote: »

Yes living with the parents at 25 isn't much fun.

I think renting would be an option even on my salary, but as you said it would be very tight - plus it just seems like money down the drain

Isn't your twenties the perfect time to be in shared house with other interesting people? Plus with an early jorno career the ability to up sticks and travel, take secondments etc must be a bonus...

wymondham

ftbmartin wrote: »

I think renting would be an option even on my salary, but as you said it would be very tight - plus it just seems like money down the drain

not half as much as buying at present ....

ftbmartin

Housesharing it is then! Lol - thanks for all your help

lethal0r

houses have dropped 10%~ in 10 months - in london that must be £20k minimum off a house. that could easily happen again over the next 10 months. i'd wait.

p.s. im at home, im 27 and im desperate as hell to move out but I can wait a few more months when its worth such a big saving.