First time buyer

houndour

The situation:

Combined salary: £43,000
Overtime/bonuses: £2500
Deposit: £5,000
And other money saved for fees and stamp duty.

I have a student loan at £30 a month which I think is almost negliable.

My bf has cards and loans that add up to £300 a month.

I went to Barclays (I know not the best place, but was to just learn about mortgages and to see what we could get). With the loans we would get about £115,000. Without the loans £130,000.

Not the best really. We live in Surrey and want to stay here so there aren't many cheap houses here.

Anyway, went to see a Financial advisor. Based on the above info he said we could get a Interest Only mortgage for £160,000 from northern rock.

I've thought long and hard about this. It sounds good on paper. The monthly repayments are even less than the rent we are paying now.

The thing that's putting me off is that its interest only. The FA guy said the idea is in 2-3 years we change the mortgage so it pays off capital too. But this is all based on the assumption that we both get pay rises and my bf debts go down so that we could afford capital repayments.

So now we're not really looking to buy anymore. Unless we can find a really good house for less than £140k (as this would bring capital repayments to something more manageble).

Just wondered if I'm doing the right thing. I want my own place very much and am sick of paying rent that could be going toward a mortgage. But I dont feel I can take that much of a risk yet. But then I feel like the gamble has to be taken sometime. Its a buyers market in my area at the moment. My friends just bought somewhere at a cheeky price. In a years time the prices could go up and we'd be in a no better position than we are now.

canny_yorkshireman_2

tell you what look at the housing stock, offer 15 -20 % of all the asking prices then wait till an offer is accepted it should not be a long wait then bingo sorted . seriously though its not a bad idea to go for a intrest only mortgauge and then review it 2-3 years downline when economic cicumstances may well be different for you and i have no doubt that there will be a financial product good for you then.best of luck

peter232223

I always think interest only is like paying rent.

It all hinges on if the market rises, in which case you do well. If it falls, then you would have negative equity big time,as no capital has been paid off at all.

It is a risk, in my view.