First Time Buyer Mortgage Advice

sandford6016

Hi,

My girlfriend and I are desperate to buy our first house, we currently are renting. Our combined incomes are £55,000 but the snag is that we don't have much in the way of savings to use as a deposit. I don't really understand the minefield of mortgages but I guess we're looking for a 100% first time buyer mortgage, ideally so we can buy a house around the £140,000 - £150,000 mark.

Can anyone offer some advice on what, where, why, etc..!!

Thanks!

herbiesjp

Without knowing much else about your situation it is difficlut to say.

However, simply based on multiples, there are lenders that will give you the mortgage amount you are looking for.

It will depnd on your circumstances which wil include previous credit history, other oustanding financial commitments and overall affordability of the loan.

Penny_Less_6

My partner and I are also first time buyers. We already have a property in mind so don't have the time to save a deposit, so have been looking into 100% mortgages. We have been told by a bank advisor that it is ok to get a loan to commit as a deposit. Obviously repayments are alongside the mortgage, so needs to be carefully considered. As we are looking to borrow a relatively small amount, the monthly repayments are managable. The quotes we have so far have been about the same as we are paying out monthly for rent, so worth looking into.

AndrewSmith

The bank advisor needs to have a little chat with his manager and compliance officer.

Taking a loan out for a deposit will actually reduce the amount you are able to borrow as the lender will multiply the loan payments by 12 and deduct this from your salary. Eg:
No deposit 100 % mortgage, salary of £20,000
Average 3.75 x income @ 100% (Yes I know there are higher multiples available, just for example though)

20,000 x 375 =£75,000 potential mortgage.

Taking a loan as deposit

If the loan payments were £150 per month (typical for a loan of say £7500)

Deposit after having allocated money for fees £5000

150x12=1800
20000-1800 = 18,200

£18,200 x3.75 = £68250 mortgage.

You are no better off and , in fact, could be paying out more on a monthly basis for a smaller mortgage.

Care should be exercised when looking at 100% finance, especially when we are in times like now of very slow property value increases.

Let's have the opinions of some of the other professional brokers here, amd I right?

Andy

sandford6016

Thanks guys, the more advice the better!!

saver6

Is there anyone in your family that may be able to give/lend you enough for a deposit, no matter how small? I'm not sure of the whole legal ins and outs, but my dad was very generous and "gave" me and my partner 10 grand as a deposit. We actually had leftover cash by the time we bought, which we used to help furnish the house.

As far as I am aware, my dad couldn't actually give me the money, because I would have to pay tax on it (as income), and as the money was originally put aside as my wedding fund (money for one day vs a house - not a hard decision to make!), my dad doesn't want me to pay it back. However, our solicitor (me and my dad used the same one) suggested that we made a deal whereby he owns that percentage of the house (therefore can make money when we come to sell it), however he is not on the deeds and has no say over the house in any other respect.

First time buying right now is really hard and with house prices so high I would discourage going for a 100% mortgage, so any deposit you can get together, even to get a 98% mortgage, and you'll have more options open to you. However I am no expert so hopefully someone else can help further!