FTB 15000 deposit but poor mortgages

inca_2

The reason you would be paying a higher rate is because at 90% loan to value you present a larger risk to the lender than somebody with 25% equity in their home. I realise that it's frustrating for you but it's the way it is I'm afraid, the higher the risk, the higher the cost.

As other people have said you might find yourself in a much better position if you hold out for a while and save a higher deposit. If property prices continue to fall you could end up with far more than a 10% deposit.

Cliveski2009

ads910 My fiance and I will be in the same position as you shortly - we are currently selling our flat and about to go into rented. Our combined salary is also around £50k. If we were to purchase straight away we would have a 10% deposit against a £150k property.

While I agree it would be best to wait before buying a new place it's difficult to resist looking and thinking about buying something straight away / now.

While in rented we could save around £800 per month so it would take 9 months to increase our deposit from £15k (10% against a £150k property) to £22.5k (15% against a £150k property). I think it's safe to assume house prices will fall during this period too.

Having just checked on moneysupermarket it appears there is no difference in the rates on offer if you have a 10% deposit or 15% deposit ??? I'm sure the rates were higher yesterday ??? maybe the banks have agreed to offer better rates from January 1st onwards ??

Anyhow, what I'm trying to say is that although it makes sense to wait I appreciate it's difficult. We personally would buy something now if we felt we were getting a bargain. We are in a strong position so can negotiate hard . . . . good luck whatever path you take.

uzubairu

Cliveski2009 wrote: »

While in rented we could save around £800 per month so it would take 9 months to increase our deposit from £15k (10% against a £150k property) to £22.5k (15% against a £150k property). I think it's safe to assume house prices will fall during this period too.

Having just checked on moneysupermarket it appears there is no difference in the rates on offer if you have a 10% deposit or 15% deposit ???

The reality is that in the current climate, a 90% LTV could easily become 100% LTV or negative equity in 6 months.

You should be looking at a 25% deposit, and you have a reasonably good income to do it over the next few years or sooner if you are disciplined enough.

Cliveski2009

I hear what your saying. I would really like to have a larger deposit and a smaller mortgage but we are in our early 30's with a newborn and looking for a "home for life" so the propsect of renting for a couple of years is not very appealing.

I guess in our circumstances (not looking to move any time soon / at all) negative equity is not such a big issue. We can pay the mortgage regardless.

There is never a right time to buy is there! but I agree waiting longer makes more sense but it's difficult to avoid the draw of home ownership . . .

Shazwellyn

I think the key is in the buying and not the mortgage. Your £15k wont change (can even increase!) but the house buying price might! Have you thought of getting a mortgage of 60% and going to auction or even looking for property (making offers) for that price?... you are in a strong position, but I don't know your market or expectations - its all in the research - your research! On the other hand, even if you get a higher mortgage rate for a home of your dreams, you are still in a strong position as you can put in a bid of 10% off of an asking price due to you being a first time buyer! The world is yours during this time, just remember it is about your attitude to money, where your priorities lie, how much you want that house and how DESPERATE the seller is! Weigh it all up and don't be scared!

Cliveski2009

I'm aware we are in a really strong position so we would be looking to pay at least 10% under market value. As it happens I'm considering doing a leaflet drop at select address in the hope of finding someone deseparte who is willing to do a good deal (they could pass on the agency fees saving for starters).

On Saturday we are looking at a place which just came to the market at £165k which I feel is already very good value. Although over budget it's vacant so there is a chance a deal could be done, if we could get it on budget at £150k I would feel we have done very well.

ads910

cheers cliveski good luck to yourself too.

if they are asking 165, and you manage to get it for 150 less your 15k deposit i think you wont have a problem with NE.

my problem isnt with house prices, mine is with mortgage rates, there is no way im paying over the odds just because i want 90 ltv, ill rather wait and save.

i work hard for my money and if it means waiting a little longer to keep hold of it then thats what ill do.

on a mortgage im looking at getting, 1% equates to about £100 per month thats £1200 a year that could be going towards my daughters future.

tommy75

Hi, Im in a similar position to you the OP. I found this page just doing a search on google. First.... Arghhhh noooo! Don't do it, for anybody to buy at the moment who has not got a large deposit or doesn't need a mortgage is utter madness. The UK is in meltdown and not are prices going to shoot up to 2007 levels for many many years whatever you read. Personally, if I was to put an offer in right now on a house listed at 150,000 it would be well under 100,000 regardless of whether to seller accepted or not. If your offering 15% under asking price right now you are guaranteed to be in negative equilty within six months. Most of the houses stuck on rightmove have not been reduced in price for over a year regardless of whats happened so far, so you have to knock off last years falls before you even start with a lower bid. Even the most optimistic economic predictions say theres another 15% to come off by the end of 2009. This month itself saw another 1 1/2% drop of prices. House prices are still high up in the greed bubble and have a long way to come down still in comparison to wages. I'm renting also at the moment and have a similar depost but I know even though I'm paying rent, that im still saving money each week compaired to the money being lost on house prices. Jobs are only just starting to be lost and this is going to get alot worse for some time yet. Save up what you can and hold on, im not a betting man but im sure I will get a decent home for my family that won't kill me paying back higher rates soon. If you get firefox and a program called property bee (free) it tracks the prices viewed on rightmove for you. All the best.

tommy75

Also do some research on the property and area you thinking of buying in. Nethouseprices.com will tell you what propertys in the same street sold for over the last 8 or so years.