Help - First time buyer, dont know whats going on!

koe_182

HELP basically.

Im looking to buy for the first time and need some serious advice. unfortunately i dont really have anyone to ask here at the moment.

Here is the situation. basically i am not that highly paid, around £12k after tax and need to move out of where i am now, the minimum i would need to get a decent place would be around £60k. obviously this isnt going to be very possible (please correct me if wrong) so ive decided it might be worth ganging together with a mate or 2. currently 2 people seriously interested, in a same position.

Whats the legalities of buying with friends? how many people can share a mortgage? how does it work? do we all go and see a financial advisor?

i really need as much help with the process as possible.

AndrewSmith

Hi,

Lets see if I can help

koe_182 wrote:

Im looking to buy for the first time and need some serious advice. unfortunately i dont really have anyone to ask here at the moment.

Here is the situation. basically i am not that highly paid, around £12k after tax and need to move out of where i am now, the minimum i would need to get a decent place would be around £60k.

As long as you are employed PAYE the lender will work out your borrowing capacity on your Gross income before tax, less any monthly loan or credit card payments with more than 1 year to run, Unless the lender works on affordability when they look at your monthly income and ability to repay.

koe_182 wrote:

obviously this isnt going to be very possible (please correct me if wrong) so ive decided it might be worth ganging together with a mate or 2. currently 2 people seriously interested, in a same position.

It depends on your Gross income, credit history, and outstanding loans, along with any deposit you may or may not have. Yu may be surprised and find out that you can mortgage the amunt by yourself. Buying with friends is something that does happen and is acceptable to some lenders, I have noticed recently that there are more people coming to me with this type of scenario.

koe_182 wrote:

Whats the legalities of buying with friends? how many people can share a mortgage? how does it work? do we all go and see a financial advisor?

You will all be jointly and severably liable for the mortgage. This means that if it isn't paid they can come after you all, or each of you individually for the whole amount.

Some companies will allow more than 2 people on the application. It works pretty much the same as any joint mortgage application. The legalities of what happens if the place is sold is something that you must agree with the others before you go ahead. Get your solicitor to draw up an agreement for you each to sign.

I would definately seek the advice of a Mortgage Advisor, use their experience and market knowledge to help you find the right product and show you the costs etc involved. He can also work out whether it may be possible at all to do it yourself.

Hope this helps

Andy

koe_182

another problem for me is that i do have quite a few debts to pay as well (3 credit cards and a overdraft) i dont think i have a particularly bad credit rating as ive never missed any payments etc..but would really like to pay these off as well. would i be able to do any extra borrowing to throw them in with the mortgage? how would this effect us if i did go with the joint mortgage?

do financial/mortgage advisors charge for advice or do they make their money through commision? thanks

AndrewSmith

The outstanding credit cards will only have the effect of reducing your available income for the mortgage calculation. If you have kept up with all the payments it should not have an adverse effect on the lending decision, merely reduce your mortgage capability.


Regarding fees / charges. It varies from broker to broker.

I personally offer the choice to the client of either a fee with my comission being refunded to the client, or I simply take the commission.

Ask the broker for his IDD or Initial Disclosure Document which should detail any fees or charges levied by the Broker / Adviser.

Andy

koe_182

thanks for the advice, i think i'll book to see financial advisor. do you have any advice on my extra borrowing or is that not your field? thanks

AndrewSmith

It certainly is in my field

It may be possible with certain lenders to incorperate an unsecured loan facility in addition to the mortgage to clear such things as credit cards etc,

However you must remember that it is generally not a good idea to borrow in excess of the property value. You would need a proper consultation with a Mortgage Adviser / Broker to ascertain the suitability of the different options.


Hope this helps

Andy

koe_182

yeah a loan facility may be the best way to go, i understand it would not be the best decision financially as i'd probably end up paying greater intrest, but i think with making a step to get involved in a mortgage i'd rather be on a level pegging rather than just making my bills every month. does this make sense?

also, how does getting a joint mortgage work its with someone who isnt a legal partner? do they work it from our joint income? or do they assess us individually? how would a 3rd person effect this?

also if it was a joint mortgage, obviously the other person wouldnt want to be accountable for my extra borrowing, how would that change things?

koe_182

any more advice? x

AndrewSmith

Hi,

You will all be assessed jointly when the lender is looking at the amount you can borrow.

Regarding the loan facility, it is my understanding that, as with the mortgage, you will all be liable for the entire borrowing including the loan element, as you are all applying for the mortgage, and the loan facility is an attachment to the main mortgage product.

I think that is right but I will check to be 100%

Hope this helps

Andy

koe_182

thank you very much for that, i would appriciate it if you could have a look at the loan facility part of it for me, obviously it wouldnt be great to get my mate responsible for my extra borrowing ya see.

how does it work with 2 unrelated people, do we set up a joint account which the mortgage payments come from?

AndrewSmith

WIth regards to paying the mortgage, it's entirely up to you. The lender wont be bothered as long as they get their money

I will look into the loan part for you now and post a reply soon.

Andy