first house, is it possible?

hjkl

house value 125000, entry level in this area.

age 30
income 18k
savings 7k
debts 0

3.5 or 4 Xs income gets me nowhere near. But,

have paid £400 per month rent for past 2 years, does paying rent prove ability to pay mortgage?

inherited some land valued at 25k, can this be used as security? i do not want to sell it.

parents would like to help, providing deposit 30% and/or guarentee all payments in the short to mid term (10yrs?)

Would any of this make gaining mortgage to buy above house possible?
Am i still miles off?

thank you

ILW

You could get your parents to take out a mortgage

hjkl

Thats is a possible option, but i want to do as much as a could under my own name. Id rather be in debt to my parents less and be grateful to them, than burden them with a debt that i am responsible for.
Also wouldnt my parents age be a problem?

cpdc1030

The income multiplier is going to be the major concern, even if you made a larger deposit. I just barely sqeaked by for a 121k mortgage on 33k (was in my name only not joint with partner).

I know that shared equity has very few fans here - but I think in your case it may be the only viable option.

Charlton_Taz

Firstly, just a few practical things.

1. You will need to use a chunk of your savings for mortgage fees / solicitor fees etc. Say £2-3K.

2. You should ideally have at least a 10% deposit i.e. £12,500 for a house worth £125,000. Unless you have this kind of deposit you will find it very hard to obtain a mortgage, I'd imagine (obviously not a problem if your parents lend you the money).

3. It is very likely you will also miss out as the salary multiples are too high (even if you get a 30% deposit from your parents)

Secondly, you should look at how much can I afford, rather than how much can I borrow? I've assumed your take home pay is around £1,200 a month. Once you take off your mortgage payment (approx £470 at 5% and assuming 30% deposit), and a conservative £120 for council tax and £100 for gas/electricity/water/landline (these could easily be more) you are only left with £510 to cover everything else (i.e. entertainment, food, travel to work, clothes, TV, broadband, costs of a car, maintenance for the house, paying back your parents the £37,500 they will have lent you etc etc)...that doesn't give you that much leeway.

hjkl

thank you

how much can i afford?

I think i am in a strong position to pay considering my income. My income is relatively low because of the career I want to do. In 2 years time can conservatively expect to be earning mid/late 20s. I live cheaply for example car insurance/tax/mot was less than £300 this year. My only great expense is rent which is paying somebody elses mortgage. Savings are low because spent two years not working/traveling before entering my career.
Dont have any dependents, girlfriend currently moves around with her job so not in position to share mortgage. My job fixes me to around where i currently live.
the house would have a room free to rent (as i do now)

With a fixed rate id know exactly what was required and i could guarantee payment through my parents. Where is the risk?

what is the current mortgage lenders view of parent guarantors mortgages?

Charlton_Taz

Okay...given the description of your circumstances, if you are confident your salary will increase soonish and that you are now in a better place to save some money anyway (as you are not travelling) then I would say as long as you are your parents can come to an agreement on a deposit then go for it. OH and I were in a similar position when we bought our first house...we did get a loan from our parents to help us with a deposit but we were both going into careers after university where we were confident in a few years time we would see a salary increase.

We put together our own budget and worked out what we could afford and that poiont in time and borrowed based on that...then once we had higher wages in a couple of years after that we were able to save and pay back the parents (obviously we agreed with them beforehand that there would a time delay like this before they got their money back).

All I ever say to anyone, is try and budget so that you are not too stretched each month to make your payments...and if possible have money spare to save. Ideally then you can build up a cushion so that if something happens e.g. boiler breaks / lose job etc....its not panic stations immediately.

hjkl

seen this on lloyds website

With the Lend a Hand Mortgage, you only need a 5% cash deposit, plus the backing of someone who wants to help you onto the property ladder by putting their savings up as additional security for the mortgage.
Your Helper will need savings equal to 20% of the property value.
Your deposit of and the savings of your helper must equal 25% of the property value.

They still earn interest on their savings, but it means that you can benefit from the lower mortgage rates normally available to customers with a 25% deposit.


rate between 4.4 to 4.9% depending on fee fixed for 3 years
Is this my answer?

happybroker

hjkl wrote: »

seen this on lloyds website

With the Lend a Hand Mortgage, you only need a 5% cash deposit, plus the backing of someone who wants to help you onto the property ladder by putting their savings up as additional security for the mortgage.
Your Helper will need savings equal to 20% of the property value.
Your deposit of and the savings of your helper must equal 25% of the property value.

They still earn interest on their savings, but it means that you can benefit from the lower mortgage rates normally available to customers with a 25% deposit.


rate between 4.4 to 4.9% depending on fee fixed for 3 years
Is this my answer?

....quite possibly.