Just some simple advise please, can I get a mortgage?

movingup_2

Hi All,
I know this has been asked before but it keeps slipping down the list of posts so it’s hard to find current info. Can any of you please offer some advice on this please?
My income is £30K per year I have £5K in savings. I’ve seen a house with an asking price of £170K, I’d like to buy it. My father has an income of £30K but will retire in 5 years. His house is valued around £350K. He has offered to get a mortgage with me.
Would we be able to get a mortgage together for £180K?
Thanks

_Andy_

No - you don't have anywhere near enough deposit and money for fees etc.

movingup_2

Thanks for the reply!

What about my father going as a guarantor? Or how much deposit do I need then?
Thanks

_Andy_

A guarantor doesn't change the deposit needed.
You will need a minimum of 10% (£17k), plus legal fees, valuation fee, moving costs etc.
You need to carry on saving.

Jacka87

Firstly, in simple terms you are generally requiring a minimum of 10% deposit at the moment and a maximum lending of 4.5 times your earnings as a guide.

That puts you at 17k deposit for the property in question but you will only be able to borrow 135k. Meaning a property value of around 150k max. So as Andy pointed out, no you cant get this mortgage.

The way I see it is you have 3 options, save a hell of a lot and wait a little while so your deposit builds, though you may still fall short on the salary multiples. Look at cheaper properties but again you will need to get a bigger deposit cos yours is tiny when you look at deposits required nowadays.

Or thirdly instead of getting your dad to go on the mortgage with you, you could get him to remortgage and give/loan you the amount. If he was to re-mortgage for 5yrs but only say 50k that would mean that you would have 55k, 50 for deposit and 5 for legals etc. then with a mortgage in your name of 130k you would be at the 180k you where looking for. The main issues with this is it puts financial worry on your father near his retirement but as he is your dad he may be willing to consider this as opposed to going onto a mortgage with you. I assume if he was on mortgage with you, that you would be expected to pay for it, if this is the case then you just pay both mortgages and in 5 yrs your dad has his money back and you have your home. The main issue is can you afford it.

I have done the same thing with my dad and its going fine, no problems. I am now looking to remortgage to give him the money back.

Conrad

Rates are high at 10% deposit level.

Guarantor mortgages are designed to bridge a finite gap, for example where say a trainee Lawyer expects thier income to double in 2 years, and parents can guarantor for a relativly short period.

These arrangments are generaly not accepted where the guarantors income is heavily relied upon, and there is no end in sight.

dimbo61

If your dad borrowed £50k from the equity in his home over 5 years at 5% fixed for the 5 years it would cost £934.56 repayment or £208 interest only ( but it needs to be repaid in 5 years!)
This deposit would give you a LTV of 75% so a £130,000 mortgage over 25 years would be £760 a month repayment or £542 Interest Only at 5% fixed for say 5 years.
Having both parts repayment would cost you £1700 a month or more than your take home pay!
Having the smaller mortgage ( on dads home ! ) repayment and the other IO would still cost you £1500 a month for the next 5 years.
Start saving and look for a much cheaper property.

Jacka87

I would just like to say that I agree with Dimbo that you defo need to start saving. I did not run through any calculations when I made my suggestion of your father remortgageing a small percentage of his property value.

I still believe that it is an option however I feel that you will need to be looking at a much lower value property no matter what. I would also like to point out that allthough I have never missed any payments on my mortgage or my dads, I am always keeping a very keen eye on my budget as I am fully aware that I have set a very high level of mortgage payments.

On top of my graduate position (fairly well paid) I also have a flatmate in my property and a part time job working for my father (who is self employed). The reason being without the hard work I would not have got onto the property ladder, and defo not in such a great flat. Though I still had a deposit of 20k in my own name without any of my dads help, and he is not nearing retirement either.

movingup_2

Oh dear, not much hope for me at the mo. I'll keep saving, or marry a rich man. Thanks for all your help.