FTB : Am i in a good position or not?

Supreme_2

Just a quick question really to get a bit of a feel as to whether i am in a reasonable position for buying or not.

I currently earn approx £25k and am renting. I am considering purchasing and would be looking at properties around the £140k mark. The only debt i have is the dreded student loan! and it's quite big (£12k+), though i do have a deposit of £35k.

So would it be too much of a stretch to be looking at £140k properties whilst in my situation?

AMG2B

Hi Supreme - yes, I think really you need to be looking at properties sub 120K - although of course you might be able to get a property listed at 140k for less. But then I'm no expert, other than when DH and I took out a mortgage a couple of years ago we made sure we didn't stretch ourselves too much and we're really pleased we didn't now - we borrowed 100k and our joint income is 40K - it means we can overpay some months, and we don't worry quite so much as we would had we stretched ourselves.

herbiesjp

Based on the deposit, and property value the scenario looks good

Looking at the income and the student loan - it looks a bit tighter

How much do you pay on the student loan each month?
How much is your rent?

Supreme_2

herbiesjp wrote: »

How much do you pay on the student loan each month?

Currently i pay nothing, though it should be roughly £85.

herbiesjp wrote: »

How much is your rent?

£580

Mrs_Bumble

Why aren't you paying anything at the moment to your student loan?

I agree with Herbiejp above that income and with the student loan that a mortgage of the amount that you are looking at would be tight.

If you look at properties around the £140K mark is that because you expect to be able to obtain signifcantly cheaper?

For me it would sit more comfortably if you were looking at borrowing around the £80-£90K mark.

Supreme_2

Mrs_Bumble wrote: »

Why aren't you paying anything at the moment to your student loan?

I have never been asked to pay anything, and the SLC are impossible to get hold of to sort anything.

I will start paying soon though i am sure!

£140k because around here that's really the cheapest end of the scale, and anything much below that and i'm going to get stabbed walking to the door :rotfl: Saying that though, i would hope to find something nearer £130k, but i'm not entirely sure thats realistic unfortunately.


A mortgage of ~£105k would give me monthly costs of approx £580 (same as my rent), and with other costs (insurance, etc...) will be short of £700/month.

If it raises to say 8% it would be around £800, which although a lot, isn't an unmanageable amount.


Is this all crazy talk, or does it make any sense?


One question i do have though; if i would like to free up some money, i would like to have the option to rent a room out. Is this generally an acceptable thing to do, or does it cause complications with the mortgage?

herbiesjp

The deposit you have is very good - so well done for that

You are looking at higher end multiples (4.2 times) and would therefore not have the whole of the marketplace to look at

Some lenders could potentially help, especially based on the deposit front - however you would need to be 100% comfortable with the mortgage payments, and as such I would be inclined to fix for a longer period of time, but on a deal that allows you to make overpayments.

That way you can have the safety of knowing that payments will not hit £800pm for a set amount of time, and also if things did get better for you, you could chip away more quickly at the mortgage debt (or student loan if they decide to start making you pay! lol)

Mrs_Bumble

Well you look like you have look at this from every angle and so definitely not going into this blind at all and I think that is impressive!

I can't really add anything to Herbiesjp post above, agree totally.

In relation to your lodger, sounds like a very sensible idea and shouldn't cause any problems at all with mortgage lender.

Check out websites like https://www.zoopla.co.uk to see what houses have actually sold for and estimated values to help when purchasing!

good luck!

Supreme_2

From my really quick look around on the internet (i know this isn't the best, but it's a fair indicator), i can see a number of offerings at 4.39% fixed for 3yrs. This seems sensible to me, 2yrs is too short, and there doesn't seem to be any incentive to go for 5yrs with my situation.

Is there any reason to change the length of the mortgage from 25 to 30yrs, other than to slightly reduce monthly outgoings?

With a multiple of over 4, will this significantly reduce my options with lenders? What would be considered a normal multiplier for a first time buyer?

Mrs_Bumble

Keep the term as short as you can afford that way you will save yourself absolutely thousands in interest payments.

3.5 times is more common but there are a few lenders that will lend around the 4.1 and sometimes a bit more as long as your credit history is absolutely squeaky!

Speak to a good local independent whole of market broker.

herbiesjp

This seems sensible to me, 2yrs is too short, and there doesn't seem to be any incentive to go for 5yrs with my situation.

The incentive would be trying to lock into a low fixed rate while they are around. IF you take a 3 year fixed rate, who knows what the rates will be at that point? Nobody knows, but at least you know what you could get today which is more of a certainty

Is there any reason to change the length of the mortgage from 25 to 30yrs, other than to slightly reduce monthly outgoings?

Not really, better to keep to a short term, as long as it is affordable.

With a multiple of over 4, will this significantly reduce my options with lenders? What would be considered a normal multiplier for a first time buyer?

Yes, choices will be limited. However what is going in your favour is your deposit. That, combined with a good credit history, could just well open up a few more doors for you.