First time buyer needs some first time advice

Gibbsey

Hi,
I am currently living with parents and have spent the last year paying off any outstanding debts I have had. I will be completely debt free in Feb 2010. Can't wait! I am looking at buying my first property in March 2010 and have seen properties on the market now which are suitable for around £125k. Annual salary not including any overtime or bonuses is just over £31k. I have heard varying stories about what I can borrow and different first time buyer schemes that are available. Ideally, I would love to be able to cough up a large deposit but for any reasonable sum it will take me at least 18 - 24 months realistically to save. My alternative is HomeBuy Direct or the like which I am a little dubious about. An option is a family member who is willing to lend me £15k for an initial deposit.

There are so many options out there and I just don't know where to start or who to trust. If I have £15k to cover deposit and any fees for a property valued at £125k is this enough? Should I wait and save more? I am concerned about what the markets will be doing this time next year? What mortgage should I be looking at? Fixed or tracker? 25 or 30 year term? TOTAL CONFUSION! Any advice is greatly appreciated

tek-monkey

You need a 10% deposit, not including all fees. I am currently in the middle of my first buy, and would say fees for a similar priced place are about £1500. I'd say £2k to be safe, leaving you with £13k maximum for a deposit. So already your deposit is only just 10% of the £125k price bracket, you can't go higher.

The question is, are there £125k houses where you want to buy, that you like enough to buy? How are you funding the repayments of the loan? Do they want it back monthly, a lump some at some point later?

boonerz

I don't know anything about any shared equity schemes that may be available, but I can offer some insight on cost as my GF and I are currently in the process of buying our first home - both coming from living with parents.

We got a 5yr fixed at 5.99 at a 90% LTV (10% deposit) from NatWest. Although I think this is now up at 6.39. You can get 2yr Fixes at 5.99 though.

I would think that for a house at the value you're talking about you will need at least the money your family member is offering. Although, I would think you might need a little more money than that too in order to pay for fees and to furnish your house.

Our solicitor fees are around £750 and the homebuyers survey we got was £475. The mortgage we got doesnt havea fee as such, but some do and it can be £1000.

Have you worked out affordability of a mortgage of this size? Go to moneysupermarket.com and punch in the figures.

Fire_Fox

Lenders prefer to see evidence that you have saved your deposit or, at the very least, expect the deposit to be a gift as otherwise your are starting out home ownership with a debt. You will also need a reasonable amount of money saved - ideally three months salary - in case the worst happens and you get made redundant or unable to work for health reasons.