First Time Buyer's Guide To Mortgages

sarastark86

matt669 wrote: »

Hello all, and many thanks for taking the time to read this. I basically wanted to make sure i'm sure on the right track for things. Both myself and my fiancee still live at home, have no debts at all,clean credit ratings, with hardly any monthly outgoings. She is a teacher and earns about £20k per year, i am an officer worker and get around £17.5-£18K. We were looking at houses between 130-140K in Gloucester. Currently we have around £8K saved for a deposit and we are somehow managing to save 2k between us per month. How much of a deposit should we really be aiming for i had guessed at about 15%? Is it too soon to be seeing a mortgage advisor or should we wait untill we have more saved? Sorry if these all seem really trivial questions but i am really lost on this sort of thing and am very unsure of the options open to us.

Many thanks in anticipation of your replies

Matt

Hi Matt,

If you are wondering about size of deposit I happened to be testing out moneysupermarket.com's mortgage calculator this morning and there you can adjust the size of the deposit and see what you get offered e.g. put in LTV 75k deposit 25k and you will get lots of results, put in LTV 90k deposit 10k and you will get very few BUT still some including one from 'Share to buy' which led me onto their website https://www.sharetobuy.com which you may find interesting. I am a bit skeptical of this type of thing - it seems too good to be true really - and the whole 'go on, borrow some more!' style of lending it seems to be promoting, but there is some really useful information about the home-buying process and I have requested a 'mortgage illustration' from them to see what they have to say for themselves. On the plus side they specialise in FTB's and couples' joint mortgages and seem to offer lots of advice and best of all they appear to be free (even mortgage arrangements). Although they must make money from somewhere *suspicious face*. Hope this helps anyway!

alph250

sarastark86 wrote: »

Hi Alph250, as you can see from my post about Ownhome above, the minimum mortgage that they will let you take is 3x your joint income therefore with you and your partners' earnings you would be expected to take out a mortgage with the Co-op for at least £118.5k. Unfortunately not £102k, that would be far too affordable! I was quite surprised when the Co-op told me this as I had previously gone on the assumption of 2.5x joint income. On the plus side on this basis you would then own 70% of the 170k house you've got in mind, so less to pay back when you get promoted :-)

Thanks Sara i was unaware of that! to be honest we were considering getting a bigger percentage anyway, it just looks like we would have to!lol

How was your experiance with them? do you have to push them or are they quite quick? once you get accepted is there a specific amount of time you got to complete the sale? what are co-op like, are they helpfull? what are they like with credit history? what are the co-op rates, are they the same as advertised on the website?

Lots of questions! sorry but thanks if you have the time to answer them!

sarastark86

Erm I'm not really sure, this is the first time I have investigated housebuying so not much to compare it to. Basically I rang up about Ownhome in May when I first heard about the scheme. They take a few details then book you in for a call-back to go through everything. We had to wait about 6 weeks for the call-back so I think it was end of June. Then they took all our details and said yep, you're eligible to receive funding, and within a few days they had sent us confirmation in writing saying the next step was to contact the Co-op to discuss mortgages. As we weren't actually looking to buy at the time, just wanted to know if we were still eligible, we didn't do anything else at this point.

Then I rang up again in November to check that we were still eligible and they said we were (they recommend that you ring up every few months to keep everything up to date) and I rang up the Co-op just to ask about mortgages etc. The guy was helpful, took all the details then sent us the basic info, but again we aren't actually looking at the moment, just sort of testing the water, so we haven't progressed to the next stage. The guy said that the application was valid for 90 days, but when that expires I can just ring back and put in another application. I don't know what they are like with credit history as both me and my partner have reasonably good credit. I also don't know whether the rates were the same as on the website but they seemed quite good. I think he offered me three different fixed rate deals: 2 years at about 6.1%, 5 years at 5.6% or 10 years at something else. We got a quote for £135k mortgage on the 5 year fixed rate at 5.6% and it was £872 a month (remember this is before all the interest rate cuts). Then I spoke to them again a couple of weeks after the base rate by 0.5% and it had gone down to 5.1% for the same deal. I haven't spoken to them since the base rate was cut to 2% but it has probably gone down again. I guess it would just be their standard mortgages that they are offering. To get the good rate it had to be LTV 75% or less which seems to be the general situation everywhere.

Re: time restrictions etc, Places for People (the people running the equity scheme) told me that there's no expiry date for you being eligible and on the system ('we want EVERYONE to have the chance to buy their own home!' oh please..), the only thing to consider is that the funding is finite (as e.g. for FY08-09 they are not accepting any more applicants) and you are not guaranteed funding until you put in an offer on a house. At this point the funds are actually allocated to you and then you have a certain period (I think it's 3 months but I'm not certain) to complete the transaction, otherwise the funds go back in the pot which would mean that if they then ran out of funding before you found another house you wouldn't get any money.

Overall so far the process has seemed reasonably easy and clear but it would be great to hear from somebody who has actually bought a place through the scheme... somebody must have done if all the funds have run out for this year!!

Where are you hoping to buy? I think I heard somewhere that the funding was limited to London and the southeast but I don't know for sure. I'm in Chelmsford - 19th most expensive place in England :-(

matt669

Thanks sara, after checking the mortgage calculator you suggested it would appear that looking at houses for 130-140k with around a 20k deposit, the repayments are nowehere near as bad as i had feared. With saving 2k a month it doesn't seem to be that far away now!!! Excellent!!

Matt

OxfordFutureFTB

dancingphil wrote: »

Of course you would be responisble for any negative equity at the time of sale, including all transaction fees to. And if you don't sell it, then you could ride out the storm and avoid paying any losses.

But surely it would be prudent to wait for the market to bottom out, then use this housing crisis to your advantage by getting in at the lowst price and risk.

What's your hurry? Prices for sure will not go up any time soon.

Thanks dancingphil, there is no hurry, i also think that the market will keep falling for at least next 12 months if not longer.:j

Anyway, does it mean that if I will finish my 3 year fixed deal with bank and will apply for another will i need to cover that loss in cash or is it only when I am selling the property?

kelise

Hi. I have found a property that i would like to get a mortgage on. I have made no offers yet. However the company selling the house offer a great deal with Nil deposit and 75% share of the house. What do i need to do about getting a mortgage. if the price for the 75% is £80 do i have to tell them i need a mortgage for £80k as this seems like a 100% mortgage which people are not doing.
Thanks

sarastark86

hi kelise, i think that as you would be taking out a mortgage for 75% of the house's value you would tell the lender 'loan to value' (LTV) of 75%, which would give you access to the more competitive rates. you could maybe have a look at http://www.sharetobuy.com/information/shared-ownership-mortgage.php , this might be relevant although i guess it depends on the developer's particular scheme. why don't you contact the developer for advice?

Steve.T.S

Hi guys, I wonder if anyone can offer some advice.

I am in a situation where I am looking into the possibility of buying for the first time towards the end of the summer. I have found myself in the fortunate position of earning a good wage that would provide me with the suitable funds to purchase in Cardiff.

I am only looking at a small apartment of flat type place at this time, in the region of 90,000-110,000 pounds. I am currently earning £29,500 a year.

My problems and questions are as follows, my student days have left me with a "very poor" credit history according to experian, however within the next month I will be free of all credit card debt and my only monthly outgoing on debts will be £125 on a loan with 4K left to pay. Is there anyway to improve this rating quickly?

Also what sort of mortgage should I be looking at, I would like to have a deposit of maybe 5% or 10% however I am worried that due to my credit history the biggest obstacle will be getting a mortgage in the first place.

Any advice greatly appreciated.

Thanks,
Steve

mel556

I don't if this is the right place to ask, buy does anyone know if there are any left?

My son and daughter in law have saved up a few thousand and have found a house they like but it only makes about 7% of the value.
Can any one help.

Please

Radsteral

Hello all ,
i have been looking a house since october .. 269 k it was and now he just lowered it to 250.00 but negotiating and can be setled for 238 k.

excited about the house i love as it clicks many positive things i been to hsbc and couple independent brokers but it seems hopeless

been with hsbc since i first came to the country, 2 credit cards, my current account, my business account and 25k savings.
was told to bring 3 years accounts for company and was shatered when accountant sent me 2008= 5300 plus 15.000 dividents--, 2007 5200 plus 15000 dividents ..

from my bussiness account i draw some 4000.00 each month as wages and the account for some 50-60 k a year, but that cant be proven from accountant..

anyway out ?
any reply much appreciated
R