First Time Buyer's Guide To Mortgages

robin_banks

I'd check the tax implications;

Taken form YouGov;

Loans at low interest rates

You may have to pay tax on this benefit if your employer lends you more than £5,000 interest free, or charges you less than the official rate of interest on a loan. The value of the benefit you'll have to pay tax on is usually the difference between:

• the interest you actually pay
• the interest you would've paid at the official rate

You may also have to pay tax on the benefit if your employer lends money to one of your relatives.
You won't have to pay tax on the benefit of an interest free or low interest loan from your employer if the total of all loans provided in a year is less than £5,000 or less.

adewalebiggie

I am really keen to get on the housing ladder in London before the end of this year but finding it hard to get a decent mortgage. Have saved £20K since I left Uni, have no debts, other than my student £8K loan, and a good credit history...yet am finding it extremely difficult to find a decent mortgage. Am looking at a mortgage of £160k. I initially thought that £20K would be enough for a deposit and fees etc, but realising how stingy the lenders now are - thought I would make my £20k my entire deposit and save another £5k for additional costs - which I am now saving (1K down 4 more to go). However can see now that my £20k puts me in the 10% deposit box which has awful rates - one lender quoted me a monthly repayment of £1k for a £160K mortgage! So thinking maybe I should now save an additional 4K to bump it up to 15%. Then on - top of that save another £5K for fees and sorting out house. Saving £10K will mean that I will not be able to even think about getting onto the ladder until a year from now. Fear is that by the time I have saved, house prices will have gone up sizeably and I will not be able to afford them._pale_..I live in London and house prices have really come down to the point that I could actually afford to repay a mortgage taken out there in my lifetime :beer:- just scared I will loose out on this great opportunity because of the stingy lenders:mad:! Any advice on other ways I might be able to get an affordable mortgage?

JJmcClure

Hello adewalebiggie

I'm in a similar situation as you

I've got £15,000 saved up. Desperate to get on the property ladder.

After a place in London for £166,000

I'm going to go through Yorkshire Bank if they'll take me.

It's a three-year fixed rate mortgage. The rate is stupidly high, and my monthly mortgage payment will be about £1,000 a month for a two bed flat. The big thing though is they offer 95% mortgages (the rate though is 6.99. That's high, but not as bad as some I've seen). This means I don't have to borrow money of my folks to get a 90% and I can do some much needed work on the flat, and have some cash left over for emergencies

I could potentially rent out the other room if I'm in trouble as well

It's a catch 22 and I agree with you. Property prices could be about to go up again and it'll be even tougher to get a place in London because there's no guarantee that banks are going to start offering better mortgage deals

So I'm biting the bullet. I've worked out I'll have an OK amount of money left over each month to spend on going out, but I will be Mr Hermit for three years until I can get a better deal I'm on a decent salary so hoping I'll be ok.

The thing is, I'm being offered several 90% mortgages (which I could borrow cash off my parents to get), but the rate is still 6.49% and is fixed for FIVE Years - I'd feel happier knowing I can get a lower deal in three than five years

Another reason to do it this year is there's no stamp duty for properties under £170,000 until december 31st, so that'sa saving of £1,600-odd for me

It's tough being a first-time buyer at the moment

adewalebiggie

Hi - thanks for your response. I might check them out if they are willing to lend at 95% - what is they salary multiple? If the repayment on 95% is the same as 90% then I might as well have that and, like you, use the rest of the money to do up the place... have you got any direct contact details? If not will just call them tomorrow...I am planning on buying at least a 2 bed. My plan initially was to use the additional money from the tenant's rent as an overpayment - but it might actually form part of the repayment! I mean 1K a month is ALOT of money...dread to think how I would afford to live after that plus bills and other exspenses...do not want to be one of those sad people living off butter sandwiches and baked beans because of their mortgage....:eek:rates are also bound to go up too soon, so these mortgages might be the best "deals" there are around....I am also keen to get on the ladder prior to the stamp duty holiday ending - another reason why I need to find something FAST...can I ask who else you went to. I have done the rounds with the high street banks - the few offers of lending I had were laughable - would be lucky to find a parking space with that money! Where in London are you looking to buy? Have you actually found a place?

Oh - any other advice from others on the site really welcome!

JJmcClure

I know Natwest are offering 5 years at 6.4% with no arrangement fee - but that's for a 90% mortgage, not 95%

But unless I worked out my sums wrong it's still worth your while going for the 6.99 over three years with a £599 arrangement fee

In the long-term, you do save a few pennies

Again, you're right. £1k a month is a lot of money - but it's not forever and I can't see any other way of getting on the property ladder at the moment

Sarah_1989

Hey hey - never been on one of these before but am trying to gain as much knowledge as possible before embarking on a first time buy with my brother!

We have saved 20k each, so a combined down payment of 40k - I was in barclays the other day and loosely asked how much they are lending and was told that realistically they would lend 4 to 4 and a half times our combined income - obviously subject to checks etc (which i am hopeful will be fine!) Is this a good amount or is there better out there?

My brother is keen to live in the property whereas I am wanting to rent my room out in order to chip away at my mortgage repayments - if we are lucky enough to find a 3/4 bedroom place we would also be looking at renting the other rooms - given that my brother (co-owner) would be living in the property would we need to get a buy to let mortgage?

My father has also advised that there are potential issues with multiple occupancy, insurance, taxation on profits made etc. What are the pitfalls in getting a buy to let mortgage and will the tax man really screw me over??

Sorry for the endless questions but its an exciting yet nerve racking time!

I welcome any advice - I am sure there are lots of us in the same boat right now!

Many thanks

adewalebiggie

So have called all of the banks that are talking big about offering 90 or 95 per cent mortgages. All are not willing to lend me the amount I need £144K...I earn £30K a year, and after tax have about 1,600 a month left. But based on affordability - am not eligible for the sum of money needed to buy even a prime parking space let alone a flat in London.

The crapest offer goes to HSBC - who also happen to be my personal bank - despite holding all of my savings and my ISA, never going overdrawn and having, as the person I spoke to admitted, a really good credit rating, the most they could give me was £105K.:mad:

To add to my joy - just been called by my estate agent and been told the property I wanted has gone - at full asking price.

Kinda feel there is really no point to this - wish I had just lived it up, instead of diligently saving my pennies, and gotten a really bad credit scoring. Least then this rejection would make some sense!

Think I will just have to hold tight and wait either for the lottery or for the banks to see some sense. Know which one I would hold my breath for.

_Andy_

Shame on HSBC for being a responsible lender.

mistrihelen

I don't think the lenders are being stingy, adewalebiggie - you're actually asking for quite a significant multiplier of your salary. 105k seems reasonable - maybe you just need to look further afield? If you are buying on your own, on that salary, you have to accept there's a compromise somewhere - and maybe commuting to London is it.

Our joint salary is almost twice yours, yet we have 'only' gone for a mortgage of 126k - the most expensive properties I even wanted to look at were in the 180 range and I would've been nervous applying for that (frankly, going for a house of 140k was somewhat terrifying!).

If you are realistic and find a property somewhere within what HSBC or whoever is willing to lend, you'll be glad of your savings and having a good credit score.

Good luck

abtmay

We called Nat West this afternoon for a mortgage quote and was informed that we were only allowed to borrow approx 2.5 times our combined income. I thought banks tend to lend approx 3 to 5 times the combine salary..... Can anyone advice?