Mortgage possibilities on 45k Joint Salary

leemuddywaters

Hi All, myself and my wife our first time buyers, we have a joint salary of 45k and have a 5k deposit at the moment, we currently rent at £650 a month.

Anyone know what house prices realisticly we could be looking at?

_Andy_

At the moment - none, due to the low deposit.
You will need at minimum a 10% deposit, plus savings for legal fees, valuation fee, cost of moving, cost of furniture, decorating, maintenance, contingency etc.

leemuddywaters

_Andy_ wrote: »

At the moment - none, due to the low deposit.
You will need at minimum a 10% deposit, plus savings for legal fees, valuation fee, cost of moving, cost of furniture, decorating, maintenance, contingency etc.

Furniture? We already have a house full of our own, Cost of Moving? We can do that ourselves. We have been looking at new cuilds so why would decorating be number 1 on the agenda?

happyrichard

Agreed. The whole mortgage market has changed significantly over the past few years. You will need at the very least a 5% deposit, but to get any half decent rate at the moment, a 25% deposit is required.

Not sure of the technicalities, but have you looked into joint ownership. I am not sure, but the deposit required there may be slightly lower.

That said, keep on saving, and you can join the housing market...if you really want to!

Hopejack

I think Andy was just trying to say that you will need some savings in addition to your 5% deposit. Even on a new build, you will still have to pay some kind of arrangement fee for your mortgage (you may be lucky and have this waved being a FTB), some of the better deals have as much as a £1-1.3k arrangement fee. There will also be a valuation fee to pay even on a newbuild. Then there are legal fees as mentioned and possible stamp duty dep on value of property (over £125k from 1st Jan = 1% of cost price) etc.

I'm sure you are aware of most of the costs though The only one I hadn't considered properly were the mortgage fees really as they are considerably steeper than when we last bought about 6 years ago!

Good luck with the move - make sure you knock them down on the valuation of a new build to ensure your lender doesn't come along and undervalue the property meaning a shortfall in your funds! It's happening v often and esp with new builds these days. Also, there are not many 95% mortgages around - I'm no expert but on the whole, I've seen 90% around for FTB but not great rates. Would it be possible to stay put a little while longer and save like mad for a bigger deposit? It could get you a better deal

ginvzt

I thought banks are not keen on lending on new builds and want 25% deposit..

Hopejack

ginvzt - hence my 'knocking' new builds down on price.... I think they will lend on new builds but are being v picky?? I know new build BTL are a complete no-no right now!

leemuddywaters

Its absolutley crazy isn't it, we have decent money coming in both in professional jobs, want to start a family soon but would like our own home to raise children. Its just very disheartening, I moved back to the UK from New Zealand and it just feels everything stacked against you here.

Hopejack

Lee - have a look at any lender online and most have a mortgage calculator of what you can borrow on your earnings. Have to say though this is often a 'pinch of salt' figure these days.

Well some people would say it's crazy (ie those wanting to borrow) but those lending don't think so - the market is v volatile at the moment. 100% mortgages and even 125% from some lenders have done the economy a lot of damage imo. I think they just don't want to repeat people being in negative equity (which tbh is quite possible in this current market with only a 5% deposit to put down) straight away and/or having to repossess a property which they will be in negative equity on. And of course the long term uncertainty of the interest rates isn't helping - imagine your mortgage payments trebling due to IR rises.

So to sum, I can see both points to be fair

happyrichard

leemuddywaters- I appreciate that you are not that chuffed about the situation, but the market has changed to ensure that people do not get themselves into a situation where they can't afford the homes they are living in and get them repossessed. It is essential for the banks to lend to only those who are capable of paying the bills, and unfortunately your deposit looks very small at the moment. I really think that saving is the only real option for you and then you will be able to join the ladder. I really don't understand the obsession with joining the property ladder- it really is a UK phenomenon...blame Maggie for this!

Cannon_Fodder

A poor credit history will also limit your options, so you are right to try and clear that up. Your advisor seems to have some good advice. http://forums.moneysavingexpert.com/showpost.html?p=27145615&postcount=227

While waiting for the defaults clear, being 'on decent money', you can easily bump your deposit up to £15k or £20k over the course of a year...then you'd be looking upto £200k houses.

Life will not get cheaper when you start a family. If you cannot raise a decent deposit now, then review your spending habits.