Young couple need advice, First mortgage

Liamg1987

Hi Everyone,

Me and my Girlfriend (22 years old) are going to try and get on the property ladder as our New Year's resolution.
We're currently renting a small flat but our money is going nowhere.

Our combined income per month is approx £1700 and our outgoings are about £1100, We have £1000 pounds in savings but if we budget strictly we can put away approx 500 a month.

We want to try and get on the ladder summer time 2010 and are basically looking fro any advice we can gather. We're looking at getting a house round about the 65/70k mark in Runcorn, North West of England.

We were told we need to keep away from "Endowment Mortgages" as this just pays off interest as opposed to the mortgage itself?

Thanks for any advice

blueberrypie

Go and talk to an independent, whole-of-market mortgage advisor. Ask family, friends and co-workers for recommendations. Note: advisors who work in banks and estate agents are not independent. Make a list of questions to ask, and don't be afraid of asking questions that seem stupid. If there's something you don't understand, ask for it to be explained, go away and think about it, and come back and ask for more clarification if you need it. A good mortgage advisor won't mind this at all.

You will need to save at least 10% of the property value in order to qualify for a mortgage, so if you are looking at borrowing £65k, you'll need £6,500 as a down-payment. If you're saving £500 per month, this will take you almost another year. It might be worth moving in with parents for a few months, assuming parents are willing, in order to be able to save faster. But taking a bit longer to save isn't necessarily a bad thing: it will give you more time to watch the local property market, and most people seem to feel that house prices are not going to go up by much in the next year. You might also get a better deal if you're willing to buy over the winter, which is generally a slow season for house-sales.

You'll also need enough money to cover other costs, such as solicitor's fees for conveyancing, moving costs, etc - don't forget those.

You don't mention any other financial commitments - if you have a car-loan or credit-card balance, those will also be taken into account when determining how much you can borrow. It would also be worth checking your credit-files to see how those look.

Radiantsoul

You probably need at least a few thousand for fees in buying a place and at least 10% deposit, although 15% would be better.

In terms of types of mortgage you can either repay the interest and capital(a repayment mortgage) or you can go for an interest only mortgage with a repayment vehicle. This means you make an investment that you hope will generate enough money to repay the mortgage in full at the end of the term. It might generate more, which is great. Or it might generate less, which is a problem.