First-Time 100% Interest only?

Injured_2

Life...it's grand isn't it. Recently, I bought a new car and a loan for 11k along with it. Now, life has reared it's ugly head and now I need to have a change of scene. Ideally, buying a small 1-2 bed house, which in my area would be about 140k from initial researching. I currently rent a room which is no longer a viable option.

It seems that I could go down the Interest Only route to ease my transition to the world of a house-owner, but I have little in the way of savings (due to the car!)

What options do I have being a re-born First Time buyer with little cash on tap and a loan which I would ideally like to pay-off via the mortgage (if indeed this is the best way to do it.)

Any advice would be helpful!

Thanks!

Inj.

AndrewSmith

Hi,

What exactly is it that you are looking to do? It doesn't make sense.

What do you mean by 100% mortgage to buy a place but use the mortgage to pay off your loan?

Are you therefore suggesting borrowing more than 100%?

Andy

Injured_2

Sorry, I didn't make myself clear. Yes, a 100% mortgage which then I could use some of the total to pay off the loan.

meanmachine_2

Now, what you mean is a 110%+ mortgage, otherwise how will you afford to buy the house?

As per, please list income, debts, price of property, size of deposit etc etc etc etc

Or, you could just wait until you've paid off the loan, saved up a deposit etc etc etc

Sherydo

meanmachine wrote:

Now, what you mean is a 110%+ mortgage, otherwise how will you afford to buy the house?

As per, please list income, debts, price of property, size of deposit etc etc etc etc

Or, you could just wait until you've paid off the loan, saved up a deposit etc etc etc

Hi ..I must say I am in the same predicament, wanting to buy a house, but not knowing how to even go around the mazr that is selecting a mortgage!! I have the details above, so what do I do now...Mr.Meanmachine...

AndrewSmith

My suggestion is that you post some details of what you are looking for along with income etc,

Help and suggestions will follow

Also try these two very pertinent threads which should offer some guidance.

http://forums.moneysavingexpert.com/showthread.html?t=209805

http://forums.moneysavingexpert.com/showthread.html?t=175653

CHeers

Andy

Injured_2

OK - here goes...

Income - 27.1k, 6% of which now goes into a the company pensions fund, though I can reduce this percentage. Take home is roughtly 1800 per month.

Loan - £440 per month, which has just started. Other costs would be about £200 per month petrol, £40 car insurance.

Property - 1 bed starter home or 2 bed if I can stretch to it, though I'm fully aware that beggars can't be choosers.

I could offer a deposit of maybe 2/3k at absolute best (without selling body parts!)

Due to my circumstances I simply cannot stay where I am without either moving to another rented accomodation, but obviously this is not my preferrence. Staying put is much easier said than done.

lightspeed

Here are some quick figures to give you an idea of cost:

Income = £1800

Mortgage @5% 140K interest only = £583.33pm

loan = £440pm

petrol = £200

leaves £576 to pay the following:

council tax
food
electric/gas/water
phone
TV
Insurances
entertainment
decoration???
tax
mot
mobile
internet

Based on those figures, i think that 140K is a bit of a stretch considering that it is an IO mortgage. If rates went up higher you could find yourself really stretched.

I would try and find a cheaper property, get rid of loan ASAP and save some kind of a deposit. A 2% deposit would probably not be enough to access the best deals, furthermore, it would not give you much of a buffer against negative equity (should it occur).
Savings pot

meanmachine_2

By my calculation your take home is 1670 odd.

Northern Rock do a together mortgage, 125%, which is largely regarded on here as a BAD idea.

But it's something you could consider if you're desperate or you have a very high rent to pay.

Bear in mind that you'll probably be stuck in neg equity for a while.

Injured_2

lightspeed wrote:

Here are some quick figures to give you an idea of cost:

Income = £1800

Mortgage @5% 140K interest only = £583.33pm

loan = £440pm

petrol = £200

leaves £576 to pay the following:

council tax
food
electric/gas/water
phone
TV
Insurances
entertainment
decoration???
tax
mot
mobile
internet

Based on those figures, i think that 140K is a bit of a stretch considering that it is an IO mortgage. If rates went up higher you could find yourself really stretched.

I would try and find a cheaper property, get rid of loan ASAP and save some kind of a deposit. A 2% deposit would probably not be enough to access the best deals, furthermore, it would not give you much of a buffer against negative equity (should it occur).
Savings pot

That's why I want to accomodate the loan into the mortgage, hence freeing up the 440 a month. I know I would be completely hamstrung otherwise. Thank you for the advice, much appreciated.

stanmoresaver

Obvious question- probably an even more obvious answer-

Lose the car?