First Time Buyer help/ advice needed please

Chelsea_Dagger

Hello everybody,

First time poster here!

Me and my partner are looking to move out of our rented flat and move back to her parents so that we can save for a deposit for a mortgage. We have worked out that we can save around £1200/month if we really tighten our belts and work hard for a year we will have £14,000. We are looking to buy a property for around £150,000 so we would have a 10% deposit.

My main concern is that as we dont have any real credit history will it harm our chances of being approved for a mortgage? We have no loans or credit cards and only have a finance agreement on a sofa which we've never missed a payment for.

Also what is the best thing to do with our money whilst we're saving, is it too much to put into an ISA?

I've heard about shared ownership could this be an option for us? And how does it work?

We have a combined income of around £32,000 and both have stable jobs.

I'm sorry if any of these questions seem basic but we're both young and all this is new to us.

Any help would be greatly appreciated!

DiggerUK

Chelsea Dagger,
You have a way to go before you get a mortgage, on current salaries I think you will only get about 120 for a mortgage. That is with the 20% deposit.
You have about 2+ years hard saving in my opinion.

Go to a mortgage provider and get a forecast.
Keep positive, keep hopeful and keep saving.

VIGILANT22

As an exercise do a budget planner based on being a home owner ie monthly salary after tax, mortgage payments, council tax, insurance, household bills, see what is left bottom line and if this is "do-able" for your lifestyle....Life is pretty misreable if at the end of each month you dont have enough disposable income to enjoy a bottle of wine, see a movie, plan a holiday etc...

opinions4u

Chelsea_Dagger wrote: »

First time poster here!

Welcome.

We are looking to buy a property for around £150,000 so we would have a 10% deposit.

- 10% deposit is the absolute minimum in the current market. 15%+ will usually get you access to better mortgage deals though. 15% is £22,500.
- stamp duty is 1% of the purchase price, £1,500.
- a typical valuation fee will be around £450
- solicitor costs £800
- mortgage product fee £995

That's before you worry about silly things like furniture etc!

My main concern is that as we dont have any real credit history will it harm our chances of being approved for a mortgage? We have no loans or credit cards and only have a finance agreement on a sofa which we've never missed a payment for.

Keep on top of the bills, maintain your payments on everything (e.g. mobile phone contracts), get on the voters roll at your new place and, perhaps, make an application for a credit card that, if accepted, you use once or twice a month for petrol or other normal day to day purchases and pay off in full each time the bill comes through.

Also what is the best thing to do with our money whilst we're saving, is it too much to put into an ISA?

ISA limits are £3,600 this tax year and £5,100 next tax year. Each. It may be worth looking at the savings part of www.moneyfacts.co.uk, in particular ISA, regular savings and easy access accounts.

I've heard about shared ownership could this be an option for us? And how does it work?

You buy part of a house and pay rent on the other half. Personally I'd try to avoid this route as they can be difficult to sell later on.

We have a combined income of around £32,000 and both have stable jobs.

This mortgage calculator link can help you work out what a mortgage will cost you. £135k at 6.0% is £880 a month. But you need to factor in all the other household bills, life cover and other insurances on top of this.

I'm sorry if any of these questions seem basic but we're both young and all this is new to us.

Sensible questions. Hang around these boards and you'll learn a lot about the ins and outs of mortgages, including seeing the dark side of what happens when people get in to financial difficulties, sometimes because they've stretched themselves too much.

The priority for now is to save as much as you can!

Snippa

Chelsea - you don't say what age you are. But if you're young, ie early 20s, there is no need to rush into buying. I think people have been a bit oversold on buying property over the last 10 years or so, due to booming prices. It is great owning your own place, no question, but only if you can afford the payments, the bills and possible extras like maintainence and things going wrong relatively easily.

If you're in your 20s, there's a lot to be said for enjoying life while you're young, and leaving yourself the freedom to move around. When you're renting, if you want to move you give a month's notice and that's that. So if a new job comes up, or some other opportuinity, or you want to travel, or a kid comes along....whatever, you can move with very little hassle. If you own, you have to sell, which can be stressful and take a while. You also have the possibility of negative equity, especially if you're stretching and taking on a 90% LTV.

If you really want to settle down now, and can find somewhere you'd want to live in that's affordable, fair enough. But do consider the downsides as well as the upsides. Buying is great if you're settled, and can find somewhere you're happy living in, and are in it for the long term (say 5 years). But renting and having no ties can also be great, while you're young.

toffee1981

We are in a similar position to you. Be realistic about the amount of money you can save each month. You still need to live.

My partner and I both have an ISA so we can out £7200 a year in. I also have an account with Abbey especially for first time buyers. (Now Santander) You can open it with up to £5000 then pay in between £1 and £300 per month. You can not take any out for the first year and get 5% interest. This is more than an ISA.

After a year, if you want to withdraw the money you have an interview with their mortgage person. You are under no obligation to take out a mortgage with them.

I realise there is a bit more to this account but just an idea for you to look into.

readytofly

toffee1981 wrote: »

We are in a similar position to you. Be realistic about the amount of money you can save each month. You still need to live.

My partner and I both have an ISA so we can out £7200 a year in. I also have an account with Abbey especially for first time buyers. (Now Santander) You can open it with up to £5000 then pay in between £1 and £300 per month. You can not take any out for the first year and get 5% interest. This is more than an ISA.

After a year, if you want to withdraw the money you have an interview with their mortgage person. You are under no obligation to take out a mortgage with them.

I realise there is a bit more to this account but just an idea for you to look into.

What is this account called? Thanks

dannymccann

We are also young - 22 for me and she is 21. We've been together for 5.5 years, met at school, all that malarkey. We are very settled but do not have the option of moving to parents due to the space restrictions. We have been renting privately together for 2 years. We have decided the time is right and we are ready to stop lining the pockets of different landlords. We just bought a newbuild at £138k, we had 5%, the builder puts up 20% as an interest free loan over 10 years (£27600 as it stands now). This works for us (mortgage of £530 a month including insurances is less than our rent currently + £125 a month into an ISA to pay off the loan).

Numerous factors gave us our decision - the one above, house prices, the offer we got on our place, location (we live on the same estate now so we know the area well), proximity to work, features of the house, family relatively close, great walking grounds for our dog (see the pics linked below), the deal with the deposit, our readyness to get on the ladder now before rates rise in the next 2 years plus more.

Only you know when the time is right, if you are happy to move in with parents and will be comfortable there, stay there as long as you can and save for as long as you can, the more you put up in capital the cheaper it is every month. If you are willing to sacrifice independence / freedom (to a certain extent) for a year or 2 to save around £20k you will be in much better stead

http://www.facebook.com/album.php?aid=391247&id=585740327&l=7caf9496d1

zoosh

dannymccann wrote: »

We are also young - 22 for me and she is 21. We've been together for 5.5 years, met at school, all that malarkey. We are very settled but do not have the option of moving to parents due to the space restrictions. We have been renting privately together for 2 years. We have decided the time is right and we are ready to stop lining the pockets of different landlords. We just bought a newbuild at £138k, we had 5%, the builder puts up 20% as an interest free loan over 10 years (£27600 as it stands now). This works for us (mortgage of £530 a month including insurances is less than our rent currently + £125 a month into an ISA to pay off the loan).

Numerous factors gave us our decision - the one above, house prices, the offer we got on our place, location (we live on the same estate now so we know the area well), proximity to work, features of the house, family relatively close, great walking grounds for our dog (see the pics linked below), the deal with the deposit, our readyness to get on the ladder now before rates rise in the next 2 years plus more.

Only you know when the time is right, if you are happy to move in with parents and will be comfortable there, stay there as long as you can and save for as long as you can, the more you put up in capital the cheaper it is every month. If you are willing to sacrifice independence / freedom (to a certain extent) for a year or 2 to save around £20k you will be in much better stead

http://www.facebook.com/album.php?aid=391247&id=585740327&l=7caf9496d1

Lovely place you have there

adbee

dannymccann wrote: »

We are also young - 22 for me and she is 21. We've been together for 5.5 years, met at school, all that malarkey. We are very settled but do not have the option of moving to parents due to the space restrictions. We have been renting privately together for 2 years. We have decided the time is right and we are ready to stop lining the pockets of different landlords. We just bought a newbuild at £138k, we had 5%, the builder puts up 20% as an interest free loan over 10 years (£27600 as it stands now). This works for us (mortgage of £530 a month including insurances is less than our rent currently + £125 a month into an ISA to pay off the loan).

Numerous factors gave us our decision - the one above, house prices, the offer we got on our place, location (we live on the same estate now so we know the area well), proximity to work, features of the house, family relatively close, great walking grounds for our dog (see the pics linked below), the deal with the deposit, our readyness to get on the ladder now before rates rise in the next 2 years plus more.

Only you know when the time is right, if you are happy to move in with parents and will be comfortable there, stay there as long as you can and save for as long as you can, the more you put up in capital the cheaper it is every month. If you are willing to sacrifice independence / freedom (to a certain extent) for a year or 2 to save around £20k you will be in much better stead

http://www.facebook.com/album.php?aid=391247&id=585740327&l=7caf9496d1

Where on earth is that house for £138, 000? It looks amazing for the price.

toffee1981

Sorry, might be a bit late now but for anyone else reading the account with Santander is called First Home Saver. You can still open it.