First Time Buyer help/ advice needed please

CloudCuckooLand

adbee wrote: »

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

Yuk. Very expensive for a 12 foot wide garden...have to give them credit for finding the narrowest shed in history !

BKAT_9

How rude! I dont think that is the attitude that is promoted in these forums....at the risk of major sterotyping...are you American? it would explain things!

property.advert

If you have 10%, then you can certainly get sub 5% advances but you would need a 4.22 salary multiplier for your loan. This is achievable but you would do best to think now about who offers loans at 5 times salary (google around) and perhaps save for the next 12 months with them. Why ? because a human can see that if you are saving £1200 a month and your 5% mortgage on 135k is costing you £563 per month at 5% interest only, then you have a "spare" £637 per month as soon as you stop saving up the deposit.

However, to reach a 15% deposit, you would only need another £7500 which would take you a further 6 months at your proposed £1200 a month and that would open so many more doors for you mortgage wise and the rate you would pay will drop significantly. However, it would drop again at 80% LTV and so forth but you don't want to be living with mam and dad forever ! At some point you have to call it a day !

At 85%, your multiplier is down to 3.98 and thus well within all modern salary multipliers. You may consider that a goal.

At a savings rate of 5%, your £1200 a month would only have earned out around £335 after 12 months and to be honest, it might be far more important to sacrifice some but not all of that and take a savings account with a lender who will state today that they will use a human to review the mortgage application rather than chase a headline rate elsewhere because a prospective lender can look at the accounts you hold in your name at their institution and form a much more balanced appraisal of your position.

Essentially you are "buying" a relationship from them at the cost of perhaps 2% or 3% interest on your £1200 a month.

As for not having any credit agreements, you could "waste" money and get a loan for say £1000 over a year at around 10% which would cost you £55 in interest (less the credit interest you could get on that £1000, so about £25 net) and show you had a loan and had successfully paid it off. Personally I might consider that but I would get a credit card or two (applying a few months apart) and use one for the weekly shopping and fuel and paying it all back on time and in full each month. That would help you out no end.

Finally, looking 12 or 18 months ahead with no spending money is terrible. I would seriously consider, if your jobs allow, getting some bar work or similar. You would or could both get a night or two out a week and earn about £10 an hour I guess with tips included. I used to do that and it was great, even if I used the money earned to go out after the pub closed ! Working 2 shifts each, say for 4 hours a shift, would give you about another £25/30 a shift pay at minimum wages and another £100 a month each after tax. In a year, that would be another £2400. If you could work in a nightclub, I think you could easily double that. It would be added to your income for mortgage purposes and make life so much easier whilst giving you some social life. A Saturday job would serve the same purpose of course.