What could / should I do ??

bring1t

Hi, I think someone on here maybe able to offer me some advice and guidance for my situation.

Myself and partner are graduates in the past 2 years and are now looking at the housing market as we feel in the position to buy now that my graduate scheme with blue chip company has just finished and am moving into a "proper job".

Our earnings are 36k and 24k, but we have credit card debts (on 0%'s) of about 15K left over from being students and too many holidays, this was a bit more but we have been reducing this! I have only just achieved the salary so we have no deposit.

We live 'up north and am looking in an area that is really popular with young professionals and would probably be spending "only" 125K.

What are my options in this situation, 100% mortgage, 95% mortgage and get a loan for the 5% ? ? Any other options ?

Currently renting a flat, but want to move into a house, hence the question.

Any advice would be very appreciated.

Thanks, Richard

jamesd

Should be easy enough to do at 95 or 100%. I suggest that you stop paying off more than the minimum on the cards that are at 0% and start saving a deposit to get to 95% and a cheaper mortgage. From the look of it you shouldn't have too much trouble saving the required 7000 in three to six months, barring a costly lifestyle.

You might consider a flexible mortgage, keeping the credit card debt at 0% as long as possible and overpaying the mortgage instead. Then if you do find yourself paying interest on the credit card debt, the flexible mortgage would let you withdraw some of the overpayment to pay off any debt that's costing more than the mortgage interest rate. Would be a really good idea to overpay as much as the total credit card debt as fast as you can, so you can't be trapped into paying a high credit card interest rate if the 0% deals dry up.

The idea is to exploit the 0% credit to pay off as much of the mortgage as possible, while that credit is available. Once you have the property you might even increase the 0% balance, putting all the repayments into the mortgage overpayments instead of paying off the cards, to save you more money.

If you haven't done it yet, now would be a really good time to prepare a budget so you get a good idea of what savings and overpayments are practical - you'll be well rewarded in reduced interest for even a year of aggressive overpayments.

bring1t

thanks for the advice, and i see what you mean about saving the required 5% deposit, but idealy i would want to move quicker than that.

My current thoughts are that if we see somewhere we want i could get a loan for the deposit (with no repayment penalties), and then pay that back over the 3 - 6 month period.

This would then enable me to get a 95% mortgage. Would this be a sensible thing to do?

Cara79

Hi there

I think, from what I can gather, if you take out a 5% loan for the deposit, then the loan 'commitment' will be taken into account and would reduce the amount a lender would lend you.

In my personal opinion, I don't agree with borrowing for a deposit. I really do think, especially when the housing market and interest rises, you would be better to hold off, save the deposit and you might actually find yourself in a better position.

Good luck anyway.
C x :rolleyes:

lovelldr

personally, I'd say you would be better off if you didn't have any extra loans, as there's enough debt in your balance with the credit cards ... another loan wouldn't look too good in my opinion.

But there may be others who know more and would say it would be ok to do. But I personally feel that any mortgage lender would feel more comfortable with someone who has less debts...

jamesd

It's cheaper if the interest rates make it worthwhile - saving more than it costs. With some of the low cost loans or overdrafts available today it probably is doable.

If you haven't done it already now is the time to get the 2 pound credit reports from the credit reference agencies, so you know what will be found and can start fixing any errors that need fixing.

MortgageMamma

rm-lewis wrote:

Hi, I think someone on here maybe able to offer me some advice and guidance for my situation.

Myself and partner are graduates in the past 2 years and are now looking at the housing market as we feel in the position to buy now that my graduate scheme with blue chip company has just finished and am moving into a "proper job".

Our earnings are 36k and 24k, but we have credit card debts (on 0%'s) of about 15K left over from being students and too many holidays, this was a bit more but we have been reducing this! I have only just achieved the salary so we have no deposit.

We live 'up north and am looking in an area that is really popular with young professionals and would probably be spending "only" 125K.

What are my options in this situation, 100% mortgage, 95% mortgage and get a loan for the 5% ? ? Any other options ?

Currently renting a flat, but want to move into a house, hence the question.

Any advice would be very appreciated.

Thanks, Richard

Hello

If you want a 100% mortgage it is doable providing you have no adverse credit such as ccj's or defaults. How much you can borrow is down to the individual lenders affordability calculations and some lenders are more generous than others.

When you say you are "up north" where abouts exactly? what area are you thinking of buying in? I am familiar with most of Manchester, a fair bit of lancashire and a wee bit of west and north yorks.

bring1t

I am looking at Edgeley in Stockport, popular with first time buyers and young professionals.

I have never had any credit problems and have a good history. On a joint application we would be looking at about 2x multiple on a purchase of 125K max.

I still dont know whether the differences in the interest rates between the 95 and 100 mortgages would make getting the deposit as a loan worthwhile?

MortgageMamma

It depends on how big a loan you take and what the monthly repayments are. for example, a leading 100% mortgage at the moment is at 5.35% which would make your monthly repayments 799.35. a 95% mortgage at the moment fixed for a similar length of time is at 4.99 and your monthly payments are 737.17 and you would need a 7k deposit, so, unless you could get a 7k loan for around £62 a month it would probably be better to take the 100% in this instance. However please DO NOT take what I am saying as proper indemnified advice, you would have to be assessed a lot more thoroughly in order the get the right mortgage for your circumstances.

HTH

MM