First time Buyer/Modest Income?

avfcuk1980

Hi. I'm 26 years of age have decent credit history. Have no outgoing's apart from everyday utility bills etc. No debts. Annual income is gross 16k

Been paying £400 a month rent for quite a a while now. People say I should buy property. The problem being the properties i'm looking at are in the 100/110k range. I've heard the companies will only give you approx 3-4 times your income. In my case that would be around 65k. Where I live (midlands) this would only buy a small flat or terrace in a run-down area of town :S

As i can't really afford a deposit would be looking for an 100% mortgage. I can easily afford to pay £400 (just work over time if i need extra cash). Over 25 years this would be 120k!

So, question is... am i being realistic is this possible or is there no chance? Will my income count against me, do i always have to declare it?

Cheers for any help on this

jamesd

You have to declare your income accurately, unless you like the idea of a fraud charge. It is possible to get a higher income multiple but it doesn't sound like a good idea in your situation. Actually: it sounds like a really bad idea to do the 100-110k range.

What I suggest you do first is work out a monthly budget, including everything you spend and earn. Then use that to work out what you can afford. Finally, try living to that budget and saving up for a 5% deposit while doing it. If you succeed, that would both get you a lower mortgage interest rate and prove that you'll be able to handle the repayments.

I also suggest that you forget the 100-110k range and go for the cheaper place, then use the combination of the rent you're not paying and any overpayments you can manage to build up equity. That'll let you move on to the more expensive place in 5-15 years without stretching your budget too much. The more you can manage to overpay on the cheaper mortgage, the faster you'd be able to move.

The way mortgage payments and interest work, it starts to really hurt once you get near to the edge of the maximum amount you can borrow. The extra interest reduces the capital repayments and you end up making almost no progress in paying off the mortgage.

I'm deliberately living and buying in a cheap part of town because I don't like the costs of a bigger mortgage - gives much less income pressure and money worry!

AndrewSmith

With a salary of £16k, you will not get a mortgage of anywhere near £100-£110,000 95% or 100%

Yes you will always have to declare your income, and as you are looking for 95-100% it will have to be evidenced by payslips and bank statements.

The max you would be looking at would be no more than 5x your income, and that would be a stretch.

Beware of anyone who says they can arrange more for you, they are not the ones that have to pay it back.

Not what you want to hear but I believe in blunt honesty and not creating false hope.

:beer:

Try these two posts, you may find them useful:

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

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

Cheers

Andy