Not sure what to do...so confused!

Sarahpuggy

Hello everyone,

Im really hoping you will be able to give me and my BF some much needed advice!

Well between us we earn £44,000 a year. We both have student loan debt (which doesn't go against you on a mortgage right?) and my BF has about £1000 on credit card (0%) and i have a student overdraft of £1000 (0%) which is being paid off every month as fast as i can..We both have pretty good credit histories, with a couple of late credit card payments from my BF.

Anyway we really are fed up of paying rent. We pay £700 a month for a one bedroom flat in Surbiton, Surrey. This doesn't include any bills or anything. Our monthly income is roughly £2600 and our monthly outgoings for everything is about £1500. This leave us roughly about £900 spare every month to do what we want with.

The question is, do we take the plung and get onto the property ladder by means of 100% mortgage or do we save like crazy for two years and carry on paying rent!? To be honest, we definately want to move from this flat anyway, which will probably mean paying more in rent. We just dont know what is best to do. I know 100% mortages can be risky, but if you buy somewhere that needs improving and hopefully wont lose money, does this make it 'less' risky??

Our salaries are also likely to increase fairly as we are at the beginning of our careers. What would everyones advice be please? We feel so frustrated that we are professionals now and want to have our own place but it seem so confusing and risky if you dont have a deposit. Also if we wait two years, the house prices could go up, leaving us in the exact same position as now?

In our area a 1 bedroom flat is around £160,000 but ideally we would want 2 bedrooms, which would be more around £180,000. How realistic is it to consider taking this on a 100% mortgage? We want to stay in this area for a good few years so we wouldn't want to sell in a short time, and would like to make improvements etc..

i think we need to go and see a financial advisor? is that who we should see, or a whole of market broker?

What does everyone think?

Thankyou!

Financial_Savvy

Could you move out of the area (slightly) to somewhere cheaper, and purchase a small 1 bedroom property which will get you on the ladder but without a huge mortgage?

Sarahpuggy

yes that is definately an option, and something we dont mind doing as long as we can commute comfortably to work. The problem is we are both new to the area and London so we dont know what alot of the areas are like! But yes, its definately an option..

AndrewSmith

Hi,

On a combined salary of £44,000 it is unlikely that you will get a 100% mortgage for any more than about £150,000-£160,000 maximum.

It does however depend on what you do for a living as certain professions attract exclusive mortgage products with some lenders specially for 'professionals' (doctors, teachers, lawyers etc).

Andy

Sarahpuggy

Thanks Andrew, thats good to know. We aren't doctors or lawyers or anything im afraid!

Im a fashion buyer and my VF is a software developer!

So what about 95%, do you think thats do-able? So i guess we'll need something between £8000 - £9000 as a deposit...

AndrewSmith

The amount you can borrow will still be the same Im afraid.

The only real change dramatically in income multiples comes when you have a deposit of, say 25-30%

Not what yu wanted to hear I know, but better that you know.

Andy

Sarahpuggy

Thanks..

What would you suggest we do, as your seem to have alot of knowledge..wait a couple of years and save up?

AndrewSmith

Sarahpuggy wrote:

Thanks..

What would you suggest we do, as your seem to have alot of knowledge..wait a couple of years and save up?

Ah, now that is the question.

Do you make a small compromise on the type of property or location now to get a foothold on the 'property ladder?' or do you wait and get the one you really want with a larger deposit.

I would have to go with the latter if it were me, better to save and put down a deposit.

your seem to have alot of knowledge.

Thanks, I am just coming up to my 13th year in mortgages. God that makes me feel old !!!! :rotfl:

:beer:

Sarahpuggy

anyone else?

Ian_W

Hi Sarah,
In a previous life I used to live in Surbiton and it is very expensive partly because it's a lovely leafy suburban area and partly, I think, because of the very fast rail service into Waterloo which makes for easy commuting. Don't know where you and your VF [what's a VF BTW?] work and whether you need to commute but places like Morden, Sutton or the Heathrow side of Kingston etc were always a bit cheaper.

Having an "easy commute" [contradiction in terms IMO!] always costs more in the smoke so properties that are distant from tube or rail stations tend to cost a bit less than something similar within walking distance.

Why not try searching https://www.rightmove.co.uk for properties within 5 miles of Sutton at £160K max, there are plenty of flats, some 2 bedroom in that sort of price range. If you do decide to buy get a mortgage offer in principal before you start looking and if you can scrape together a 5% deposit so much the better. It won't affect how much you can borrow but it will be at a better interest rate. Also allow for Stamp Duty @ 1% and legal costs of around another £1k.

Hope that helps.

Sarahpuggy

Thankyou Ian! Sorry VF was meant to be BF (boyfriend). Yes we work, he works in Surbiton, i drive into SW London.

I will start looking at those area. thanks again.