HELP!!!!!! (1st time buyer)

ilsonreject

Hi

I'm sure the regulars on this board will have seen threads of this kind hundreds of times before but basically I am a 1st time buyer in desperate need of some kind of direction/help.

Me and my gf (both 22 years old) have decided to buy my mums house which is up for sale. it is on the market for £82,000. We have a combined income of around 21,000 and can probably get together a 5% deposit.

This much I know but I have pretty much no idea what to do next. I know I could just go into my bank (Lloyds TSB) and take their mortgage offer but I would imagine we would probably be losing a lot of money by not looking at other offers.

Could anyone give us some advice on where to go from here, what are the best deals around at the minute or is there not much difference in the deals at the level we are at?

Any kind of help would be greatly appreciated

Dan29

Probably worth reading Martin's article as a starting point.

ilsonreject

Yeah had a look through and it did help. was just hoping someone could kinda point me in the general direction of where I need to be going.

AndrewSmith

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

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

Have a read of these threads. They are somewhat related to the topic.

WIth respect to whether the mortgage is possible that will largely depend on the specific details within your situation, however on a joint income of £21,000 looking to mortgage £77,900 (95% of £82,000) this represents just over 3.7x income multiple. This is generally above the standard criteria for joint income laid out by most lenders however there are some who do stretch this far and beyond.

I say generally, before the usual 'let's prove the broker wrong' crowd leap in gleefully with personal tales of how they attained 4x joint income.

Each case is different and the level of borrowing agreed will depend on the strength of the case being submitted.

You may find that larger lenders with automated decision porcesses may not give you enough, whereas the more traditional lender who assesses each case individually, or lenders who work on affordability as opposed to income multiples, may be a better bet.

Hope this helps

Andy

WestonDave

On a standard multiple of 3.5 times joint income you would be about £4400 short of the asking price, you then need to factor in probably the rest of the expenses you will incur - probably not much change out of £750 for fees etc, so all in you are probably about £5500 short of offering your mum the full asking price. Is there any scope within her budget/borrowing ability for her to accept that lower offer? Or alternatively for her to lend you that - I suspect you may get a more competitive mortgage rate if you don't overegg your multiples and you can then pay a similar rate to your mum. That of course assumes she doesn't need every last penny for her own move.

The other thing I would advise you to start thinking and talking about now is ownership - are you going to own the property in equal shares, is one of you putting in more than the other which you would want back if the worst happened and you parted? Your solicitor should talk to you about these sorts of questions as you aren't married so its as well to have a calm conversation about it now rather than get it thrust on you as a surprise later.

ilsonreject

Thanks for the replies

Its gonna be totally equal payment between me and gf have talked about that, so if we split everything would be 50/50. was quite an awkward conversation to start!

I am not overly concerned about the affordability of it all as I have an extra income of around 8,000 - 12,000 a year from matched betting/casino bonus bagging which I haven't included in the figures and am treating as bonus money that can help me pay off early.

On this kind of mortgage would anyone know if I went for an interest only payment type mortgage how much the monthly payments would roughly be? Probably gonna make myself sound really naieve (sp?) now but would they be less than £200p/mth?

Thanks

AndrewSmith

Interest only, 4.75% (average rate) £77,900 = £308pm

ilsonreject

thanks, Andrew.

Sorryt o ask another question but what are the downsides of an interest only payment plan? other than the obvious if you've saved nowt you own nowt. Assuming we will save is interest only generally a good idea?

AndrewSmith

Downside is that you are merely 'renting' the money and may not be able to repay the mortgage at the end of the term.