First time buyers no deposit - advice please.

Missy_X

Hello

I know this is similar to aidy’s question but advice would be very much appreciated.

My partner and I earn good wages, me 28k and him 45k and have both been in stable employment for 8 years. We are looking to get onto the property ladder sooner rather then later. As with aidy we have some debts each (about 15k between us) but good credit ratings.

I feel that although paying the debts off and saving for a deposit would be the ideal way, we are still paying out £850 each month in rent and that money could be coming off a mortgage.

So here are my questions

1) Would we get a mortgage? Looking for about £200,000
2) What type of mortgage would be best? I’ve got it in my head that interest only would be good for a couple of years but that might not be the case.
3) Who do we go to for advise? We live in the Woking area.


Thanks in advance.

Joe_Bloggs

I'm sure you could get a mortgage with those incomes. Why you debts are so large with those incomes is another story. The joint income multiplier would be 2.8 so this is not a problem.
Lets say you got a £200K mortgage @5% over a term of 25 years. The interest alone is £835. So you would be paying as much in interest as you are rent on housing.
Expect to pay a three to four thousand in stamp duty,legal costs etc. Have you looked into minimising the interest on your debts so you can pay them of quicker.
J_B.

maryjane01

Hi, I am not a mortgage broker, but you should definitely be able to get a mortgage on those incomes if you want to borrow only £200,000. My partner and I earn about £10,000 less than you and we have had no trouble getting a 100% mortgage for more than the amount you want (you do need good credit rating though).

The only questions I would suggest you ask yourself is if you have been on good incomes for such a long stable period, why do you have these other debts? On this income why do you not want to make repayments? If the housing market stays static and you do not make any repayments, you would be better of renting. Interest only repayments is rent money being paid to the bank instead of a landlord. You need to figure out how to gain equity in the property, whether that be by improving the property, making repayments or relying on a rising market (dangerous on a 100% interest only mortgage in case this does not happen)

I think you need to spend a few months budgeting and looking at where all your money goes before you make such a huge financial comitment.

EagerLearner

Hi Missy X - we were not earnign as much as you but tried to get on the property ladder 2 months ago - we managed to get the mortgage etc but only failed on the valuation of the property not beign very good (lucky escape!). Anyway, we got an independent mortgage broker to look at things and he had us in for a great Nationwide mortgage, which we never got but it was all good. I suspect you would be fine although those debts will be taken into account. Get some savings together in an ISA and really knock those debts on the head, then maybe early next year you can go for it or at least see what the market is doing. That is what we're planning - plus gives us time to add even more to our savings.

Good luck!

EagerLearner

Missy_X

Thanks for your comments - It has shamed me into taking a long hard look at my debts. I had a productive day yesterday and consolidated all my debts into a 6.9%apr loan. I should now be debt free in 2 years.

So we'll save for a deposit and stamp duty. This has made us realize that is the best way and was a much needed kick up the bum!!!

I'll continue to read and use this fantastic and very friendly site.

Thanks people.