First Time Buyer Mortgage Advice

Nitewalker

Hi,

My girlfriend and I are looking to purchase our first house very soon and have seen a new build property which is valued at £295,000. Obviously we shall try and negotiate the price down a little however we are a little clueless when it comes to the best options available for a mortgage. We are both in full time employment with an income of just over £60,000.

Between us so far we have £30,000 saved which covers the 10% and are likely to have another £8-10,000 available by the time the house is finished. My parents are also willing to give us another £30,000 to help towards the house be it used as extra deposit making it 20%+ down payment or towards furnishings etc for the house.

So my question is really what am I best off doing? will the rate be that much lower for 20% deposit? If I decide to stick with the 10% deposit where can I get a 90% mortgage at a reasonable rate?

Any guidance / advice etc would be greatly appreciated.

herbiesjp

If you are going for a newbuild - the deposit required will depend on 2 things:

1) Is it a house or flat
2) the chosen lender

In the current climate newbuilds require a bigger deposit than other properties.

Different lenders act in different ways regarding this deposit - so whilst 1 lender may want 20% other may want 25%.

So before applying to anyone please make sure you find out BEFORE any credit checks are done, as what deposit will be needed. Alternatively go via a whole of market adviser.

Unfortunately in this scenario, you are not at liberty to decide what deposit you want to put down, but instead have to follow the scheme criteria. Rates will however be better than 90% deals.

Nitewalker

Thanks for the quick response.

We were advised that the deposit requirement is 20% for which freaked us out a little to start with. Obviously we forgot about the money etc my family were willing to give us towards the house.

A few days after viewing the property the developer contacted us and said that we could get a 90% mortgage through Santander or Nationwide and could negotiate the price of the house a bit providing we were going to purchase within the next 2 weeks. We still have a week left before advising them what we are going to do.

Can you negotiate the price of a new build down very much? On the pevious phase about 4 months ago the 2 bed semi detached were going for £279,000 without a driveway where as the one we are looking at is £295,000 with a driveway and not ready for another 8 months. Surely there will be some room to negotiate.

Im really not sure what way to go.

getmore4less

Nitewalker wrote: »

Can you negotiate the price of a new build down very much? On the pevious phase about 4 months ago the 2 bed semi detached were going for £279,000 without a driveway where as the one we are looking at is £295,000 with a driveway and not ready for another 8 months. Surely there will be some room to negotiate.

Im really not sure what way to go.

"Ding dong" alarm bells.

This is very risky, securing funding will be hard(time limits on offers).

You need get out clauses lots of them 8 month is a long time and is likely to end up being longer.

davilown

Nitewalker wrote: »

Thanks for the quick response.


Can you negotiate the price of a new build down very much? On the pevious phase about 4 months ago the 2 bed semi detached were going for £279,000 without a driveway where as the one we are looking at is £295,000 with a driveway and not ready for another 8 months. Surely there will be some room to negotiate.

Im really not sure what way to go.

When I looked at buying a new build in 2007, I had an offer accepted that was 15% below asking. You are a FTB so it may be worth offering just below 250k so you are below the stamp duty threshold. Any house builder will know this, although whether they'll accept is another matter.
The last phase of houses were 279k but what did they actually sell for? Have you checked on zoopla?
If you don't ask, you'll never know.

Nitewalker

Ive had a look but i cant seem to find any prices for the houses sold on the development. What I have noticed though is 2 estate agents advertising the property at £5,000 less than what the developer has quoted me so that for sure will be a starting point for me.

Im not sure if its still possible but i was going to offer say £250,000 as you said for the stamp duty threshold and then offer them extra for "fittings / furnishings". If they are able to do that then that alone would be another big saving. Not sure how possible that is on new properties now though.

Hardest thing for me is ensuring we dont rush into anything just because we are both so excited about the property.

The development is in this, not sure if anyone else has other ways of finding out how much previous houses there actually sold for... http://www.crestnicholson.com/Elements/

Any assistance would be appreciated.

Nitewalker

Ok a little update.

We visited Santander to have a discussion about what mortgages they have available to offer us, a 30min chat turned into a 2 hour hard sale which didn't work out anyway.

90% mortgage option was out of the question as amount of money being borrowed was over 4x our combined salary.

We then discussed the fact we probably have about £60,000 between my girldfriend and I combined with the gift from my parents so this worked out to about 20.2% deposit. The lady began to work out all the figures, show us what was available to us etc etc.

She then ran a credit check to "pre approve" although we did explain many times that we wouldn't commit to anything there and then especially as property wasn't ready until October and surprise surprise we got declined.

Apparently this was due to 2 factors...

1 - My gf had a CCJ for a debt of £254 which was settled 5 years ago and therefore doesn't clear fully until March 2011.
2 - She hasn't had a permanent residency for the past 10 years (travelling, looking after an ill family member. living with me etc).

We were then advised that if we put £72,000 deposit down then they were certain they could offer us a mortgage.

£72,000 for a FTB seems a bit steep especially when we could easily have afforded the repayments etc that was being discussed and still have about £1,000 a month left after bills.

Where else do you suggest I can try or what would you suggest we do in order to try and get a mortgage. My parents are willing to take a mortgage out on our behalf or be added to the mortgage to help us as a worse case scenario but we want independance and not have to rely on them forever.

All advice and assistance is greatly appreciated. We really don't want to lose out on the opportunity of owning the house we've found.

opinions4u

1) Wait another year until the CCJ drops off altogether - then other lenders would be more interested. Save more in that time.

2) See a whole of market mortgage adviser to see if they can access more delas for you.

3) Buy a cheaper house. Just because it's new doesn't mean it's better than one that's already been lived in. Often quite the opposite.

In the current market you will find it easier to get a mortgage with a 25% deposit and that mortgage will invariably be at a significantly better interest rate.

£72,000 for a FTB seems a bit steep

Some would look at it another way. £295k seems like one hell of an expensive house for a FTB to take on. I do, however, understand why you'd want to.

especially when we could easily have afforded the repayments etc that was being discussed and still have about £1,000 a month left after bills.

So if interest rates doubled, council tax jumped 10%, VAT rose to 20% and your pay got frozen for a couple of years ... could you afford it?

During the time I've owed a mortgage lender money, I've experienced 15.4% rates, VAT rising from 8% to 17.5% and some massive increases in council tax and utility bills and the last couple of years have seen little or no pay progression, despite inflation.

A mortgage lasts a hell of a long time and just because it can be "easily afforded" at one point in time doesn't mean that will always be the case.

VIGILANT22

Nitewalker


Consult a whole of market mortgage advisor

Nitewalker

opinions4u wrote: »

1) Wait another year until the CCJ drops off altogether - then other lenders would be more interested. Save more in that time.

2) See a whole of market mortgage adviser to see if they can access more delas for you.

3) Buy a cheaper house. Just because it's new doesn't mean it's better than one that's already been lived in. Often quite the opposite.

In the current market you will find it easier to get a mortgage with a 25% deposit and that mortgage will invariably be at a significantly better interest rate.


Some would look at it another way. £295k seems like one hell of an expensive house for a FTB to take on. I do, however, understand why you'd want to.

So if interest rates doubled, council tax jumped 10%, VAT rose to 20% and your pay got frozen for a couple of years ... could you afford it?

During the time I've owed a mortgage lender money, I've experienced 15.4% rates, VAT rising from 8% to 17.5% and some massive increases in council tax and utility bills and the last couple of years have seen little or no pay progression, despite inflation.

A mortgage lasts a hell of a long time and just because it can be "easily afforded" at one point in time doesn't mean that will always be the case.

I fully understand where your coming from in terms of things which could change in the future which would then potentially make the situation different. As explained to the advisor both of us are currently going through promotions which would increase out income quite significantly of which all the money would be going towards overpayments (providing not getting penalised) or saved towards the mortgage in the future in case of a rainy day.

£295,000 for a FTB is alot of money but so is £60,000 deposit which by the time the house is completed will be £68,000. Living in Epsom all the properties are rather expensive, ideally we wanted to spend no more than £270,000 but theres is very little around for that kind of price near us and those that are require quite a bit of work.

Annoyingly though Santander's guidelines shown to us by the advisor stated that if CCJ is for a sum less than £500 and settled 3 years + then it would be accepted. So although there was the residency issue I found it strange they also declined based upon the CCJ, the advisor wanted to challenge it on our behalf but i think the gf was a bit deflated by that time.

Next step shall be a whole market advisor then thanks alot for assistance.

Pammy

We were told by Santander that we would be accecpted with 2 defaults from 5 years ago for a small amount yet we were declined.

It's really difficult.

We found one now but needed 25% for a deposit. Also don't forget all the other costs, you will be looking at around £8550 for the stamp duty and then the solicitors fee which can be up to £500.00. Plus depending on the lender another £300-400 for the survey (unless its a freebie).