Dont understand mortgage etc. HELP!!!

nuttymummy

Hi guys!

ok, im currently living in a rented house owned by a private housing association (like council!) we have a boy, and now a little girl, and are only in a 2 bedroomed house, so theres going to come a day when we need 3 bedrooms. ive argued with the housing association as they say we are 'adequately housed' and are not eligible for 3 rooms!

but i want my own home, im never settled in a rented, just thinking at any moment u can get thrown out and all the money youve spent on decorating etc will be lost

BUT heres where it gets complicated.... i know NOTHING about mortgages, how they work etc.
so hoping someone here can explain in terms i understand rather than reading through loads of complicated guides on the net!

my OH (other-half) brings home £800 a month, im a stay at home mum and receive approx £140 a week through child benefit etc.
i dont think we have a credit rating as we are a young family (im 22 and hes 24) we have bought the couch on credit, and its almost paid off, in the hope this will kick start some sort of credit rating, and also taken out a credit card. we just use it for small spends then pay it off straight away...its only purpose again is for credit rating.

would we be able to even get a mortgage, and how much of one are we looking at?
i dont like all this complication!! LOL
thanks guys, i really appreciate the time youve taken to read this, and even more greatful if you leave a response

opinions4u

Ok, I suspect it's going to take you some time to progress to owning your own home, but here goes:

1) Try not to take out any more credit - but continue to use the credit card and clear the balance in full each month.

2) Make sure all your bills are paid on time and that you are registered to vote.

3) Save. This will probably be your biggest challenge. You will need to raise a deposit for a house (around 10%-15% of the value - perhaps £6k to £9k, but the more the better) and also have additional funds for solicitor, valuation, product etc (I'd guess around £2k).

4) You will probably be able to borrow around 4 times gross income - but this is a general guide. If hubby's on £12,500 at the moment, this will probably restrict you to a £50k mortgage (£59k house roughly, depending on deposit), although it's more than possible that tax credits etc may give you access to borrowing a little more. If you return to work that would increase the amount you could borrow as a couple - but factor in child care costs and the emotional impact on the kids if you did start a new job.

It may be worth getting a face to face chat with a local mortgage broker to get a clearer picture of what you can borrow in the present climate, but if getting £thousands together for deposit and fees is a fair way off there is little point having an in-depth knowledge of the ins and outs of trackers, fixeds, discounts, capped and variables.

Here's a link to a mortgage calculator to help you work out how much repayments should be. I would suggest that you assume a rate of around 7% at the moment as a lower income FTB and also know what you would have to pay if rates jumped up to 10%.

Even if you can't find a property in that £60k ish price range in your area at the moment, I'd strongly suggest that you save as heavily as you can now as it may help to give you better choices in the future.

To get £10k together over a 4 year period would mean savings around £200 a month. You may be eligeable for the new Savings Gateway which could add 50% to amounts saved over 3 years on the first £25 a month.

There are also other options:

1) Buying isn't an absolute requirement in life. Renting can have its benefits.

2) Shared owership (where you own part of a property and pay rent on the other part) - if you follow this route be very careful, there are pitfalls.

3) Homebuy for key workers may also be an option, depending on employment status.

nuttymummy

thank you very much

awww 60k house? not a chance im afraid that 179,000 house i had my eye on is just impossible then isnt it LOL

my OH gets £800 a month, but gets a bonus of ROUGHLY £4000-£5000 a year. does that count towards the mortgage or would u use that as deposit?

BritRael

nuttymummy wrote: »

thank you very much

awww 60k house? not a chance im afraid that 179,000 house i had my eye on is just impossible then isnt it LOL

my OH gets £800 a month, but gets a bonus of ROUGHLY £4000-£5000 a year. does that count towards the mortgage or would u use that as deposit?

Some good advice above

As for the bonus, definately save it. It'll help towards the deposit. Whatever you do, don't spend it! I know it might seem a long way off at the moment, but everybody (who wants to buy a home) goes through it. Good luck.

Annisele

It sounds as though part of your worry is that the council might 'throw you out at any moment' - they're really not allowed to do that! They have to go through due process (usually involving a court); they can't just turn up on your doorstep and chuck you out.

Certainly if you don't pay your rent, if you make your neighbour's lives a misery, or if you decide to knock down load-bearing walls, your council will eventually evict you. I don't know much about council tenancies, but it might set your mind at rest a little if you check your tenancy agreement/speak to your council about the circumstances in which you might be evicted.

nuttymummy

lol o yeah i know the council cant really 'throw' you out, BUT they wont let us have a 3 bedroomed, so then i start thinking about private renting...and its those who can turn round n say...right we want u out in 6 months which is something i dont want to happen....once ive found 'THE' house im happy in, i want to stay there, so private renting is a bit dodgy in that sense.

thanks for that britrael, yeah we try to keep the bonuses but they end up paying for the car tax etc n eventually broken washers, hoovers etc LOL

WTTM

nuttymummy wrote: »

thanks for that britrael, yeah we try to keep the bonuses but they end up paying for the car tax etc n eventually broken washers, hoovers etc LOL

Well in the real world then you can't afford a house.

Maximum borrowing looks like £60k and you can't afford to save for a deposit as things stand.


MOMENT

nuttymummy

WTTM wrote: »

Well in the real world then you can't afford a house.

Maximum borrowing looks like £60k and you can't afford to save for a deposit as things stand.


MOMENT

well as much as i understand 'straight-talkers' that was abit nasty!
i was asking for someone who could help explain mortgages to me and what i had to do.

thanks for helping me realize ill be stuck in a crummy 2 bedroomed council house with 2 kids of the opposite sex squashed in one room for the rest of my days.............

Gorgeous_George

A 3 bedroomed house in your area costs around £70K (link). Save a good deposit and a bit extra (say, £12K or thereabouts) and look for a house that needs doing up. Perhaps aim to buy nearer Christmas when the market is slower.

You can do it if you want it bad enough. I know that £12K is a lot to save. Find a job to do a few hours a week and save the wages. Aim to save £500 at first and then £1,000, then £1,500, then... you get the idea.

Go on, you can do it.

GG

nuttymummy

GG thank you so much
we have just opened an ISA account too to try and help us along. xxx

Annisele

It might be worth checking with your council as to whether you could have a three bedroom council house when your children are older (and if so, how much older). I don't know what the rules are, but it wouldn't surprise me if the council are more relaxed about opposite sex babies sharing a room than they are about opposite sex teenagers doing so.