First time buyer: Where to start?

DaPhenom

I was in a similiar position to you 12 months ago, rather have to settle for a mortgage with 10-15% LTV, i saved for an extra year and have just exchanged on a property with 25% LTV, so a better mortgage rate to start with. Plus don't forget, while 450 of 1500 might not seem much now, interest rates will no doubt go up in the time you own the property. Bills, food, maintenance, insurance and all the other things you won't have payed before can mount up. But you sound like you've got your head screwed on and thats half the battle won!

matt1987

Yorkshire Building Society do a very good FTB mortgage where the only thing you have to pay is legal costs for registering land and search fees.

They also give you £500 on completion, and their rates are v. competitive with 85% LTV.

2 YR Fixed - 4.99%
3 YR Fixed - 5.49%
5 YR Fixed - 5.79%.

They are well worth checking out, and this is who I am having my mortgage with.

Doshwaster

matt1987 wrote: »

Yorkshire Building Society do a very good FTB mortgage where the only thing you have to pay is legal costs for registering land and search fees.

They also give you £500 on completion, and their rates are v. competitive with 85% LTV.

2 YR Fixed - 4.99%
3 YR Fixed - 5.49%
5 YR Fixed - 5.79%.

They are well worth checking out, and this is who I am having my mortgage with.

Yes, I went with the Yorkshire too. However, just to show what difference a 25% deposit can make, I got 2.99% on a 2YR fixed rate.

matt1987

Doshwaster wrote: »

Yes, I went with the Yorkshire too. However, just to show what difference a 25% deposit can make, I got 2.99% on a 2YR fixed rate.

Yeh thats a massive difference! I think it would take us ages to save up another 10% to be honest, and ideally we would like to move now as were living with parents at the moment.

We plan to overpay by £100 per month though, and by using a mortgage schedule calculator, if we were able to overpay every month it drastically reduces the amount you pay in total!

Just out of interest, did you do their FTB special where all the fees were paid for, and also did you get the free home insurance and £500 cashback?

Tom_B_

Doshwaster wrote: »

Shared ownership may be worth looking at - but just be warned that qualification rules do vary around the country with local authorities and developments. You may well find that being single with your income you actually earn too much to be considered for one of these schemes.

It was the trap I was caught in for years - earning too much for an "affordable" home but not enough for a non-affordable one.

As for £450 "not being much", I suspect while living at home you have been protected from the full costs of home ownership. There's probably £200 a month on top of that for council tax, gas/electric and insurance. For a first house most people are happy to cope with cheap, donated or 2nd hand furniture for a few years but there is also the cost of any repairs or home improvements to consider. It all adds up!

Finally, don't totally discount the option of renting. Rent prices are relatively low at the moment. In a falling market it may be worth renting for a year or two while you save up for a bigger deposit and have time to search for that perfect house. Rather than buy that £100k house with a 15% deposit you could get it for £90k in 2 years with a 25% deposit.

Buying a house is not a decision to rush into just because you are sick of living with your parents.

I'm not in a huge rush to move out, but it would be nice! I'd think I'd be better off staying with my parents and saving more than renting to be honest. At the moment I'm saving £800+ a month and I'm really not watching what I spend at all so if I waited a year I'd have another £10,000 which will give me a better deposit... but won't the house prices have gone up too?

Surely, depending on the market there will be diminishing returns on any money I save to the point where if property prices are likely to go up faster than I can save I'd be better off buying now. Of course I don't know how likely that is. For example if £15,000 is 15% of a property now, it may only be 12% in a year on the same property so that's 3000 of the 10,000 saved essentially lost.

Doshwaster

matt1987 wrote: »

Just out of interest, did you do their FTB special where all the fees were paid for, and also did you get the free home insurance and £500 cashback?

That looks like a good deal. I got my mortgage 3 months ago - but remember mortgage deals change on an almost daily basis. I think my fees were £495 which included a free survey (I paid £200 to upgrade it to a HBR) with £250 cashback (had to chase my solicitor for it as the cheque had got lost in the filing cabinet!) but didn't get any free insurance.

edinburgher

Is your student loan of the income-contingent variety? If so, you'll be paying £75 a month (like me) and £4,000 is a very small amount (think I'm around £15,000!)

If I were you I'd far rather hang onto the £4,000 and pay £75/mth for the next 4-5 years. £75/mth from a £25,000 salary is not making any real impact on your affordability as far as I can see.

I'm also a wannabe FTB (probably 18 months away from owning) and as with so many other things, cash {deposit size} seems to be king. Lower LTV = lower interest rate and more options. Sounds like you'd be best hanging on for a bit longer - 24 is a great age to be thinking about buying, but it won't kill you to wait.

angeldeelite

I'm a FTB and saw an IFA last week. I have £2,500 on a credit card and she said it was definitely better to hang on to my cash for a deposit rather than pay off the credit card. At the end of the day, if your repayments are affordable (which on a £4k student loan must be minimal, i pay £70 a month on £20k student loan!) then i dont see the point in using valuable cash to pay off such a small loan.

edinburgher

(which on a £4k student loan must be minimal, i pay £70 a month on £20k student loan!)

That's because it's income contingent (i.e. based on what you earn, not what you owe). If OP has the same sort of loan as us, they're probably paying about a fiver more than you are.

waitingforpost

It's best not to pay off your student loan early. As it is paid back through PAYE, it won't be considered by lenders as a credit commitment. It doesn't even appear on your credit record. It isn't classed as an 'outgoing' as the money is deducted before you receive it.