First time buyer: Where to start?

Doshwaster

Tom_B_ wrote: »

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.

That's a very big assumption. In the Mid-2000s, then it was undoubtably true, but that doesn't mean it will be in the next few years. Just be grateful you didn't buy in 2007.

My gut feeling (and I'm no expert) is that prices are going to be fairly static, or fall slightly, in the next few years. There's going to be no immediate return to 10% year-on-year increases.

If you can save £800 a month then you are sure to be out-performing the market.

You seem to be a bright enough chap so try running some simulations using a spreadsheet or online mortgage calculators. The results can be surprising.

BaconandEggs

Doshwaster wrote: »

Based upon borrowing 3 times your salary and having a 15% deposit that would mean you could look at houses around £90,000 (deposit 15k, borrow 75k)- can you get anything in your area for that price? That would be a mortgage of around £450 a month. Some lenders may be prepared to lend you 3.5 to 4 times salary but your mortgage rate would be higher as your %age deposit would be lower.

Best talk to a good independent advisor - not your bank - most will give a first consultation for free. No point in going to an estate agent if you have no idea what you can afford.

Remember you will need about £2000 for legal and financial fees - plus money to equip the house.

So 3 x salary is what most lenders offer?

What about combined salary with partner?

GMS

waitingforpost wrote: »

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.

How can a deduction not be classed as a credit commitment? It is repaying a loan therefore it is an outgoing. What do you think will happen when an underwriter gets to see the payslips?
What a ridiculous post.

Doshwaster

BaconandEggs wrote: »

So 3 x salary is what most lenders offer?

What about combined salary with partner?

It depends on a whole bunch of factors including what kid of job it is, how long you've been there, what other financial commitments you have and what the current phase of the moon is. 3x would be a "safe" amount to ask for and I'm sure that most lenders would allow it. Other may go up to 3.5 to 4x but it would depend on your situation.

The days of 5x and 6x lending have (thankfully) passed.

As for joint applications. Again, rules vary and typically depend on the relative salaries. If both are similar then you are likely to get more than if one earns a lot more than the other (as there is more risk if the higher paid one loses their job). A couple on 30k each would usually be able to borrow more than a couple on 50k and 10k each.

edinburgher

How can a deduction not be classed as a credit commitment? It is repaying a loan therefore it is an outgoing. What do you think will happen when an underwriter gets to see the payslips?
What a ridiculous post.

Ah well, you saved me saying it Just to clarify - I don't think it would be classed the same as an unsecured loan (for example), as it is based on the salary of the person who took out the loan? So while it's not a credit commitment in the traditional sense, it does affect affordability. Still, at least there's no way to default on it!

NuJon_2

Tom_B_ wrote: »

-I have no credit cards (Somoene told me this was bad because I'd have no credit rating, is this true?)

Tom

Yes this is very bad - go and get a card and just spend a minimal amount on it, pay it off immediately and repeat each month. It does wonders for your credit score - i couldn't even get a phone contract until i got my credit card sorted!