First Time Buyers

Bozzagorn

Hi Guys,

I know there's tons of other posts loitering around on here asking for advise and guidance for first-time buyers, but as most documentation relating to mortgages/FTB's state that there's no 'one-size fits all' option, I thought I'd just try to tap into someone's thoughts about our situation. Any help gratefully rec'd - thanks.

Soooooo.

Me and my Fiancee are both 23. Combined income works out at roughly £37k. We stand to have savings of about £14k - both sets of grandparents have been exceptionally nice and offered to help us out as and when required. We don't have any real debts - probably <£200 on c/c and I have a £250 o/d which is normally maxed by the end of the month!

We're planning to get married in 2012 and my partners grandparents have given us an option - they'll either pay for the majority of the wedding, and whatever's leftover can go towards a deposit. Or, we fund our wedding and can then put the full whack of any inheritance towards a deposit.

Then - I had a thought. What if we applied for a mortgage using everything available to us (inheritance + our savings) for say, £5k more than actually required, then use that extra money towards funding the wedding. Does that make sense?

EG

Roughly £14-15k depost - £37k combined salary... ~£100k mortgage required for property but actually borrow £105k.

I'm sure the logic is sound - just wondering if anyone would be able to comment on the feasibility with the figures I'm quoting?

We're going to seek some advise from some brokers before too long - just chomping at the bit to get someone elses' take on it all!

I'm sure I've left some glaring detail out so this whole thing makes no sense - I'll clear anything up if required.

Thanks guys,

Chris

Bozzagorn

Boomp

:beer:

Person_one

It won't quite work, sorry.

You can use 5K of your deposit to pay for the wedding and take out 105K mortgage but then your LTV will go from 87% to 92% and you won't be able to get a mortgage at all.

USM

In addition, your constant use of your overdraft will be seen as someone in financial difficulty and your mortgage options will be very limited. At 90% LTV you need to be squeaky clean to be getting a deal.

FTBFun

Sorry but if you constantly use your overdraft every month that doesn't strike me as someone who has the necessary financial power to be able to service a mortgage - and I expect a bank to agree.

You're both still very young so I would say save up for a few more years yet, get that overdraft in control and in a few years when you are on a sound financial footing you can get your first home.

snowlady07

Sorry but would their little £250 o/d cause that many problems? As long as they're not going over the o/d limit of course!

I would go and see a whole of market broker and get a professional opinion.

jozbo

I agree, talk to a broker before you make any decisions. They can find the more lenient lenders for you.

Bozzagorn

If that's the general consensus then fair enough - I'll go and reduce the overdraft to £0. Really not that much of a big deal. It is only £250 and I never default on it - can't really see how that should affect my ability to get a mortgage of £100k, but hey ho. I thought my ability to save towards the deposit would far outweigh the o/d and prove that I do have a degree of financial power. I'm all for waiting a few years to get a sound financial footing - but in the realities of the world we live in, financing a landlords mortgage by paying them £600 a month in rent makes that a very difficult. Hey ho, bizarre world we live in.

I'll go to a broker to get some advise...

@ Person_One - If I took £5k from the deposit to fund the wedding, I wouldn't need to take a £105k mortgage. It would probably being roughly £100k, but probably looking a bit less. So that'd leave a roughly £10k deposit and a 90% odd LTV.

RB-Arc

Your mortgage provider will know how much you are purchasing for, so you probably won't be able to get an extra 5k out of them.

However, some mortgage providers offer a cashback incentive - might be worth speaking to your broker about these schemes.

pinkteapot

To be fair, at the same age I kept my £1k overdraft maxed out... Because it was a graduate account with an interest free overdraft so it made sense to take the money out and put it in savings (savings account with the same bank - they could have complained if they'd wanted ). Didn't stop me getting a £115k mortgage (though things were far more lax in 2006!).

Just one thought though - you mentioned £14-15k savings. This can't all be a deposit as you'll need a couple of k for solicitor, survey, moving costs etc. And you need to have a contingency of at least £1k the minute you move in in case the boiler packs up or anything is broken...

penguingirl

Both OH and I still had large (>250) graduate (interest free) overdrafts when we applied for our mortgage last year and it didn't appear to make any difference (I still have mine). That was with first direct who are pretty strict. We did have a 25% deposit though.