First Time Buyer - help!

runiu

Hi,

I need your help...

Basically I need to by a house/flat quite soon...

I was thinking about shared ownership but some of you said it's not good scheme...

So I've spoken to my parents and they can lend me £20k towards deposit...

But my current situation is:
income £28.5k
lloyds credit card £1900
barclaycard £3500
car finance £187p/m till feb 2015 (£7500 settlement figure)
lloyds current account - £1000 overdraft used

I'd like to buy property up to £120.000...so I'll put 10% deposit...
My question is would it be better to pay off all the debts on credit cards and then apply for the mortgage? Or would it be better to put more deposit?
Or what else would be good in my circumstances?

Thanks
Runiu

BitterAndTwisted

With those sorts of debts and a gifted deposit you might find it difficult to persuade a lender to offer you a mortgage. I think it would be best to be debt-free before getting into even more debt.

harz99

runiu wrote: »

Hi,

I need your help...

Basically I need to by a house/flat quite soon...

I was thinking about shared ownership but some of you said it's not good scheme...

So I've spoken to my parents and they can lend me £20k towards deposit...

But my current situation is:
income £28.5k
lloyds credit card £1900
barclaycard £3500
car finance £187p/m till feb 2015 (£7500 settlement figure)
lloyds current account - £1000 overdraft used

I'd like to buy property up to £120.000...so I'll put 10% deposit...
My question is would it be better to pay off all the debts on credit cards and then apply for the mortgage? Or would it be better to put more deposit?
Or what else would be good in my circumstances?

Thanks
Runiu

Okay I will try and be constructive although some of what I am going to post will probably not be to your taste.

Why do you NEED to buy a house/flat rather than rent, which given your debts would be far simpler and maybe more sensible?

You say your parents are willing to LEND you £20k towards the deposit - do you really mean lend, if so how do you propose to pay the money back on top of your mortgage, or do you mean give with no need to repay?

You appear to be contemplating using some of the £20k to pay off your debts - have you discussed this aspect with your parents as that may well be at odds with their reasons for lending/giving you the money?

You will be well advised if you do go further to have paid of the expensive CC debts and your similarly expensive overdraft; the car loan is less of a problem unless you have been foolish enough to take one out a high APR. Paying these off and allowing some money for Legal costs, Mortgage Arrangement Fees, removal, furnishings etc. is likely to eat up £8-9k of the £20k, leaving you with around £11k - £12k maximum as a deposit.

You need to find out what the maximum loan to value (LTV) is for any mortgage you may be able to get, as an example if the property was £100k to buy and the Bank/BS has a maximum LTV on loans of 85% you will need to find £15k deposit. And the banks/BS will use their own valuation of the property NOT the selling price to arrive at their maximum loan.

So if the bank valued that same £100k property you wanted to buy at £90k, rather than £100k, at 85% LTV you would need a deposit of £23.5k to buy at £100k.

On the assumption that you do not also have a substantial savings pot, I really don't think buying a house/flat is a sensible idea at the moment. As others have said, better to concentrate on becoming debt free, and then maybe look at the project again, especially if the £20k would be on offer again from your parents at some future date.

frostyfog

Hi everyone,
I hope someone will point us in the right direction and advise us on what to do.
We are FTB and we think we are ready to step on the property market. Viewed a couple of houses for about three months and finally found the one we fell in love with but the problem is that

* It is a concrete house which has been on the market since Jan this year, because the owner passed on and the children are the one selling the house but seems they are not in a rush to sell, even though the EA said nobody has ever gone to the stage of UO/SSTC with the house since its been on the market. we viewed 2 times and placed an offer (asking price 70k offered 60k, offered rejected but still open, offered 63k but finaly agreed on 64500k)

* The house has only electric for heating (Old Storage heating system with Economy 7 series i think) there is no gas connection to the house at all, DH have rang the national grid on friday, they said we need to make an application form so they can give us a quotation. We already got a quotation for a full Central Heating installation for 3000k. and the guy that came around to see the central heating reckons we might need to do something about the electric system as well cuz its old and he doesnt know maybe we can use it on normal tarrifs, moreover its an OLD electric meter.

* DH doesnt work at home,he travels to work and he comes home every 2 weeks or sometimes 3 weeks. And its been so stressfull for him as he works full time and studies as well, cuz he wants to back to uni to study dentistry in about 3 years time. He has been very strong and positive, but i do feel for him as he thinks that we should not even bother about any house now, plus if he goes back to uni he would not be staying at home regularly for the next 5 years while he's studying, cuz the universities here doesnt do dentistry and the nearest is 2hrs away. He reckons we should wait till he gets admission to study his course so that we can then buy a house and probably stay together while he's studying (minimising housing cost to only mortgage or rent which ever one we decide then)

* we have about 35% of the asking price that we've managed to save over the years, and we only got a mortgage offer from halifax due to the construction of the house, monthly payment for 3 years fixed rate at £350/month wich is lesser than our current house rent. But DH is really worried about the cost that can arise from trying to install new gas service and central heating as well as electricity, and does not want us to spend the all the money we've saved on house straight away. He reckons if the vendor accepts 60k for the house then he might put up with it but if not, he will not be buying a house anymore.

*Is it advisable to buy such house as a FTB with no gas service, central heating, and old electric wires and metering.?

*can we still negotiate with the vendor as per price because of the GAS, CH, AND ELECT? (Moreover we are still waiting for A HOME BUYERS REPORT.) maybe this could piont out some other things that wil help bring the price down

* Or realistically, are we heading in the wrong direction if we buy a house now? we are both in our late 20ies and we have a small baby. even though my husband wants to go back to university, i can still keep up the mortgage if im working full time.

* Or should we wait for another 2 years and probably buy a house where my husband will be studying for another 5 years

Advise will be appreciated:(

harz99

frostyfog wrote: »

Hi everyone,
I hope someone will point us in the right direction and advise us on what to do.
We are FTB and we think we are ready to step on the property market. Viewed a couple of houses for about three months and finally found the one we fell in love with but the problem is that

* It is a concrete house which has been on the market since Jan this year, because the owner passed on and the children are the one selling the house but seems they are not in a rush to sell, even though the EA said nobody has ever gone to the stage of UO/SSTC with the house since its been on the market. we viewed 2 times and placed an offer (asking price 70k offered 60k, offered rejected but still open, offered 63k but finaly agreed on 64500k)

* The house has only electric for heating (Old Storage heating system with Economy 7 series i think) there is no gas connection to the house at all, DH have rang the national grid on friday, they said we need to make an application form so they can give us a quotation. We already got a quotation for a full Central Heating installation for 3000k. and the guy that came around to see the central heating reckons we might need to do something about the electric system as well cuz its old and he doesnt know maybe we can use it on normal tarrifs, moreover its an OLD electric meter.

* DH doesnt work at home,he travels to work and he comes home every 2 weeks or sometimes 3 weeks. And its been so stressfull for him as he works full time and studies as well, cuz he wants to back to uni to study dentistry in about 3 years time. He has been very strong and positive, but i do feel for him as he thinks that we should not even bother about any house now, plus if he goes back to uni he would not be staying at home regularly for the next 5 years while he's studying, cuz the universities here doesnt do dentistry and the nearest is 2hrs away. He reckons we should wait till he gets admission to study his course so that we can then buy a house and probably stay together while he's studying (minimising housing cost to only mortgage or rent which ever one we decide then)

* we have about 35% of the asking price that we've managed to save over the years, and we only got a mortgage offer from halifax due to the construction of the house, monthly payment for 3 years fixed rate at £350/month wich is lesser than our current house rent. But DH is really worried about the cost that can arise from trying to install new gas service and central heating as well as electricity, and does not want us to spend the all the money we've saved on house straight away. He reckons if the vendor accepts 60k for the house then he might put up with it but if not, he will not be buying a house anymore.

*Is it advisable to buy such house as a FTB with no gas service, central heating, and old electric wires and metering.?

*can we still negotiate with the vendor as per price because of the GAS, CH, AND ELECT? (Moreover we are still waiting for A HOME BUYERS REPORT.) maybe this could piont out some other things that wil help bring the price down

* Or realistically, are we heading in the wrong direction if we buy a house now? we are both in our late 20ies and we have a small baby. even though my husband wants to go back to university, i can still keep up the mortgage if im working full time.

* Or should we wait for another 2 years and probably buy a house where my husband will be studying for another 5 years

Advise will be appreciated:(

Walk away - if you buy this property which sounds as though it needs substantial (for you) sums of money spent on it to bring it up to a decent standard, the fact will still remain that the non standard concrete construction will make it hugely difficult to sell in the future.

runiu

MadnessOfHPC wrote: »

Property is a one-way bet in the casino of life. HPI will help you pay off your dues.

What do you mean by HPI will help ??? What's HPI?

Thanks

frostyfog

harz99 wrote: »

Walk away - if you buy this property which sounds as though it needs substantial (for you) sums of money spent on it to bring it up to a decent standard, the fact will still remain that the non standard concrete construction will make it hugely difficult to sell in the future.

Thanks very much harz
Yea we've thought about it many times and we and we're just trying to be positive and thinking if we live there for a longer period of time, maybe we might be lucky selling it at a reasonable price or better still rent it out. maybe walking away will be the last resort, i only fear that my DH will not even bother to start all over again with the house hunt:(

harz99

runiu wrote: »

What do you mean by HPI will help ??? What's HPI?

Thanks

I think he means House Price Inflation means that owning property in the long term (i.e. life) always sees a gain (on paper at least).

Doesn't help you in the short term though; no easy way to buy - sorry................