Can we get interest only as first time buyers??

TammyBright

Hello All,

Thanks for taking the time to read and comment.

My partner and I are hoping to buy a house in a few months time, we have a mortgage in principle - 90% 15k deposit 135k mortgage. Repayments are quoted at £850 a month. Which we can afford, but we are hoping to have a baby soon and my partner is studying outside f/t work too, once she finishes in 3 yrs her wage goes up by 5k. So, if we could have an interest only mortgage for 4/5 years then change to repayment it would give us more flexability....

Do mortgage lenders allow interest only for first time buyers? will only having 10% deposit affect whether they will agree to interest only?

Thanks again!

beecher2

I'd really urge you to only take on a mortgage you can afford if your partner doesn't get the expected 5k increase. This forum is full of stories of people who took on debt by presuming their situation would improve in the future, and then came unstuck when life doesn't pan out the way they thought it would. Keep saving up a deposit and see where you are in a few years time would be my advice. Lenders aren't going to give you an interest only mortgage without you having a repayment vehicle in place.

CloudCuckooLand

You'll need evidence of a repayment vehicle, a financial product to build up the capital equivalent to repayment. The amount you'd have to invest would be much the same as the difference between IO and repayment. So, no net gain in your finances.

Until the child arrives, I'd plan as though she will not go back to work. If she does, great loads of spare cash for luxuries and the next house...if she doesn't, mortgage is affordable, no panicked sell off when in mortgage arrears.

Review after child is 2.

Another way to have that breathing space, is to have a longer term. Then shorten the term to make up for it, when the £5k pay rise comes in...but that still assumes nothing will change to your plans in the next 3 years...life often gets in the way...

Senior_Paper_Monitor

Fully endorse the comments above of Beecher2 and CloudCuckooLand.

Additionally there are no 90%/interest only products on the market (as far as I am aware) anyway.

Only a few lenders will now consider any form (even part IO/part C&I) of interest only above 75% LTV and they are becoming more and more demanding on the nature of repayment vehicle.

So, not only are we all (so far) recommending that 'you don't go there', I also think there's nothing there to go to!

TammyBright

The pay increase is guaranteed due to the training and promotion being part of the contract, i also have a pay increase due to training in April when we hope to buy (mortgage in principle is on my current wage) we do need to consider MAT leave and childcare payments before we start a family...if we can’t afford to have a baby now we will wait three years until our income increases rather than leave ourselves short...we are young enough to wait. Buying a house is our main priority in order to have security for our future children.



My sister in law had an IO mortgage and didn’t have a saving/investment vehicle in place?



Thanks for your help!

Senior_Paper_Monitor

Please note the word "had" - the world, the rules and 'the meaning of life' has changed.

TammyBright

senior paper monitor - thanks for your insight into the lack of options for IO right now.

Looks like we shall have to go ahead for the repayment option. We can afford to do this, it just means 'family plans' go on hold for a while.

Could anyone advise - we have 150k to buy, what amount should we be looking at in order to offer 150, i know this is dependant on the sellers situation and other factors....i heard you can often offer 11% below the advertised price?

CloudCuckooLand

TammyBright wrote: »

The pay increase is guaranteed...

As far as anything 3 years away can be guaranteed...

When the hormones kick in and she decides to be a stay-at-home-mom...?

When you unexpectedly have triplets...

etc, etc.

TammyBright

She has a protected post within the LA, so its 'almost' a dead cert...even without it we can afford the mortgage.

I'm having the baby...and would love to be a stay at home mum, but we cant afford to.

liubeliu

CloudCuckooLand wrote: »

You'll need evidence of a repayment vehicle, a financial product to build up the capital equivalent to repayment. The amount you'd have to invest would be much the same as the difference between IO and repayment. So, no net gain in your finances.

Until the child arrives, I'd plan as though she will not go back to work. If she does, great loads of spare cash for luxuries and the next house...if she doesn't, mortgage is affordable, no panicked sell off when in mortgage arrears.

Review after child is 2.

Another way to have that breathing space, is to have a longer term. Then shorten the term to make up for it, when the £5k pay rise comes in...but that still assumes nothing will change to your plans in the next 3 years...life often gets in the way...

I would ditto those comments, we had our first child in 2002 and moved in 2003. My wife was expecting to start working in 2004 but decided to get mortgage on just my salary. 2011 and my wife has still not returned to work as the benefits of being stay at home mum outweighed returning to work. If we had based our move on our initial assumptions we would be struggling now and probably downsized or worse.

TammyBright

This is good insight thanks, having a family is such a big deal and decisions change when a little one is involved thanks for sharing your experience i'll defo keep this in mind when we are looking at the figures (and the tiny babygrows)