First Time buyer and clueless

doowop

Hello all

I am a first time buyer and would like some advice about mortgages and gifted deposites.

I have scrimped and saved since graduating and have managed to club together £10k. My grandparents (who live abroad) have very kindly offered to gift me £20k. First question I have is will I have to pay tax on this??

Second question...I have found a property I would like to buy and would like to put an offer of 200k. I spoke to L&C mortgage advisers and they came up with a few options for me and a decision in principle. Has anyone used L&C before? Are they any good as mortgage brokers?

Thirdly, am I likely to get a mortgage? I have no defaults or late payments on my credit score and have got two credit cards in an effort to bump up my credit history. I was rejected from some of the big credit card companies last year (santander, tescos) but have got one since then and have one from my uni days. unfortunately, having checked credit score, it is 592... a friend of mine said this is quite low and I am worried about applying for a mortgage!

Also, monthly repayments seem so bloody high! I'm looking at £800+ a month at least. Is this generally right? I earn around 2k pcm after taxes (and it is very unlikely to go up by much in the future...).

I always dreamed I would be able to scrimp and save enough to gather a deposit on my own (without any help from an already struggling family) but this is proving to be impossible. Urgh! Renting seems so much easier in comparison but I feel like I am frittering my money away. Any hints and tips would be much appreciated.

Wh05apk

No you will not have to pay tax on the gift (unless your parents die within 7 years and their estate is over the iht threshold)

L&C are a large broker, as a broker myself I can't really comment.

The mortgage you are after sounds high, if your net is about £2k, then I would estimate your gross at about £30k? the normal max is about 5x so a mortgage of about £150k would appear your limit.

How much is your DIP for? if you have a dip, then you should be able to progress it to a mortgage.

Meeper

No tax to pay on the gift, provided they are still alive in 7 years time. If they die within this period there may be a potential Inheritance Tax liability.

Whilst I'm sure L&C are perfectly capable, they are endorsed by this site which claims to be independent and not endorse anyone, so I wonder about their independence. They don't charge fees and get their income from the lenders that they send business to, which means that you may not get research done from the whole of the mortgage market as some lenders don't pay advisers. You will not hear about deals from, for example, HSBC, First Direct, Co-Operative Bank, Post Office, Britannia, and a few more.

If L&C have obtained an agreement in principle for you, ask for a copy of it. An agreement in principle is the first stage of the application process therefore they must have provided you with a Key Facts Illustration for the deal that you have applied for, along with a Terms of Business, Initial Disclosure Document and some ancillary stuff. An agreement in principle is a credit-scored initial enquiry therefore they should have notified you that tehre would be a credit search involved. If they have not given you a KFI and explained that there is a credit search involved with getting an AIP, then you have grounds for complaint to them.

If you have a proper agreement in principle, that means that you will have passed a lenders' credit scoring, so all you need to do is substantiate the information regarding residency and salary and the mortgage should go through.

Monthly payments will depend on many factors. You give no indication of the mortgage amount, etc, so it's impossible to say whether it is expensive or not.

Being a homeowner is not all it's cracked up to be and is not the golden goose people expect.

doowop

DIP wise I have been told 168k but that some lenders could lend as much as 172K. Again, I'm not sure if I can get this with my credit score. I don't think it is a bad one but given that I hae been rejected from credit cards in the past, I am worried about being rejected from a mortgage.

Gross is around 36K but my student loan comes out of that and I am paying into my employer's pension (which is really good so I don't want to miss out) hence the 2K (it's more like 2080).

Do I need to do anything official with the money (i.e. fill out any forms?) No one ever teaches you these tax things at school!

I wouldn't be adverse to waiting a bit to gather some more money but I saw the flat of my dreams this Sat and want to get a wriggle on. I never thought I would get so carried away!

Barros

doowop wrote: »

I wouldn't be adverse to waiting a bit to gather some more money but I saw the flat of my dreams this Sat and want to get a wriggle on. I never thought I would get so carried away!

I hate to be the voice of reason ...

But if you are carried away with this property then STOP right there! Habe you had a second viewing yet in the cold light of day?

Take a friend or famly member with you as you need an un-biased opinion. It's easy to get carried away - but you need to think of all the practical elements and then start to thinkabout budgeting, offers etc

doowop

Thanks for the info Meeper.

I have a decision in principle but not an agreement in principle...are they completely different? All I got from L&C was a letter with the decision in principle and a letter quoting solicitors fees (which was not even right as they said i would have to pay stamp duty on a 200k property as a first time buyer). I didn't get any of the other docs! Hmmm. I might have to shop around a bit more, I think.

It's funny, we are all so obssessed with buying! In other countries, people are so much more content with renting and you can get good flats in good areas in main cities for next to nothing a month. Unfortunately, I am not renting for next to nothing and am desperate not to house share anymore.

doowop

Barros wrote: »

I hate to be the voice of reason ...

But if you are carried away with this property then STOP right there! Habe you had a second viewing yet in the cold light of day?

Take a friend or famly member with you as you need an un-biased opinion. It's easy to get carried away - but you need to think of all the practical elements and then start to thinkabout budgeting, offers etc

Thanks Barros...you are absolutely right! I need to get a a grip and see the flat again and sit down and budget. I took a friend along with me on sat but they got a bit more carried away than I did... Not very helpful.

Meeper

A Decision in Principle is the same as an agreement in principle. Ask L&C which lender it is with and what mortgage product it is for. If they haven't discussed this with you and just gone ahead with a lender without telling you, they are out of order and you should absolutely complain.

Having discussed a mortgage with you over the phone they should have explained their level of service, whether they source from the whole market or a restricted panel, explained any and all fees that may be involved for their service, gained your agreement to take your personal details down and hold them on file, researched the market, provided you with details of a specific mortgage deal, gained your agreement that the mortgage was suitable and you were happy to proceed with an application process, gained your understanding that a credit search would be carried out, done the agreement in principle and provided you with the response. They should then have sent out to you in the mail your adviser's business card, Initial Disclosure Document, Terms of Business and a "You and Your Mortgage" leaflet from the FSA within 14 days of your initial discussion.

I hate this type of advising. They say that you have a decision in principle, but who is it with? Why have they done this when you blatently haven't agreed to it?

Anyone who comes on here again saying "Go to a fee-free broker" - this is what you get. Shoddy work, misinformation and a lack of clarity. They are so afraid that their service is crap that they won't tell you any information about the lender or the deal in case you realise that you can go to the lender directly and cut out their pointless service. Personally, I charge a fee for my service and my clients appreciate the value that I add to the process and they are happy to pay for that extra service. This just appears to be poor practice on their part, and not according to the appropriate regulations.

Yorkie1

Meeper wrote: »

Anyone who comes on here again saying "Go to a fee-free broker" - this is what you get. Shoddy work, misinformation and a lack of clarity. They are so afraid that their service is crap that they won't tell you any information about the lender or the deal in case you realise that you can go to the lender directly and cut out their pointless service. Personally, I charge a fee for my service and my clients appreciate the value that I add to the process and they are happy to pay for that extra service. This just appears to be poor practice on their part, and not according to the appropriate regulations.

Please don't tar everyone with your personal hobby-horse brush.

I used a fee-free broker. He made sure I saw the screen with all the details of all the products & lenders. He fully disclosed all the relevant documentation and information. There was no cover-up or other shoddy practice as you describe.

He came highly recommended and lived up to that reputation. A colleague visited him for a re-mortgage and came away with the advice that staying on the SVR would be better than a new product at that time for her circumstances and preferences.

There will be good and bad advisers in all fields. But you only show yourself up by slating everyone the same.

And no, I am not a broker - nor do I have any personal axe to grind or promote with regards to them.

Meeper

Point conceded.

Wh05apk

Meeper, you seem to be having a dig at L&C, I know where you are coming from, and personally I would never "buy" a mortgage by phone, it is too important a decision, but we are all different, some people feel intimidated when they are face to face, and can handle things better by phone.

oh and the "you and your mortgage" leaflet is not a legal requirement.