Think I have a deposit? whats next

firehawk_2

Hi.
I've been working really hard and on a good rate for a contract of mine and its almost coming to an end. I have saved alot of money and think I have between £10-£15K deposit for a house.

I am not sure where to go from here and how I can buy a house as a first time buyer and how the whole process works.
I am self employed.

Any advice and suggestions are much appreciated.

Annisele

In some parts of the country £10k is a decent deposit on a FTB house; in parts of London you'll get nowhere at all.

Approximately how much do you want to spend? How long have you been self employed for (and how many years accounts do you have)? What has been your income for the last three years? People will be better able to help if you give a bit more info.

firehawk_2

Thank-you.

I have been self employeed since 2007. my income - im not sure how much it has been for the last 3 years. one year was a recession for me so I earned probably around 16K for that year.

This year I believe I may have earned around 55K, the previous around 45K, the previous around 16K and the year before around 35K. I can easily request the accounts to date no problem from my accountant.

how much am I willing to spend? Good question. Again, depends on the type of house but probably around 185-200K.
I would like to know how much the repayments would be and how they can help first time buyers or how I can help myself.

redbull5

if your wanting a property for 175000 - 200k you will need at least 30k deposit

neverdespairgirl

That would make your average over the last 3 years about £33k. Make sure that's your taxable income, after expenses.

Speaking as one of a couple who are both self-employed and have just got our first mortgage, banks tend to be more fussy about self-employed types, and lend lower multiples, and treat your income now as the average of the last 3 years. Worth speaking to a broker, but I very much doubt you'll get anywhere near £180k mortgage,.

Annisele

If you're looking at a £185k house I'm afraid you're probably going to need to save quite a lot more. With a £10k deposit you'd need need a 95% LTV mortgage, which IMO you're not going to get with current lending requirements. (95% LTV = you need a loan for 95% of the value of the house. In your case, your deposit is £10k so you'd need to borrow £175k to buy a £185k house. 10/185 is 5%ish, so hence the 95% LTV).

There are some 90% LTV mortgages about - meaning that you'd need a deposit of at least £18,500, plus money for fees and costs. Lenders tend to be very picky about the credit records and employment history of the people they give 90% LTV loans to, so you might struggle even if you do double the size of your deposit.

If you look at Money Supermarket's best buy table, you'll see that the rates are quite a lot better the higher the deposit you have.

Some mortgage brokers will be along soon, and they'll be able to tell you if I've been pessimistic.

firehawk_2

Thanks. I appreciate that.

I guess I'll never be able to buy a house in this country too expensive and not much help for first time buyers (who are also single!)

Annisele

I want to buy a house too (currently renting), but I don't want there to be any help for first time buyers - I reckon the 'help' would just push prices up and make it even harder for me to buy anything. I've decided that if worst comes to worst I'll buy a house in Burnley when I'm 65; the deposit I'm trying to save for a London house will already buy a rundown one of those in cash

It sounds as though your income is rising, so you should be able to continue to save a decent deposit. Lenders' criteria are tight at the moment, but they'll (probably) relax over time - and even if they don't, the higher your deposit the less you'll need to borrow and the more likely you are to find a lender. So - save save save!

Jimmy_31

firehawk wrote: »

Thanks. I appreciate that.

I guess I'll never be able to buy a house in this country too expensive and not much help for first time buyers (who are also single!)

You are in the same situation now as i was a few years ago (im also self employed and single) i chose to just save as much as i can till i could find a property within my price range. im still saving at the moment but not long to go now.

i always had my doubts about wether i could ever buy a property and did consider leaving the country at one point but the way things are going in the market at the moment its looking more and more likely that i may finally get a chance to put a roof over my head so dont be too disheartened and just keep saving up your deposit till you can reach a good LTV because it will make life a lot easier in the long run.

Also the last thing you want is any assistance from any local council schemes or government schemes when purchasing your home, it will just hinder you and every other buyer whos waiting to buy

casper_g

firehawk wrote: »

Thanks. I appreciate that.

I guess I'll never be able to buy a house in this country too expensive and not much help for first time buyers (who are also single!)

On the contrary, it seems to me you should be in a great position to buy a house in a year or two: you have an excellent income now: 45-55K is twice the average income of a person in full time employment, so you should be able to compete even with double-income couples wanting to buy.

You should be able to save a big deposit, say 30K or so, in no time at all if you really put your mind to it. After all, if you survived on 16K two years ago you now have the best part of an extra 40K on top of that! Even if you spend an extra 10K on living well, you could save 25-30K by this time next year giving you a total of 35-45K.

The key to saving a deposit is to spend less than you earn, and put the rest away in an account you don't touch. It's really very simple for someone with an income as high as yours!

The_Blue_Hatter

firehawk wrote: »

Thank-you.


how much am I willing to spend? Good question. Again, depends on the type of house but probably around 185-200K.
I would like to know how much the repayments would be and how they can help first time buyers or how I can help myself.

Is there a reason you want to spend 185k? I dont know where you live but is it possible to buy a small place for say 110k. You would need 11k deposit and your earnings should (hopefully) get you a mortgage for this. Over the next 2 years of (over)paying your mortgage your equity will grow and you should then be able to get your 185k house.