Please Advice on 125% Mortgage for a FTB

lynzpower

knaresbrook wrote:

Thanks for all your advice mate. But i am already 33 now all my friends at my age have a decent house, which i am the one without a property. I am not jealous. I too want to be on the property ladder If i look for a property price of about 175k will that be something a good choice but bit far from where i am currently live. Please advice.

You say your not jealous, so why compare yourself to your mates.

You have major debt there, getting into more debt with abolsutely no savings whatsoever is a recipe for financial suicide.

Believe me, I know. Im having to sell as I cant afford the interest rate rises.

ukbondraider

This type of mortgage should be be taken out by people whos salary increases alot EVERY year e.g 50%+ each year.

Only that way can you afford this type of mortgage.

If this is not you, pay off your debts first as even a mortgage at 3x your salary, you will find yourself struggling if you have a salary does doesnt move up much.

rosysparkle

The only sensible advice is to pay off your debt and save a decent deposit before you think about buying. It might not be the advice you want to hear!

£41k of unsecured debt suggests that you and your partner aren't living within your means now, and haven't been for some considerable time. Would you run up that credit card bill again once you are paying the mortgage every month?

You need to get your spending habits under control and your debt repaid before you start thinking about taking on a mortgage which you may not be able to afford, particularly if interest rates rise.

Cannon_Fodder

Wait for the housing crash, then wait another 12 months, then jump on the property bandwagon.

Meanwhile, sit down and look at your finances and try to work out why a joint income of £52K is not enough to avoid being in debt in the first place.

A year or two of better money management could lift most of that debt - my partner and I earn £5K less than your joint income, but SAVE £10K per annum and still have nice holidays, eat at nice restaurants, etc etc...

It might be harsh to turn your simple "buying a house" question into a debate on your spending, but if at age 33 and houseless you still managed to accumulate £41K of debt, then maybe a prod to move you towards your lightbulb moment is necessary.

Think about doing a Statement of Affairs, list incomings, outgoings and debts, and get on the Debt Free Wannabee board for some advice...

mr.broderick

Cannon_Fodder wrote:

Wait for the housing crash, then wait another 12 months, then jump on the property bandwagon.

Meanwhile, sit down and look at your finances and try to work out why a joint income of £52K is not enough to avoid being in debt in the first place.

A year or two of better money management could lift most of that debt - my partner and I earn £5K less than your joint income, but SAVE £10K per annum and still have nice holidays, eat at nice restaurants, etc etc...

It might be harsh to turn your simple "buying a house" question into a debate on your spending, but if at age 33 and houseless you still managed to accumulate £41K of debt, then maybe a prod to move you towards your lightbulb moment is necessary.

Think about doing a Statement of Affairs, list incomings, outgoings and debts, and get on the Debt Free Wannabee board for some advice...

What does he do if there is no crash but just a levelling off?

maninthestreet

Knaresbrook - What are the montly payments on the 35K loan you have? How about the 6K CC debt? What was the 35K loan actually for - a car?
What will the monthly payments be on the 125% mortage you've already got a quote for? How does that compare with your current monthly housing costs? Have you factored in the cost of council tax, which could rise to almost £150/month for a 175K property, if the horror stories in the press turn out to be true?

lynzpower

maninthestreet

I pay 116 on a 200k property already

Council tax is set to rise further of course, as it always does, mind you it might not rise by much ( mine went up 8 quid last year)

dougk_2

If you have 41k of debt then you have to look why. If you haven't been able to manage without getting this high level of debt how will you cope with a house and all the expenses that go with that too.

As others say you need to reduce your debt - If you have a "new expensive" car consider selling it and getting a more sensible one - maybe something worth 3 or 4 grand max.
Realistically on 50k income between you I would say you should be looking at paying perhaps £500+ a month of your debt off.

Cannon_Fodder

Mr B. - In the couple of years it takes for levelling off to become apparent, some debt will have been dealt with, and a more affordable 90-95% mortgage may be achievable...paying perhaps 5% (-/+ 0.5%) instead of over 6% because its a 125% deal....

Of course a housing crash is speculation/guesswork, but the one certainty is his debt. We still don't know what has caused the debt, so how can we be sure "IT" won't happen again, making any advice about affordability of the mortgage inaccurate and potentially dangerous...

If he could fix around 6% for 10 years, then MAYBE it would be a better bet (though the underlying causes still need attention), but just a two year deal leaves him wide open for a severe jolt if rates go up another 0.5% or even 1% in that time.

mrsc_4

Pay off your debt as soon as you can and save money along the way, do this as fast as you can then think about buying a house.