Not Sure whether to go for it...

tomvandam

My parents have given me a deal to buy the 2nd house of them and they will give me £40,000 as a deposit which I will need to pay back when i sell the house.

The house is worth around 180,000.

My sistuation is:

I have £3000 in the bank

A car worth £5000 which I may sell.

I earn £20000 a year basic but normaly get alot of overtime ( im not banking on the overtime though)

Quick research suggest I can get a fixed rate of around 4% for 3 years on a loan of 145,000 over 25 years for 765 per month. Add £150 for bills and insurance and I have an expense of around £900 a month.

My plan is to rent a room for £400 including bills etc, so that leaves me with 500 a month to pay, which I can just about afford (Im saving 500 a month now)

My father has agreed to be the guarantor so is it safe to say I will get a finance?

I plan to use my savings as a war chest should I not have a lodger for a few months.

I'm just looking for general info and opinions and reality checks. What sort of mortgage would you guys recommend? Im also told about insurance should I become redundant which is another main concern, but I have been told it is hard to get them to pay out ??

I know i'm going to live very very tight for a good few years , but hopefully should be worth it if i decide to go through.:)

Thanks

beecher2

I can't see how you can get a mortgage of £140,000 on an income of £20,000 - I can't see how this would be affordable.

On top of this, you'd have to come up with £40,000 when you sell the house, so where would your deposit come from to buy another? Doesn't look as if you have much room to save if you took on such a huge mortgage.

Keep saving and get somewhere cheaper when you've build up your savings, under your own steam.

Senior_Paper_Monitor

7 times income ?? (admittedly not allowing for overtime)

78% LTV @ 4% fixed

Your requested reality check ..... Its not going to happen.

.... and the budget makes no sense whatsoever - council tax, utilities and insurance on £150 a month ? What about food, clothes, transport ?

leftieM

Don't go for it. You can't afford it.

DVardysShadow

More realistic to take a 50% share in the house [90,000] with 20,000 gifted, leaving a mortgage of 70,000. Your lack of capital will hinder. Plus any rent you need to pay on the half you don't own may hinder the deal. And you need to have an agreed basis on which to dispose of the house.

noodle

<idle thought>Can we assume that your parents need to get hold of the excess capital here for some reason? Because if not then your plan, even if it works, involves an awful lot of money leaving the 'family' to go to a bank. Is it possible for them to lend you the full value and you pay them back, with the interest?

There might be a spot of tax planning to do (not sure of the implications) and, of course, they'd have to trust you.</idle thought>

tomvandam

Senior_Paper_Monitor wrote: »

7 times income ?? (admittedly not allowing for overtime)

78% LTV @ 4% fixed

Your requested reality check ..... Its not going to happen.

.... and the budget makes no sense whatsoever - coucnil tax, utilities and insurance on £150 a month ? What about food, clothes, transport ?

i didnt put food etc in the budget . The budget was purely for the house aspects.

What about a 35 year agreement..I'm only 22

The 40,000 isn't an agreed loan I think they expect to get something back if I can afford it.

I have seen an 80% LTV with 4% ..

tomvandam

DVardysShadow wrote: »

More realistic to take a 50% share in the house [90,000] with 20,000 gifted, leaving a mortgage of 70,000. Your lack of capital will hinder. Plus any rent you need to pay on the half you don't own may hinder the deal. And you need to have an agreed basis on which to dispose of the house.

This seems like a good option which I will suggest. Il post my progress if your intrested.

tomvandam

I don't think I made it clear enough that I'm looking for a lodger aswell. I need to make a decision by today !

Senior_Paper_Monitor

You did - it doesn't affect the situation in terms of LTV / salary multiple etc.

When purchasing you cannot forecast additional income (be it salary increase, extra/new job or lodger) - as of today, you don't have a lodger.

deedee71

tomvandam wrote: »

I don't think I made it clear enough that I'm looking for a lodger aswell. I need to make a decision by today !

I would say you are nowhere near prepared enough to be making this decision today.

Have you asked a mortgage provider what they are willing to lend you? Even at a generous 3 times your salary you are well short.