First time buyer… help required.

michaeldc

I say first time buyer, what I mean is, I’d like to be a first time buyer. After a string of unsuccessful relationships I am resigned to the fact that I will be on my own when buying my first house. My parents are hoping to help with a deposit after they down size this year, let’s say (by some small miracle) that are able to give me £20k as a deposit. I have no debt and yesterday found out I have earned a promotion which will see my wage rise from £17k to (hopefully) over £20k.

Do I have any hope at all of getting a mortgage with these sums and if so how much can I expect to get? I have no idea what the current interest rates are or how long I should be thinking of paying it back. Any advice greatly appreciated.

Thanks for reading
Michael

powerwin

Remember you will have to factor in costs of buying a house (a few £k) plus you need a bit of emergency savings.

Say you use £10k of cash as deposit, then £10k for fees plus contingency. So, you then can add three times salary.

At the moment you are looking good for properties of £70k. You probably need to do a bit more saving depending on property prices in your area. Get saving now.

Current interest rates are historically very low. Very big chance mortgage rates will start to rise dramatically within the next two years, factor that in.

Usual mortgage term is 25 years.

Rgds

michaeldc

Thanks powerwin, you sound knowledgable but I really hope you're way way wrong otherwise I am totally knackered.
If it's only 3 times your salery and the fees are gonna cost as much as the deposit itself (never heard of it being so much, seems ludicrious) then I have no hope of ever owning anywhere that isn't a complete hole.
I live in Manchester and I've seen reasonable house prices for 2 bed mid terraces starting at £160k, by the standards set above I would need 30K of savings and a partner 1.5 times as much as me (I'm now in a senior position in a large financial corporation) to even come close to buying one of these modest places.
£70k may get me the most run down squallid little hole in an extremely rough area.
This just can't be right? I'm worried for my future.

CLAPTON

well
there are several mortgage calculators on the various lender web sites that allow you to get a feel without a formal application
e.g. Nationwide have one
on theirs they say 20k salary they might give 78k as a mortgage
but I'm sure you would find some will give 4 x salary

on the subject of fees etc : you will exempt from stamp duty and so you only really have lenders fees and solicitor fees
maybe assume about 1000 - 1,500 for solictors
and look at potential lender sits for fees (but these can usually be added to the mortgage)
but do remember you will need money for furniture, council tax, water etc

GMS

160k property with a 20k deposit leaves a loan of 140k needed.

Fees will vary depending upon lender. some charge booking fees, some dont. Some charge application fees, some dont. Some will offer help towards legals.

Ignoring fees you would need 7 times income. This is not a realistic figure. Even if a lender were to advance that kind of money could you really afford it?

Look for a cheaper property or save much more for a deposit. Unfortunately you are not in a position to buy at 160k.

flecker

michaeldcoates wrote: »

Thanks powerwin, you sound knowledgable but I really hope you're way way wrong otherwise I am totally knackered.
If it's only 3 times your salery and the fees are gonna cost as much as the deposit itself (never heard of it being so much, seems ludicrious) then I have no hope of ever owning anywhere that isn't a complete hole.
I live in Manchester and I've seen reasonable house prices for 2 bed mid terraces starting at £160k, by the standards set above I would need 30K of savings and a partner 1.5 times as much as me (I'm now in a senior position in a large financial corporation) to even come close to buying one of these modest places.
£70k may get me the most run down squallid little hole in an extremely rough area.
This just can't be right? I'm worried for my future.

It's crazy but it's right. Property is way overpriced at the moment and few FTBs can afford to buy. That's why sales volumes have crashed over the past few years, but prices have yet to drop to a similar degree.

There's lots of debate about what will happen next with house prices but most of the debate is centred around whether they'll stagnate or crash - it's pretty much universally agreed they won't be rising any time soon. So now is a good time to be saving and watching the market.

casualwalks

Why not buy a flat (instead of a house) in the area you like? In a few years time, when you have some equity built up you can upsize.

michaeldc

Thank you all for your time and advice. I have just one place I would like to live in in the future. It's a recently refurbished small 1 bed flat for £120k in a location I like.

Plan is to continue adding to my new ISA till I have 4/5 k in it for fees and some neccessary appliances, I think this will be enough for a first time buyer going on what my work mates are telling me who all have hosues.

Hope I get 20k out of my folks as early inheritence for a deposit.

Try to convince anyone to lend me 5 x my wage

Looking at the prices around me, £120k minimum for a small place is what I have to be aiming for. Anything less looks horrible in a terrible area, that's not me being a snob either, they are awful places

Thrugelmir

michaeldcoates wrote: »

Looking at the prices around me, £120k minimum for a small place is what I have to be aiming for. Anything less looks horrible in a terrible area, that's not me being a snob either, they are awful places

Best time to buy is when somewhere is unfashionable. As in time developers will start buying up the properties in the area.

cashandassetpoor

Nationwide just announced a new 95% LTV mortgage for FTBs, save to buy. save £50 a month with them for 6 months to qualify.

Thrugelmir

cashandassetpoor wrote: »

save £50 a month with them for 6 months to qualify.

£300 isn't much of a deposit.