A Little Help For a First Time Buyer

DazGlanza

Hi, i have looked and searched through many comparison sites, calculators etc to find out information on mortgages but have just ended up with a headache!

I am 21 years old and am currently earning 21k a year but is going up in the next week or so to 25k and then 27k by the end of the year and another rise early to mid next year which should take me to 35-38k due to recently qualifying. I have approx 9k in a savings and would like to know the in's and out's on 95% mortgages. I have other savings but is in a share save and wont be available for another 3 years. So 9k is what i have spare and readily available. In my area for a 1 bed flat/house you are looking at 160-180k what advice can you give me?

thanks

edit: my credit rating should be amazing as i have had 2 credit cards which are paid in full every month direct debit every month without fail!

kingstreet

There are very few 95% deals around. They are difficult to come by and the rates are not particularly competitive. I'd find myself a good independent or whole market broker and get some advice on planning your purchase properly.

DazGlanza

thankyou so much for the fast reply, are you able to give me any names of brokers i can try?

kingstreet

Ask friends and relatives for personal recommendations for someone in your area. Whole of market and independent are the key words.

Whole of market means not tied to one lender or a restricted panel. Might not charge you a fee, but might not look at deals that don't pay them a commission.

Independent means fee-charging, but will include direct-to-lender deals and may refund any commission on the deal to you.

hazyjo

Probably only able to borrow between 3-4x your salary (4.5 at at absolute push, but I wouldn't want to unless you'll then be in for some hefty rises over the next couple of years).

If you're not looking until you'll be earning around £38k, I'd still only count on around a £150k mortgage. Obviously >10% deposit would be better than 5%. I doubt you'd get great interest rates with only a 5% deposit.

I'd be very wary of buying a one bed flat/house. Would definitely try and wait until you can afford a 2 bed. Very hard to sell on in a rubbish market, and can lose lots of money on them. Also grow out of them very quickly. If you meet someone you choose to live with, or had kids in the time you're there, you'd more than likely want to sell up. At least with a 2 bed, you wouldn't have to sell it if your circumstances should change.

Good luck.

Jx

kiki*_2

I have just had a 95% mortgage agreed with Yorkshire bank, they explained everything perfectly. They warned thatchy don't accept many first time buyers but my credit rating was identical to yours, 1 credit card always paid in full and no overdraft or debt anywhere. Application went through mo problem.

Yorkie1

But the 9K in saving has to cover fees as well as deposit ... and there would be no reserve for all the inevitable expenses which occur after you move into a new property, plus the higher initial mortgage payment, and leasehold expenses which flats are subject to, etc etc.

If the fees are, say, £2K then that's £7K deposit. Which is a flat of max £140K (irrespective of income) on 95% LTV.

KateLiana27

As a fellow first time buyer, please be careful.

Surveys, solicitor's fees, search fees, mortgage arrangement fees, etc all add up very fast. About a third of sales fall through (often through no fault of the buyer) so you may need to budget for more than one survey etc. If 9K is all you have to fall back on, I would wait and build up more savings before buying. Then you'll have the flexibility of choosing a good mortgage deal, rather than going with the only provider who will give you a 95% mortgage (possibly at extortionate rates).

You'll also find it MUCH easier to get a mortgage if you are on 35-38K than 25K. That's a huge difference in salary and the banks won't care that your salary is going to be x amount in a year - only what it is now. So if you can wait another year, I would.

DVardysShadow

KateLiana27 wrote: »

... You'll also find it MUCH easier to get a mortgage if you are on 35-38K than 25K. That's a huge difference in salary and the banks won't care that your salary is going to be x amount in a year - only what it is now. So if you can wait another year, I would.

I would agree with this.

And there is another thing to bear in mind. When you qualify, it is one of those natural career points where you might want to go and do something different or work for another company. These options become very much more difficult to take up if you have a property. So, it could be in every way to your advantage to leave property ownership for a while.

geoffky

oh dear...a 95% mortgage and a 3o yr term....

sonastin

I would spend the next year a) saving like mad, b) making sure that you qualify with flying colours to secure the biggest pay rise possible and c) researching mortgage deals and the property market in the area you are looking. By the time you qualify, you'll have a much bigger deposit to play with, a higher salary to secure a higher mortgage and a much better idea of what is available and what things are important to you in a property and how much it is realistically going to cost you to live in the sort of place you want to buy.

In the meantime, serendipity might drop the right property at the right price right into your lap. At least this way, you'll recognise it when it comes along. In terms of the rest of your life, another year will fly by. Buying a house is one of those rest-of-your-life scale decisions.