First Time Mortgage / Deposit Loan

garymac

Hi All

Would be grateful for your advice on the following scenario my partner and I face:

- Both me and my girlfriend (aged 24) are earning just under £30,000 each p/a
- We have no substantial debt other than nominal credit card/overdraft sums.
- I've checked my rating in the past and did have a 'good' rating; my girlfriends financial circumstances are such that I would expect her to have a similar rating

The problem: we are looking to buy a house. At present we live together in a privately rented property, spending £550 per month on rent + bills etc.

Unfortunately what money goes in, goes back out again throughout the month, leaving little opportunity to save any money for a mortgage deposit. It's been suggested by others that a simple way to get a mortgage is to get a bank loan that would equate to the 10% deposit needed to get a mortgage. (the value of the property we are looking at would be no more than £120,000)

Has anyone done this? Is it possible?

BoGoF

A mortgage company won't accept a loan as a deposit, you need to save one up.

Just to be clear, you both earn just under £30,000 each? So you have almost £60,000 joint income and with £550 rent you cannot afford to save.

Either you mean your joint income is £30,000 or your spending habits need changed.

beecher2

If you post a Statement of Affairs on Debt Free Wannabee, you'll get help with your household budget. If your household income is £60k, then you should easily be able to save £1000 a month. As BoGoF says, you can't use a loan as a source of deposit and would surely be struggling to pay it back anyway if you have no excess income at the moment.

edit: you first posted in January 2010 and were were given much the same advice - if you'd saved £1000 a month you'd have been in your house by now!

jimjames

By my calculations you must be on around £3800pm joint take home after tax. After rent and other outgoings you could have £2000 to save.

As above the only way to get that deposit is to cut your spending. It might seem difficult but I'm sure there are many items of optional spending that you can stop. It might seem essential to have an expensive holiday or new car but you need to consider what is the most important priority for you and unfortunately you can't have everything at the same time.

We earn less than you, have 2 kids and pay more for our mortgage but can still save at least £500pm.

If your credit card amounts are "nominal" but not being paid off each month then you should do so asap as paying expensive interest on debt that you don't need to will be another way to cut costs.

BoGoF

Looking at the OP's other posts they both earn (at Jan 10) £27,500 each so something doesn't add up.

He didn't like the advice back then so I doubt he will be back tp explain how they spend £3800 per month.

jimjames

BoGoF wrote: »

Looking at the OP's other posts they both earn (at Jan 10) £27,500 each so something doesn't add up.

He didn't like the advice back then so I doubt he will be back tp explain how they spend £3800 per month.

£10k deposit saved@£2k per month, you'd be there in 5 months!!

_Andy_

The OP got snotty as he didn't like my(correct) reply to the same question last time.

JQ.

So in the last 18 months on £60k pa annum you've still not saved any money since the last time you asked this question? Wow.

As stated above you could save all the money you need in a couple of months, you just need to curb your spending. In the current financial climate you need a deposit - at least 5%. Halifax will allow purchase with a 5% deposit and 5% vendor gifted deposit. But don't forget you'll need cash for all your purchase costs and will need some savings in the bank - maintaining houses and flats can be an expensive business.

casualwalks

Just to offer you some encouragement, my wife and I were in the same situation. Earning just under 60K per year, and nothing to show for it. In February we took charge of our finances, and cut out loads that we didn't need. Since feb we've saved 9k just by being a bit more sensible, hopefully early next year we'll be well on the way to buying a house with our savings. Just have a really good look at what you can cut, do you need sky/cable?, could you get a cheaper mobile contract, cheaper hair cuts, shop at ASDA/LIDL/ALDI? It will all be worth it in the end.

rndb

I have to say you are all correct on the above, and yes our outgoings are considerably more than the OP (ie mortgage alone is around £1400 + the usual bills + full time nursery fees) BUT our combined income is also higher and we save minimal every month. In theory we should be able to save around 1K easily a month but it's all about mind set really isn't it? We have good salaries (could be better!) and with that in mind we feel we earn enough to 'treat ourselves', and hence to a degree saving goes out the window.
We are also 'saving up' for various bits and bobs, including a move within the next 5 years, and as I'm sure the OP will know, we know exactly where are money supposedly 'vanishes' too every month but we've not quite got there yet with the 'mind set' for saving efficiently. Hence we've taken a small personal loan to have the kitchen done when we could easily i suppose have saved for it over the past 6 mths.

I know this hasn't really answered the question, and that is NO you shouldn't really take out a personal loan for the deposit (but I know people who have) however I just wanted to demonstrate that there are more money fools out there other than the OP when it comes to haveing good incomes and saving!!!!! (and we're supposed to be intelligent species...!)

garymac

_Andy_ wrote: »

The OP got snotty as he didn't like my(correct) reply to the same question last time.

Andy I don't think there's such a thing as a 'correct answer' to this sort of question?!

Yes I did post a similar question last year; i'll be honest I completely forgot about it. Thank you for your feedback to my actual question though for everyone who did respond with the answer rather than critical feedback...

I too am baffled about how we're not saving £££. But quite literally money rolls straight out after it comes in. We're cutting back where we can (cancelling sky subscriptions, reducing contents insurance, shopping at ALDI etc) but it's not making a huge difference unfortunately...