Saving for a mortgage

petrolhead89

Good Afternoon everyone, My partner and I have been saving to purchase a flat. I'm 22 and she is 21 and we have approximately £8,000 - £9,000 saved between us. We are both working full time. Presumably once we have 10% of the sum we want to borrow (about £100k) we will get a mortgage?

If not what other hoops will we need to jump through? Lots of people tell me the larger the deposit the better the monthly repayment rate, is this true and are lenders even lending to people our age at the moment?

Regards

~Beanie~

You will possibly get a mortgage once you have a 10% deposit, it depends what your credit rating is lie. Do either of you have any debts?

As well as your deposit, you will also need to save money for solicitors fees, furniture, moving costs etc.

And yes, usually better rates are available to those with larger deposits.

InkZ

The amount you can borrow will be linked to your earnings as well.

I managed to get 4.5 x joint income with Nationwide (didn't borrow this much) but work on approx 3.5-4x joint and you should be ok.

It will depend on your credit rating and you are correct in that the bigger deposit you put down, the lower the interest will be (less risk for the lender).

With a 90% mortgage you will be probably be paying more than double the amount of interest than if you have a 25% deposit but no way around this unless you can save more. If you can save a 15% deposit it will be quite a bit cheaper than if you only have a 10%.

Once your initial deal has ended after 2, 3 or 5 years you will have some equity in the property which will help you get a lower rate by remortgaging and being a lower risk customer

JimmyTheWig

I don't believe that age comes in to it (other than the fact that it must be repaid by the time you retire, so if anything you're in a better position being younger).

hazyjo

Age might come into it in that credit histories might not have been built up sufficiently to get a mortgage in this current economic climate.

Jx

mizzbiz

All I will say, speaking from experience, is that if you're planning to start a family in the coming years, seriously rethink buying a flat. We were lucky to get rid of ours, biggest mistake was buying it in the first place!

ItMightBeUsefulOneDay

mizzbiz wrote: »

All I will say, speaking from experience, is that if you're planning to start a family in the coming years, seriously rethink buying a flat. We were lucky to get rid of ours, biggest mistake was buying it in the first place!

This is absolutely spot on.

Buy a home, not a house and make sure it's somewhere you can live in long term (>5 years). Will you want a garden? Will you need another bedroom? Think long and hard before making a 25 year commitment to a flat.

As for saving for a deposit, yes you will need at least 10% deposit plus several thousand more for solicitors fees, estate agent fees, moving costs and the inevitable redecoration.

iheartbristol

petrolhead89 wrote: »

Presumably once we have 10% of the sum we want to borrow (about £100k) we will get a mortgage?

it's 10% of the value of the property, not 10% of the amount of mortgage. The values are different. So if you want to buy a property worth £110,000, you'll need a deposit of £11,000 and can then get a mortgage of £99.

With a 10K deposit you can only really look at buying a house for £100k with a 90K mortgage

nakiwala123

Check out the thread below as it has some really useful information especially for us first time buyers! I plan on using every single bit of advice in the thread when it comes to buying my first home.

Good luck in all your efforts.

https://forums.moneysavingexpert.com/discussion/2218071

savingmummy

As others have already said a deposit is great and well done saving:j BUT if your credit historys are low this will need rebuilding and sorting out to be accepted succesfully - guessing you don`t have debts if your saving hard but if you have had debt this may have effected it aswell. http://www.moneysavingexpert.com/loans/credit-rating-credit-score

Also think ahead and imagine a year or two down the line `mini you two` comes along

You will need extra on top of your deposit for the extras aswell fees, charges, costs etc.