First time buyer - so hard!!

Paine

Hi all,

I am looking for some advice about the best way forward with buying my first property. The finance is a nightmare!

I've saved up a 15% deposit over the past two years (~£23k!), by working my socks off and cutting back on things like gadgets, new car, holidays, etc. I'm very pleased with myself! I had planned to save up 20% and buy next year, but a house has come on the market which I have fallen for and looks perfect for my needs. I want to get it before a landlord gets in there first and lets it out!

I have always tried to be good with my finances and I've always saved before buying, which means I have no credit history. Experian takes my phone bill and car / bike insurance into account and score me 'Fair' - but I'm told the fact I've not been in debt means that I am an 'unknown entity' and this will have a negative effect on my borrowing potential.

My first mortgage advisor, from a well known national chain of estate agents, believes the best I can do is 5.35% from Abbey (£715 per month, too expensive) - but these people are unlikely to lend on a 15% because the loan to earnings is 4.25. If I am rejected on the principle request then this could have a negative impact on my credit rating and push me in to the poor category and therefore stop me from accessing other mortgage deals (this happened to me 12 months ago!)

My second advisor thinks there are much better deals out there, e.g. a fixed deal which equated to £570 per month over 30 years, but he has spoken to the lender and they don't think my credit rating is strong enough to guarantee that the computer will say yes rather than no! Their advice is that I ask my father to be a co-applicant. Trouble is, my dear old Dad has finally just finished paying off his mortgage, and he is not a fan of them. I don't think he will want his name associated with mortgages again - in fact he has just sold up and intends to spend the rest of his days travelling around on a boat (alright for some eh!)

So, what would people advise I do? If there is no risk to my Dad, how do I sell it to him? Any thoughts?

Thanks

kingstreet

I suggest you sack these "advisers" who seem to think the only lenders are high street credit-score based "computer says no" muppets.

There are plenty of small local building societies up and down the country who look at each case on its own merits and actually have human beings who interact with the borrower. Blimey. Fancy that, eh?

Here in the Midlands, I regularly use lenders like Dudley BS, Tipton & Coseley, Hanley Economic.

Other great lenders are the likes of Furness, Marsden, Nottingham, Mansfield, Hinckley & Rugby, Vernon etc.

Getting one of these lenders may be about where you live, so find a good independent or whole market broker and talk about lenders who don't credit score.

DannyboyMidlands

I'd stick with the original plan. Another house will come up. In fact, there will be tons. Whilst prices are on the slide you should take the opportunity to save as much deposit as possible. It took me 3 or 4 years. With a 25% deposit you'd be looking at rates nearer 3%.

I remember tentatively trying to rope my parents in but they were having none of it. Apparantly it wasn't easy to buy in their day either!

beecher2

Are you looking for a mortgage of £127,000 on an icome of £30,000? You should probably be looking for cheaper properties, or keep saving and buy next year, as you'd orginally planned - I'm sure there will be another property which will be perfect for you. I don't think you should involved your dad - there would be risk for him, and it sounds unfair to ask him to get involved if he feels the way he does, and has plans for his future.

Ignore Experian's scoring as they're irrelevant - just make sure you're on the electoral roll and get a credit card which you pay off in full each month.

Paine

kingstreet wrote: »

I suggest you sack these "advisers" who seem to think the only lenders are high street credit-score based "computer says no" muppets.

There are plenty of small local building societies up and down the country who look at each case on its own merits and actually have human beings who interact with the borrower. Blimey. Fancy that, eh?

Here in the Midlands, I regularly use lenders like Dudley BS, Tipton & Coseley, Hanley Economic.

Other great lenders are the likes of Furness, Marsden, Nottingham, Mansfield, Hinckley & Rugby, Vernon etc.

Getting one of these lenders may be about where you live, so find a good independent or whole market broker and talk about lenders who don't credit score.

Thank you everyone and thanks Kingstreet.

To the others - I'm based in Kent at the moment, hence the property I'm looking at is near the bottom of the market in terms of value. I need to get a bigger place regardless of whether I own it or not, but with average rental prices for a 2 bed place (flat or house!) between £600 and £750, the option of buying a house with off-road parking for less than £600 per month is very attractive.

Does anyone know any local, "humane" building societies local to the South East that I could try? My second advisor (who suggested the co-application) is independent and part of a network of mortgage advisors who apparently has the UK's largest network of lenders. He has phoned a couple of lenders, but perhaps not the small local building societies who evaluate each case on its merits.

Thanks again all!

Southend1

beecher2 wrote: »

Are you looking for a mortgage of £127,000 on an icome of £30,000? You should probably be looking for cheaper properties, or keep saving and buy next year, as you'd orginally planned - I'm sure there will be another property which will be perfect for you. I don't think you should involved your dad - there would be risk for him, and it sounds unfair to ask him to get involved if he feels the way he does, and has plans for his future.

Ignore Experian's scoring as they're irrelevant - just make sure you're on the electoral roll and get a credit card which you pay off in full each month.

Should be do-able.... I got an AIP from C&G for £122k on a salary of £25.5k

ViolaLass

I second the advice you've been given to get a credit card and pay it off in full every month.

CLAPTON

too late for this application but if you decide to delay then get a credit card and use it regularly and pay in full each month
this will improve your credit rating and does not involve you being in any debt.

kingstreet

Paine wrote: »

My second advisor (who suggested the co-application) is independent and part of a network of mortgage advisors who apparently has the UK's largest network of lenders

The estate agency adviser you mention may work to a small panel, maybe only ten lenders who pay them commission.

The other may only offer a service recommending lenders who pay him a commission, he isn't independent, he's whole market.

That means he doesn't look at deals from the likes of HSBC, Yorkshire BS, Britannia etc. I'm not saying they would be the right lender for you.

An independent will offer you a fee option where you pay him to find you the best deal from all the lenders. If it's one which pays a commission to him, he rebates you that commission to subsidise, or even wipe out that fee.

Here's an example I did a few months ago to show the difference;-

Whole market advisers may only select from lenders and products which pay them a commission, with some charging a fee on top. A an independent may agree a fee with you and pay to you any commission he receives. If a direct to lender product is better for you, the independent will tell you if that is better as you are paying a fee for the advice.

Here's an example;-

you see a whole market broker looking for a 25 year repayment £150k mortgage on a £200k purchase. You want the best five year fix, regardless of fees. You agree the broker will take commission on any arranged mortgage.

He finds you an Accord Mortgages product at 4.44% fixed until 31/08/2016 at £828.65 per month. The broker will receive commission of £487.50.

You then see an independent broker who agrees to charge you a fee of £299 and to pay you any commission he receives on any arranged mortgage. He also looks at direct to lender deals and explains that in this case, you may get the best deal, but no commission rebate.

He finds you the Accord option, but as you have a fee agreement, he tells you the commission rebate would be £487.50, leaving you £188 better off.

The best overall deal is Yorkshire Building Society's 3.99% fix until 30/09/2016. The monthly payment is £790.93. This is a direct to lender product, so no commission rebate. You've paid a £299 fee, but in doing so, the monthly cost of your mortgage has fallen by £37.72 against the Accord option, saving you £2,263 over the five year fixed term.

I'm sure someone will point out that you can save £299 by finding the best direct deals yourself and that is true.

Off the top of my head, in your area you have the Kent Reliance. Cambridge lends in the SE in general. Holmesdale and National Counties are Surrey-based. Saffron BS is from Essex. I'm not saying these lenders will be available to you, or willing to lend, but there's a lot more out there than some advisers would have you believe.

Good luck in your search.

jamesd

Paine wrote: »

If there is no risk to my Dad, how do I sell it to him? Any thoughts?

Your dad would be liable for the full value of all mortgage payments and any shortfall if the property was sold after repossession. His risk is significant, not nil. All applicants are fully liable for it all.

For his safety he would also need to be co-owner of the property.

It would be safer for him to enter into a loan agreement with you and lend you enough money to reduce the loan to value.

Paine

Thank you everyone. I'm currently looking at deals offered by the Post Office, which look like they may meet my requirements. I've also contacted a couple of extra advisors and I'm waiting to see what they have to say. I'll also have a look fee-paying advisors to see if they can potentially beat any of the above!

Thanks, I shall keep you all informed!