Advice on buying my first property

Rollingskies

Hi,
I am a graduate of 1 year, perfect credit rating as have all my family and borrowing money will not be an issue. I've got student loans, but they don't count when buying a house so that's fine. I'm on 20,000 gross a year (1,330 per month net) and I currently have about £4,000 in overdraft and credit cards all which is interest free. For the last 16 months since I started my job I've been living with my parents and enjoing life. Only in the last 9 months has property come within reach and now it's like QUICK! I live in north Scotland and I can buy nice 2 bedroom flats for 80,000-90,000 and ones needing modernisation for 70,000.
Now, I know property prices could fall further, but they are not going to fall much further and if they rise by 20% they will all be out of my reach. So while the advice might be stay at home and save, if I wait too long I might find I can't buy.


For the sake of argument I need 10% deposit on £80,000 which is £8,000. I can save that in 10 months, probably 9 months if I really need to.



I have several questions.
1. General advice please.
2. Can I save for a mortgage deposit without paying my credit cards off? What I do is I take out the free interest on purchases ones and then as they get close to the end I pay them off and already I've opened another one and all expenditure goes on there until the time is up and I start again. So I never pay any interest.
3. Let's say in 6 months the house prices in north Scotland start to climb. Can I get away with putting all my expenditure on credit cards and (even if I suffer some interest) and devote my entire wage to saving?
I guess if in 18 months time I was guaranteed the house prices would be the same I wouldn't be worried as I would have no debt and a deposit ready. It's just if they go out of reach....


Thanks

Ferferksake

When you apply for your mortgage they'll ask about outstanding credit cards etc and this will reduce the amount they'll lend to you. I'd keep the interest free cards as long as you can, but you may have to pay them off to get enough of a mortgage. Any chance of a helping hand from family if necessary?

CLAPTON

some lenders take student loans into consideration
all lenders take credit card debts and loans into consideration

kingstreet

There's something not quite right about your posts. I can't put my finger on why you put my back up so much.

I have a funny feeling you're a spambot.

3.1415927 is better known as what?

Rollingskies

Thanks for the replies. I thought that might be the case. I guess otherwise people would just borrow money from everywhere for a deposit and then not afford the repayments on the mortgage. No my family are not in a position to help, so it looks like I'm going to have to bite my lip and hope for the best. I don't expect prices to alter over the winter, especially with all this chaos with the economy and the euro. They could be on the rise by late spring though. I guess I'll just have to wait and see.

Thanks. :beer:

Rollingskies

A spambot?! Well I don't know how you can tell that. If it wasn't for the fact you have a high post count I would assume you were an idiot, but maybe in your time here you know something I don't.

That's pi. I once learned the first 25 odd numbers of it.

kingstreet

Well, that's a turn up for the books. My apologies. I read through your other thread on the Insurance forum and this one and obviously reached the wrong conclusion.

You will be required to set out your existing credit commitments on a mortgage application. Whether these commitments are "normal" or of the student variety, they'll be taken into account in establishing affordability. A credit card balance will typically be charged at 3% of that balance and deducted from your income.

Not disclosing them may result in your application failing for lack of candour.

While some lenders will perhaps lend you 5x your gross annual income, most will go up to perhaps 4x and will take into account your contractual monthly payments for each credit commitment.

Looking for a £72k mortgage on an £80k purchase will be towards the top end of your expectations both in terms of maximum mortgage and minimum deposit.

Have you yet discussed the issue with a lender, or more importantly, a whole market or independent broker?

Rollingskies

Ok. Thanks for that Kingstreet. That's helpful. I haven't gone into a broker or bank because I didn't think they would take me seriously. Turning up with a £1k bank overdraft and £3k on a credit card doesn't look like a mortgage sale! I just expected them to say, come back when you've saved at least £5k for a reasonable discussion.

I think then I'm best just paying off the debts and start saving hoping for the best that in the next 18 months everything is still ok. As I will be stretched for loan and deposit any credit card debt is just going to tip the balance against me.

Castleman

kingstreet wrote: »

While some lenders will perhaps lend you 5x your gross annual income,

Any ideas which?

Rollingskies

Castleman wrote: »

Any ideas which?

80,000 (4x) is the maxium I've seen hunting around websites. Maybe that's conservative though and perhaps I could get more.

Should I look at booking an appointment with an advisor anyway?

Lokolo

I wouldn't bother until nearer the time. You will need to do these things;

- Get rid of your debt, even if its 0%, it'll count against you in mortgage application.
- Save at least 10% + fees, for a mortgage. However I would aim for 15-20% as the 90% LTV rates are appaling.
- Save up some spare emergency funds before you buy.