1st Time Buyer

paulwalsh08

Hi, just looking for some advice on my current situation,

Firstly me and my girlfriend were looking at the government scheme on a new build as the offer of 5% deposit was suited to our situation,
We then had advice of a family member about the pitfalls etc and as he was able to put is in contact with a director at a house builder who were also building a new build development and asked if we would be interested and if he could offer us anything

We looked further into this and we would own the full property and get a much better deal then we would have got,

Therefore ive been going through the numbers, and spoke to a mortgage adviser who said we be fine for a mortgage,

Just looking for some reassurance and some general advice.

Numbers
We are able to fund a Deposit for 10% currently possible 15% depending on the time we have to pay it, but im working my numbers of 10% as this is guaranteed. This would leave us needing a mortgage for 117,000
We have a joint income of 34,500 a year and perfect credit scores, we both have had loans and credit cards that have been paid on time and are now fully paid, apart from my girlfriend having a car loan at 140 a month that we are looking to pay off. Or we could keep the loan and use the money to have a better deposit???

That’s the background to my current situation and I have to following questions

1 – Do you think 117,000 mortgage is feasible – mortgage broker has said we will be able to get this
2 – it’s a new build are we able to get a 90% deposit?
3 – Girlfriend is due about 25000 inheritance, but I am discounting this as we are unsure when she will receive this, could be 3 months could be 12, does advising a mortgage company of this help? or will they not care as its not with us now.
I no people may say to wait for the extra money but this is an offer to good to be missed due to the house etc so the girlfriend wants to go for it.
Any advice would be greatly appreciated.

greatwebsite11

£117000 just about fits. The loan will be annualised and deducted from your joint annual income (12 x 140 = 1680)
Plenty of lenders at 90% loan to value,just some are more flexible on income multiples/affordability than others.
Approx £700 per month @ 5% fixed rate (some just below/some just over) 25 year term. You should then be able to make overpayments of 10% per annum.
:j

Yorkie1

Is the property built yet? If not, beware of being required to sign / exchange very early on in the process, with completion taking place months later once the house is built. This poses lots of risks for you insofar as you are legally committed to the purchase but without mortgage (offer would probably expire before completion) and with the risk of life changes impacting on you.

paulwalsh08

Many tank for the reply.

Its not built yet, but as the director is giving us help, we do not need to sign any legal documents until its guaranteed to be built within the 6 month therefore illuminating the factor of the mortgage running out.

Obviously this could happen but highly unlikely.

The numbers where more of a concern, just wanted to make sure before we go a head with some more information.

Yorkie1

paulwalsh08 wrote: »

Many tank for the reply.

Its not built yet, but as the director is giving us help, we do not need to sign any legal documents until its guaranteed to be built within the 6 month therefore illuminating the factor of the mortgage running out.

Obviously this could happen but highly unlikely.

The numbers where more of a concern, just wanted to make sure before we go a head with some more information.

That will avoid the need for a mortgage product running out - but please take very careful legal advice about this and not from the developer / their solicitor.

Many mortgage offers only last 3 months, which is not long. And if they try to tie you in to a 6 month deal, that is a very long time in which circumstances could change. If you took out further credit in that time, had a reduced salary or made redundant, got pregnant, needed a new car - all of these can impact your financial position. Don't forget that the lender will in all likelihood run a further credit check on you (possibly even want to see updated bank statements?) before completion - and is within its rights to pull the offer at that point if it wants to.

You MUST ensure that your position is protected either if your mortgage offer runs out or your offer is pulled for any reason and you can't get a new one.

I can't remember the names of the developer schemes now, but there have been cases where people have been in these positions and have been sued successfully by the developer for the full amount of the house ...

Now, this is not a frequent occurrence but do not go into this with your eyes shut just because the developer is a friend. Who knows what might happen with his business in 6 months' time.