Advice Needed on Premature House Buying

lihar

Hi Everyone

I have a dilemmna and need some advice please. Looking online sometimes actually confuses things further.

So basically, the house I have been living in with my partner for 2.5 years is now going to be sold. It's far from ideal because we were planning a long term rental, but hey, life happens and we understand the landlord needs his money.

Anyway, literally in August, we decided that as our rent is so cheap, we would start saving for a deposit and i would start paying back my overdraft etc and get us in good shape for a mortgage. In september, the bad news was broken to us. The landlord asked us a few times now whether we would like to buy it from him. We suggested a cheeky offer of 25k under the asking price and he said ok!

We have about £500 saved up (big wow, i know) and ive only just paid off £100 of a £1200 overdraft; i can afford to keep doing the same amount each month. We have the rental fees that would come back to us, our deposit from renting, totalling about the cost of the legal fees. So the big black hole is the actual house deposit.

We went to an IFA who worked out some figures and he said we could get a bridging loan or a loan from wherever that would basically be our deposit. My family unfortunately cannot help. He explained it clearly that paying it back over 3 years would be simple enough. The interesting part is that he did not offer us where to get this or if it would be easy, despite making it sound so. The figures of a loan (approx % only of course) show we can easily afford the repayments, it's just a matter of where to get it and from who.

As for the mortgage, it happens that actually because we both earn well, we can borrow up to around 240k but for this house we would need to borrow 156k to make it 90%. The IFA said as our borrowings including the loan would still be well under what anyone would lend us totally, that he doesnt see it being a problem for us to be accepted.

I have credit cards which i'm paying off at the moment, month by month. I just looked at my experian credit report and it says Poor, which surprises me because i've been paying them off. I know the landlord is in arrears on his mortgage and the letters to him are always coming through our door, plus other loans he has and other loans former tenants have had, but as we are not financially assosicated with any of these people i didnt think it would matter. The IFA said it will impact our credit report slightly. It explains why my partner, who's credit file is clean as a whistle, is good not excellent and why im not fair, but poor.I would be understanding of fair, because of having the credit cards and they are quite high still.

i rang my bank and my partner's bank regarding these bridging loans. Now I know they exist because my sister's friend just had her bank agree to give her a loan and a mortgage, making the house secure the loan. So it's obvioulsy happening, But when I'm calling my bank, they are not going for it. I understand.

But now do I go back to this IFA, a different IFA (my current IFA says that actually even though they are making money from the banks, they do have contacts and can get advantageous rates) or what?

I know we could go and rent somewhere else but actually, the prices are over £300 extra a month, so we really have been on a great deal in the current property. I would willingly take on a mortgage for the extra £200 a month and be in debt for a couple of years on a loan than pay rent elsewhere for the same amount extra per month and have LITTLE chance of saving like we have just been able to start doing.

Working on current figures, we could take a loan, a mortgage and my credit card debts and easily cover all of them with money left over to put aside for a rainy day.

The problem is it's all come a year too early.

So my decision is made about what I want to do and please, I know some people will not agree with my decision, but if you can look past the personal opinion side, please advice me on how to possibly get what I want to progress with this house buy?

Thanks...

bristol_pilot

I can think of several ways of doing this and they all involve fraud. I know it's not want you want to hear, but you can't afford to buy a house right now.

DominicJ_2

The illegal fraud I'd go to prison for?
Or the illegal fraud no one would give a stuff about?

Housebuilders used to "give" buyers the deposit....

Swans1912

It sounds like buying a house is very premature for you. It is a huge commitment even when you have no debt.

Please think long an hard about this. Don't think you have committed to buy. I think you need to look for another rental.


Consider doing a SOA over on the debt free wannabe board to better understand your real position. Your credit card debt and over draft is probably costing you a few amount unless they are 0%. You would be better off paying the debt and then start saving for the deposit.

maninthestreet

You have an overdraft and CC debts, yet you claim to have enough money coming in to service a mortgage, a loan for the deposit and have enough over to save. This doesn't add up.

lihar

Hi just to clarify, obviously I want to go down the non fraud route. If there's a legal loophole though, I'd take it and no I'm not ashamed to admit it.

I've owned a house before, I moved to a new town and nothing was available in my price range so I took to renting and have just stayed in that situation since. I am ready mentally for the commitment again, so it's less that.

By my income etc, I mean I have enough money to cover the mortgage, the loan repayments, the repayments and slightly over on my credit cards and have some money left over for a rainy day. It adds up.

So I can afford to own and run that house and the rest of my commitments but dont have the time for the money in my hands. By going to another rental, I would only have spare money left over for the rainy day.

G_M

I'm not surprised the financial advisor

did not offer us where to get this or if it would be easy

It's crazy! Either you borrow this money and declare all your loans and debts to the mortgage lender as required, and they will reduce the amount they'll lend to you.
Or you hide the loans/debts and commit mortgage fraud.

either way, I fail to see how you will be able to pay back this loan PLUS a mortgage, given that you are already struggling to repay your credit cards and existing loan.

Wait till you've paid off all your debts and saved a decent deposit. Then start thinking about buying a property.

lihar

I did ask for personal opinions aside. It's not like I haven't thought this through or am hoping someone will talk me out of it. I appreciate good intentions, but I really just wanted some advice on how to solve the problem.

DoninicJ is the only one who really gets that so far...

lihar

I would always confess to loans etc, how can you hide them, when your mortgage company will credit search you!??! There's no way to hide them, that's a silly thing to say! :-)

If I couldn't afford to pay it back and bear in mind, i'm doing this 50/50 with my partner, then of course I wouldn't go further. That's plain and simple logic. Nothing is worth skinting yourself out over. I'm not "struggling" to pay back my debts, i've just not focused on ploughing all of my money into them, while they are on 0% yet.

Swans1912

lihar wrote: »

I would always confess to loans etc, how can you hide them, when your mortgage company will credit search you!??! There's no way to hide them, that's a silly thing to say! :-)

If I couldn't afford to pay it back and bear in mind, i'm doing this 50/50 with my partner, then of course I wouldn't go further. That's plain and simple logic. Nothing is worth skinting yourself out over. I'm not "struggling" to pay back my debts, i've just not focused on ploughing all of my money into them, while they are on 0% yet.

Ok so... personal opinion aside...

By not actually having the deposit it changes the lending risk for the mortgage provider.

If you were to sell you car... you sold it for £5000 but then a person asked to pay you in instalments over 2 years. You would ask for a deposit . If you found out the deposit was borrowed from a bank charging interest you would probably think the deal was a little more risky than if they paid directly from their savings!

Swans1912

Oh and... do a SOA to prove you could afford it.... factor in the extra loan and possible increase in interest rates.