First Time Buyer - 100% Mortgages - Summary / Advice Request

hc289

Hi all,

I'm looking to move on from my rented London accommodation that currently costs me around £750/month

I'm turning over about £60k a year yet was still struggling to see how I could get on the property ladder without managing to save a substantial chunk of change (~£20k) on the side.

I think i've found the answer in 100% mortgages, I have separated parents who both own their own £200k+ homes so have ample equity to offer as guarantee.

So I think i'm following the best course if (and i'd appreciate any additional advice, otherwise this post can remain for information purposes):

- I use my local councils 30% discount scheme for first time buyers
- Find a 100% mortgage with parental guarantee (where from? I can find loads of information about it but I can't find anywhere online to request them from! Do I have to engage a financial adviser to do it for me?)
- Get stung on the rates (all 100% mortgages seem very high?) but carry on and be happy until the parents slide off the mortgage after ~10 years

It's the bit in bold that I guess is my question, sorry for the essay and Merry Christmas!

Thrugelmir

hc289 wrote: »

I'm turning over about £60k a year yet was still struggling to see how I could get on the property ladder without managing to save a substantial chunk of change (~£20k) on the side.

Turning over or earning? As does make a difference.

If earning then start saving. Review your personal budget and economise.

A guarantor has to prove that they have ability to pay the mortgage not merely have assets to cover it. Lenders accepting guarantors are far and few on the ground.

System

Downside with 100% LTV is that you pay a hefty interest rate, potentially fall into negative equity and leave your family up the creek if you should fail to meet your payments and get repossessed.

By 'turning over' do you mean earning or literally turning over in a self-employed sense? If the latter what is your profit? If the former, you should be able to save up for a deposit in a short space of time.

System

Thrugelmir wrote: »

Turning over or earning? As does make a difference.

If earning then start saving. Review your personal budget and economise.

A guarantor has to prove that they have ability to pay the mortgage not merely have assets to cover it. Lenders accepting guarantors are far and few on the fround.

Sorry Thrugelmir, just beat me to it with your sage advice!:T

hc289

Ha sorry for using strange terminology, turning over in this sense is my salary - so it's what i'm earning i.e. it's all profit/money i have, it's not any weird reference to revenue of some description!

Saving for a deposit is easier said than done, i'm trying to duck out of my current 5 person house share in the next few months and was investigating this as a method of avoiding renting for longer than necessary..

I currently pay around £750 a month in rent, this would easily go up by £300 renting on my own - so it worth taking this option and trying to save for a couple of years to get a deposit together or looking for 100% now?

It's worth saying my earnings of £60k are gross, so i actually end up with around £36k net - not a huge amount for a lavish London lifestyle, maybe it's time to scale back

mildred1978

hc289 wrote: »

Ha sorry for using strange terminology, turning over in this sense is my salary - so it's what i'm earning i.e. it's all profit/money i have, it's not any weird reference to revenue of some description!

Saving for a deposit is easier said than done, i'm trying to duck out of my current 5 person house share in the next few months and was investigating this as a method of avoiding renting for longer than necessary..

I currently pay around £750 a month in rent, this would easily go up by £300 renting on my own - so it worth taking this option and trying to save for a couple of years to get a deposit together or looking for 100% now?

It's worth saying my earnings of £60k are gross, so i actually end up with around £36k net - not a huge amount for a lavish London lifestyle, maybe it's time to scale back

Where on earth is the remaining £2250 net income going every month?!

hc289

Not an uncommon question, bills are an extra £200 (inc. council tax etc), things such as parental loan repayments from when my income was not this amount to a further £300, the remainder has been getting frittered away on things like holidays to date - a habit i'm only now getting out of, it's been fun while it lasted

It's worth mentioning i'm 'only' 24 - been out of university for around 2 years after staying for an MSc (and frittering away what savings I had on self-funding that) - so i'm still relatively new on the scene. Not that i'm saying your questions about where my money has been going are illegitimate!

mildred1978

I was earning around £65k in London a few years ago, and ran 2 homes, 3 cars, several hundred miles a week car travel...............

You need to complete an SOA and find ways to save some serious money.

hc289

If you look at all my spending saving something like 80% of all my expenditure involves just one piece of advice "stop going out and spending loads of money on alcohol, late night taxis and take aways" - as I say, i've just started putting the foot down recently (saying no to most things, rather than yes to everything) so the future's bright

What's SOA stand for?

Back to the 100% mortgage front, despite reading some months ago that Aldermore is now offering it with a parental Guarantee I still can't find anywhere (brokers) that seems to advertise it - i'm not sure what i'm missing here but someone must be selling this product?

Also, on your interesting point Mildred - how did you afford the two homes in the first place?

mildred1978

hc289 wrote: »

What's SOA stand for?

Statement of affairs:

http://www.makesenseofcards.com/soacalc.html

hc289 wrote: »

Also, on your interesting point Mildred - how did you afford the two homes in the first place?

Didn't go to uni, worked from age 15 and saved a deposit. Bought first house at 18. Tripled annual income and saved more. Made £70k on first house and used it to buy 2nd house. Husband was working in London, had opportunity for me to earn extra £20k per year by moving there for 5 years. Bought 2 bed flat in zone 2 and sold after 5 years for around £30k profit.

Switched mortgage to offset mortgage, put profits and additional earning savings in there and fully offset mortgage = zero interest and paying off capital at huge rate.

Had a baby last year and could afford to take redundancy this summer and live off one (£80k+) income.

Simples

GMS

OP you mention Aldermore. They do not deal directly with customers, you need to speak to a broker.

If you have a deposit then you do not need the product but if not then it can fit for all concerned. As long as all parties are aware of the consequences it can work. You have a decent income so may be in a position to pay down the mortgage and remove the guarantors sooner rather than later.

Have a chat with a broker and see what you think