Is a mortgage realistic?

bstevens14

First ever thread so bear with me.

I'm a 22 year old Business graduate. I'm just about to start a job in which I will earn 15k/pa but I will be looking to be taking CISI qualifications to become a private client investor.
I have 6/7k in savings currently and by next April I have calculated that I could have saving a further 8k on top of those savings.

I'm getting to an age where I would really like to move out, however I hate the idea of renting so have been looking at mortgage options. 1 bed flats seems to be on the market for 80-100k in my area and I'm led to believe that on my salary I would only be able to get 64k at a big big push. There are however very small studio apartments that go for less (65k) but I'm worried that when I'm in a better position to get somewhere bigger it would be hard to sell a studio apartment or get a decent rent yield.

I also know very little about fees involved in the process but I would be assuming that these run into the 1000's. I have looked on the forums for information but I wasn't able to find anyone in a similar position.

I also have the option of buying with a friend who earns a similar amount. We'd be looking at a 2 bed house/flat and by next April would be in the position to put in 10k each for a deposit. However I'm wondering how easy it is to 'get out' of a joint mortgage when we're both in a position to split the equity and go it alone?

I'm just looking for opinions and advice really on what to do. Sorry if my questions have obvious answers or come across as naive. I have been searching these forums for weeks now trying to find answers but am yet to find anything conclusive and it would be nice to see some opinions on what to do with my life!

spadoosh

Think you would be massively lucky getting a mortgage for 64k on 15k p/a. A very rough idea would be 3 1/2 times your income. Some lenders give more some less. But based on you only being 22 i would assume you dont have much of a decent credit file.

A big benefit to you is you have substantial saving and 14k on a 65k house is a fair deposit. Though this is only as good as how much you will be able to borrow.

In your current situation i would say (not proffesional) its unlikely someone would lend you that amount and the deposit isnt enough yet. If you think you will have an extra 8k in 12 months i would be looking to buy in 18-24 months And saving as much as possible untill then (the bigger your deposit the smaller the mortgage!)

DEFINATELY AVOID BUYING WITH A FRIEND UNLESS IT IS SOLELY AN INVESTMENT AND BOTH OF YOU SEE IT THAT WAY! Soo many complications coulds arise from it and its not likely to make you money.

Fees for moving can range from £750 - £3/4k depends on a lot really and how much you want to do your self. But budget about £1.5k and should be achievable.

I assume your living with parents?! I would take full advantage of that untill you have a substantial deposit though your wage is your biggest drawback.

If you are considering buying a property start looking at making youself attractive to lenders. this means boosting your credit rating showing lenders your responsible and can manage monthly commitments. Phone contracts/credit cards etc will help. Obviously be careful as these can be very expensive too but asume you know they are useful tools. Try and avoid applying for credit in the 6 mths prior to applying for a mortgage and when it gets to that stage see an independent mortgage broker (or alternatively use yourself!!) and definately avoid the ones in estate agents.

Good luck saving!

pjcox2005

I wouldn't advise the property route if you are thinking studio apartment.

Some will suggest stay at home and save, which will be benefical long term but I'd also challenge the notion that renting would be pointless.

At 22 circumstances change pretty quickly so renting gives you the flexibility e.g. to move areas if a job came up, move in with a partner etc.

The actual cost isn't just wasted, it provides a home, but if you want a comparison to buying then after 2 years on a 64k mortgage at 4.5% interest you will have paid of £3k.

However, you will have also incurred legal costs etc of acquiring so perhaps £1k gone, you'll have costs of selling so another £1.5k gone with legals, estate agent fees etc.

So at the moment you would have paid off about £500 of capital. Take into the account the market is fairly static, it may be difficult to sell on a studio apartment then you may consider it not worthwhile to save £20 per month in comparison to renting.

That obviously assumes renting will be at a reasonable price for a studio apartment and similar to interest but it gives you an idea that buying, especially if you may move on quickly, isn't always the best option.

Thrugelmir

Look at living at home as a major plus. Cheap living while you continue to save. One day you may find a partner so buying then will be much easier. More so if you have a sizable deposit.