Is this a pipe dream for first time buyer

deanotrfc

Hello, for the last few months me and my girlfriend have been thinking about purchasing a flat in around 2 years
time. I know I shouldn't plan ahead as the relationship could split and other complications but I am just interested to see if it could happen and I am looking for advice on to do next and over the course of 2 years.

I am 18 years old and am self employed earning £8-9,000 a year my girlfriend is 19 years old and is employed earning around the same income as me.

We both have NO credit history. I have saved £3000 and I am planning on getting a credit card and buying a car and car insurance and paying it off on a monthly basis on the credit card with the £3000. Would this give me a good credit rating and what other steps can I take to improve it?

We are both planning on starting our own cash isas in September but would a savings account be better as although you get charged tax you can still get a higher interest? We are both aiming to save £4000 each within the next 12 months.

Our price range for a flat is £45000-£55000 is this unrealistic? I believe for a flat you need a 10% deposit which we would have.

With the information I have given you would we be applicable for a mortgage over a period of 8 years? Any advice on actions and steps I should take to make this happen would be much appreciated.

Thanks.

jozbo

as you are both self-employed you may struggle to find a lender for a mortgage.

from personal experience as being self employed with an annual income of c22000 i found that lenders would only consider me with the added security of my husband's permanent employed salary.

worth talking to a broker for an idea. i haven't done the calculations but you may also struggle with the short length of mortgage you suggest.

londonlydia

Firstly, well done for saving £3k (a 1/3 of your salary :T). There are plenty of people earning many times that who dont save £3k, especially for an 18 year old, you must be very mature!

You certainly have the right attitude, and my advice would be it certainly won't hurt to keep saving. Do you actually need a car by the way, or are you just getting it for credit purposes? Generally speaking cars are a money pit, and if you can do without, I would.

Other than that, I would get talking to some experts. I don't think what you want is impossible, but tricky times means that the banks will reject on the simplest of checkboxes; unfortunately self-employed can struggle. I'm guessing you're both happily employed? Only if not, I personally would consider one of you working for a company (still in the same field) just to be able to have one of you not self-employed. You might be in a better position to get a job seeing as you have experience in your fields, and you may build up more experience too...

deanotrfc

Thanks Lydia I am a very determined saver when i want something :P My girlfriend is employed by a retail company and I am self employed and purchasing a car would help me out massively work wise and possibly get me more work. Thanks for the advice so far

BitterAndTwisted

How would acquiring a debt be an asset when looking to acquire another much larger one?

Buying a car and getting it on finance or bunging it on a credit-card will only result in your mortgage-offer being reduced by that amount.

If you want to build up credit, apply for a credit-card, use it and pay off the whole balance every month.


Still, it's all pie-in-the-sky while one of you is self-employed and the other is on such a very low salary.

deanotrfc

So purchasing a car and insurance on my credit card and meeting the payments every month would do more damage to my credit score than it would do good?

BitterAndTwisted

A debt is a debt. And mortgage-lenders pay very close attention to a prospective borrower's debts. Acquiring a debt will not "build up your credit". But getting a credit-card, putting all of your normal monthly purchases on it and settling it in full every single month could.

lovelylaura01

as previous people have said you would be better off using your savings to buy the car and use a credit card instead of your debit card but pay it off in full each month.Good luck saving for your flat i haven't got any advice for that as we rent

geoffky

Well done for planning ahead and a special well done for saving 3k on your wages...

Kynthia

I know you want to build a credit history but wasting money by paying for a car on a credit card is not the clever way. You will be paying a lot on interest when you could buy it with your savings. I'm no expert but I believe you gain a credit history by making payments in full and on time, being on the electoral roll, having a salary and bank account, etc.

The above suggestion of getting a credit card and using to buy day to day things you would have purchased anyway, and then paying it off in full each month is a good method and doesn't cost you interest. Things like your weekly food shop, cinema tickets, a meal out, etc. A contract mobile phone is similar, but only get one if you want one and can afford it. Having household bills in your name will help too if that's an option.

maninthestreet

where do you live - what does £50k buy property-wise?