Is this a pipe dream for first time buyer

princeofpounds

I wouldn't be too negative guys, the OP is very young and they are not trying to buy a house now, they are trying to point themselves in the right direction. There is every chance they will be improving their finances every year if they keep pushing.

OP, I would concentrate if I were you on boosting your income and career. That will be the most helpful thing to get you towards your goal.

If you are self-employed and want to borrow on your salary you will need to keep good records and accounts for at least 3 years.

Getting a good credit history is not about getting a big debt and making minimum repayments - you want a credit facility but as mentioned just prove you can repay it all every month for some time. Some types of lenders like people who can only just service their debt as they tend to be profitable, but for mortgages it is all about low risk of default.

Aim for more than a 10% deposit. There will be several grand in other fees and you will have a much cheaper mortgage if you can pay 20% or more as it is less risky for the bank.

Isas are not normally particularly lower interest than normal savings accounts. They ARE savings accounts, pretty much, as far as the bank is concerned.Look on the best buy tables here on MSE.

Given your income is so low and interest rates are so poor at the moment it doesn't make a huge difference if you use an ISA or not, but it's best to do so because it is simpler, you keep the allowance and it will probabaly save you a little money.

There might be some promotional savings accounts out there which are not ISAs and might earn you a little more after tax, but you'll typically find such deals require you to pay wages into an attached current account (not a problem necessarily) and the rates will probably fall soon enough.

Poppy9

Go for buying a flat, especially as they are so reasonable in price and will cost you less than rent.

However agree with others don't buy car or insurance on CC. £3k isn't going to buy you much of car as you will need majority of it for insurance. A cheap car or any car will cost you dearly to run so you may find you are unable to save as much. However if you feel you can double your work load and income then it's a great idea.

Good luck

motherofstudents

You've done really well to save so much. Better than I did at your age. Our first house we bought with a 100% mortgage and it cost under £12000, the price of a car these days.

Keep saving and keep reading all you can about the buying process. I would check rightmove every now and again just to see what's out there.

jamesd

For the car it may be useful to get a loan for part of the price then pay most of it off. This will produce regular on time payment marks on your credit report without you paying much interest on the low remaining balance. It's a useful bit of extra diversity of credit types. She can do the same thing. It may be difficult for either of you to get a loan, though no harm in trying.

A fairly cheap flat is a good move, though do consider one with at least one spare room so that if the two of you go for a child while living there you won't have an urgent need to move at a time when bills are high. The spare room without a child also offers the chance of a lodger to help with the money if necessary.

Strapped

deanotrfc wrote: »

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.

Whereabouts in the country do you live, as that would give posters more idea of what you could buy for your budget?

deanotrfc

Thanks for all the advice so far it has been really helpful. I live in Merseyside.

geoffky

trfc was the clue...

robatwork

geoffky wrote: »

trfc was the clue...

Well possibly...and possibly could be dea..NOT...rfc

Then again who supports Reading?

BlueC

Some good positive advice here, and congrats on saving the money and planning for the future. With regard buying the car on a credit card, here's an example:

Car cost: £1000, Insurance cost: £2000, Total cost: £3000

Credit card assuming an APR 34.94% (Capital One Classic) as you're not going to get a decent credit card on your salary/employment, you would be paying back £299.74 a month to clear the debt over 12 months. This means the total cost would be £3596.87. As you can see, this would be a massive waste of nearly £600 compared to purchasing the car with your savings where you would pay zero interest.

If you could only pay off £175 per month it would take two years to pay off and you'd pay over £1200 interest, and how would you afford the following year's insurance? You can see here how quickly people can spiral into debt, and having made such a good start it would be a shame to mess it all up!

That said, you're not likely to get a credit card with a £3k limit so really if you need a car for work then calculate how much extra business you think the car will bring you, then calculate whether it's worth it and buy it from your savings.

If you're interested in building your credit score, get on the electoral role, get a bill in your name (and pay them ON TIME EVERY MONTH) like a mobile phone or something, and if you feel comfortable doing so get a credit card with a low limit and spend £50 on it each month and pay it off ON TIME IN FULL EVERY MONTH! Capitals are for emphasis because if you don't do this then you'll trash your credit rating very quickly.

Strapped

geoffky wrote: »

trfc was the clue...

Only if you didn't, like me, have to google "trfc"...and then where Tranmere Rovers are situated . I am not a footie fan. (trfc around here stands for Tavistock Rugby Football Club).