first time buyer + homeowner??

marshall666

Hi

First post so be gentle!
I'm a first time buyer (currently renting) and have a 10% deposit saved towards a 220K property. My girlfriend is already in a mortgage of 90K and she has another 13K savings she is looking to invest.
We are wondering what makes the most sense in terms of her savings. If we were to buy together, are we likely to increase the amount we can borrow significantly?
I.e it seems a bit of a waste if she is just adding 13K to what we can borrow, compared to her getting a buy to let mortgage on a small flat, for example. Reducing the LTV would make a mortgage cheaper but from her point of view she would just be putting money into a place I could buy on my own.
Could we figure on roughly what she would be able to borrow in a buy to let, i.e the 13K being about a 20% proportion of what she could borrow?

Where would we start looking for quotes? I haven't seen any online systems that allow for a first time buyer + whatever she would be...not buy to let, not second mortgage.

Your thoughts most welcome and apologies for my financial naivity!

Thrugelmir

You need to think through what you are attempting to achieve.

If you ended up with 3 properties between you. Then you highly exposed to an increase in interest rates and a decrease in house prices. With the potential for little upside at the current time in terms of capital growth.

Depending on the interest rate on her current mortgage then using some of the savings to reduce the existing mortgage may provide the best secure risk free return.

hcb42

I too am a little lost - do you want to become property developers or live together?

If you want to buy the £220K property together, would suggest she throws in her £13K into the pot as well. However if that £13K is the only savings...then tying it up would not seem to make sense.

marshall666

Thrugelmir wrote: »

You need to think through what you are attempting to achieve.

If you ended up with 3 properties between you. Then you highly exposed to an increase in interest rates and a decrease in house prices. With the potential for little upside at the current time in terms of capital growth.

Depending on the interest rate on her current mortgage then using some of the savings to reduce the existing mortgage may provide the best secure risk free return.

Good point. I think I should outline what we see as our options :

1) I buy a nice but small place for 220K. She stays in her place and puts her 13K in ISA/bonds/stocks.

2) I buy a less nice but bigger place for 220K and rent some rooms out as a live in landlord (not buy to let as I'm resident). as per 1) for her

3) I buy somewhere needing work for 220K and she gets a loan to finance renovation while staying put.

4) I buy somewhere for 220K and she gets a buy to let on a small flat for 50-60K

5) We buy together with a deposit of 35K and combined income of 64K - but she already has monthly mortgage of 450..? We move in together and let her place out (we could get 350-450 pcm for her place). The closest I can get with a mortgage calculator, entering those numbers (including the monthly commitment of 450 on her part) gives us a loan of 297K - this seems high?

5 is the most attractive option to both of us if the numbers are correct, as where we are 300K gets us a pretty nice place.

average time on the market where we are is about 300 days and the market is pretty flat so we don't see selling her place as an option at the moment. We are not looking to become property developers, but I don't mind a bit of DIY/value adding ( I am fairly busy with part time study so can't take on a big project atm).

Dave_Ham

You are overthinking this, for sure.

Option 5 is what you ideally want and from the information provided would be achievable in and around the numbers you want.

Do be mindful that Stamp Duty changes at £250k and goes to 3% upfront.

Your only other consideration is that many lenders will only allow 90% mortgages to 2 first time buyers. Additionally the the rates are not as attractive and you need to be aware that you would require consent to let from her existing lender, which may or may not be easy to achieve depending upon the lender.

Sit down with a broker and run through the numbers with them, as there may be enhanced solutions based upon all of your joint information.

Good luck