How does this sound....(Buying first house)

moreofthegoodstuff

We are looking at buying our first house and the cost is 100k, we have £5000 and have been doing a save to buy with Nationwide. The property we are looking at has an offer where they will give you a 5% bonus towards the deposit...We are considering using this to buy the house and using our 5k for the survey and doing it up etc....The estate agent have said we can do this...but is this really doable? I don't fully understand all of it but my husband is convinced it's a good deal.

Also, we are looking at a 4 year deal with Nationwide but the rates aren't very good and we would be looking at £600 per month (we currently pay £500 in renting and we would also need life insurance/buildings etc) so to reduce this we were looking at taking it over 35 years to make it £522 per month and when the 4 years are up, look at reducing the term.

The question is, are we doing the right thing?!

bigadaj

Sounds as though you are too stretched, the lender will want to see some of your money as a deposit, if the seller ona presumably new build is offering a deposit you will still need at least 5 and probably 10%.

If you would be stretched then interest rates are only going up so it sounds like a bad idea, The one saving grace is that house prices aren't likely to increase rapidly so waiting is unlikely to leave you behind in terms of affordability.

moreofthegoodstuff

It isn't a new build, it's a fairly old cottage that has been renovated, looking at the mortgages with Nationwide they are prepared to lend us up to £130k with only a 5% deposit. I haven't heard of old properties offering a bonus before so don't know if it's a good or a bad thing.

We would be ok paying the £600 per month but would like to maintain a similar level of disposable income in order to furnish and get the property to a nicer standard. (and then once the four years are up, look at decreasing the term) After bills and food we usually have around £900 left each month so I'm hoping this will be enough?

bigadaj

I'd suggest saving longer. If you have £5000 now then that would mean you've only been saving for six months or so, save for another six months to a year and you would have a 10% deposit with money for fees on top. The larger deposit then the lower mortgage rate you will pay, this is obviously reliant on you actually saving £900 a month, rather than thinking you can.

kingstreet

If this isn't a newbuild, a vendor gifted deposit isn't going to be accepted anyway. Last lender to accept this, Halifax, pulled out in July 2011.