1st Time Buyer (another one)..

dan23uk

hi, i am at the very start of a long road of buying my first place. i've been to see a broker recently (a family friend), although i dont believe he is whole of market.

i currently earn £31000 a year (approx 1800 month), with no debts at all, live with my dad and only pay out around £100 a month for gym, phone etc. i should have around 15 grand to put down as a deposit.

the broker suggested i would be looking at somewhere in the region of £145-155,000 mortgage, on a 3 or 5 year interest only fixed rate. i do trust his opinion but would appreciate some input from those of you in the know!

i also have a credit card (havent used it yet!). would it be adviseable to use it every month just for something small (petrol etc) to help improve my credit score?

many thanks in advance

dan

herbiesjp

The maximum mortgage amounts look about right

Have you specifically asked for 3 or 5 years interest only deals?

dan23uk

not specifically no, the broker recommended this as being the best way for me to get on the ladder and afford the payments. i would be open to any suggestions that i could take back to him and discuss

herbiesjp

Have they shown you any rates in particular and shown you the monthly costs, both on a repayment and interest only basis?

Do you understand the difference between the two i.e. one guarantees paying off your mortgage and the other you are not clearing your mortgage debt?

dan23uk

yeah i'm on top with the difference between the two. tbh i cant remember exact rates, as it was a couple of weeks ago and more of an informal first look sort of thing! i shall have to get back to him and get some proper details!

fimonkey

Wow and SNAP! I earn almost as much as you (30K) , and have same deposit saved, and was given exactly the same advice by an independant FA, that I should stretch to 155K (much more than 3.5xmy salary) and stick it on interest only for the first 5 years before changing to a repayment.

However, after reading heaps (on this site and on others) I decided it was far too risky and I'm not willing to stretch that far. If you stretch to such a sum, on interest only, then house prices fall, think about where you'll be!

Personally I've decided to stick to what I can afford on a repayment mortgage fixed for 5 years. (not arranged yet). Hence I'll now be looking to borrow only 100k as this will make my monthly repayments, inc mortgage/ bills/council tax/water/sewage/tv licence/electicity etc etc(and heaps of opther things I didn't consider when I was renting with all inclusive rent) manageable, as well as leaving me enough over at teh end of each month to enjoy my life, save for holidays etc etc.

Your call, but don't stitch yourself up!

dan23uk

my FA ran through a few figures with me and i could afford the repayments (on interest only at least) and he gave a ball park figure for bills etc for the area which i could also manage.
i am quite cautious of interest only for the same reason as you, so will need to find out exactly how much extra a repayment morgage would cost.

unfortunately where i live there isnt really anything for less than around £140,000!!

i would look further afield but work in central london and if i move outwards (home and job) would lose london weighting payments, so would be in the same situation anyway!

dan

MortgageMamma

Have you thought about stretching for something two bedroomed and perhaps renting a room out? That would make things much more affordable for you

herbiesjp

dan23uk wrote: »

my FA ran through a few figures with me and i could afford the repayments (on interest only at least) and he gave a ball park figure for bills etc for the area which i could also manage.
i am quite cautious of interest only for the same reason as you, so will need to find out exactly how much extra a repayment morgage would cost.

unfortunately where i live there isnt really anything for less than around £140,000!!

i would look further afield but work in central london and if i move outwards (home and job) would lose london weighting payments, so would be in the same situation anyway!

dan

Ah the joys of the london property market!

Can't fault what fimonkey said

Have a look at the lower end of the purchase scale and find out what that would work out on a repayment basis, yu could extend the term initially if you wanted to, to reduce the monthly payments, but don;t forget that london is one of the most expensive places to live on this planet so other bills etc and cost of living to match.

Look at what is affordable to you monthly and work out what that could equate to you in terms of mortgage amount

HTH

MortgageMamma

You know I get a lot of clients in London for some reason and my heart goes out to them when they say the cheapest flat they can buy is 220k

Up here in Lancashire you can get a 4 bed detached with grounds for that

herbiesjp

MM

Dont make it any worse for us Londoner's!

lol :rotfl: