100% mortgage for grads from HSBC

AJP1_2

Hello everyone,
I've been researching various mortgages for the past few days only to realise that my options are very limited. I earn £25,000pa, have clear credit, pay off my credit card balance every month and have no debts at all. I'll get my annual pay rise in August (I work for an American company so we get pay rises on our anniversaries).

I am looking into getting a 100% mortgage, however most (if not all) lenders can only lend me up to 4.5 times the amount of my salary, which is not enough when you live in London.

I went to HSBC the other day to enquire about their Graduate Mortgage (for which I am eligible) and it seems that I'd be able to borrow at least £135,000 (that's what I asked for but may need slightly more) but I would only repay interest rather than capital for the first three years. I would like to sell the flat in 2 years to buy a bigger one... would paying interest only cause a problem?

Does this make sense at all? I wouldn't like to get into trouble but paying £615 rent every month isn't helping me either, so I thought that maybe buying would be a better option.

Would appreciate your opinions as you have certainly more experience than me.

Many thanks,
AJ

JoeK_3

AJP1 wrote: »

Hello everyone,
I've been researching various mortgages for the past few days only to realise that my options are very limited. I earn £25,000pa, have clear credit, pay off my credit card balance every month and have no debts at all. I'll get my annual pay rise in August (I work for an American company so we get pay rises on our anniversaries).

I am looking into getting a 100% mortgage, however most (if not all) lenders can only lend me up to 4.5 times the amount of my salary, which is not enough when you live in London.

I went to HSBC the other day to enquire about their Graduate Mortgage (for which I am eligible) and it seems that I'd be able to borrow at least £135,000 (that's what I asked for but may need slightly more) but I would only repay interest rather than capital for the first three years. I would like to sell the flat in 2 years to buy a bigger one... would paying interest only cause a problem?

Does this make sense at all? I wouldn't like to get into trouble but paying £615 rent every month isn't helping me either, so I thought that maybe buying would be a better option.

Would appreciate your opinions as you have certainly more experience than me.

Many thanks,
AJ

National statistics say that 1 in 4 people in the UK are arranging
an interest only mortgage with 75% of those being in London.

As long as you know what you are doing, the choice is entirely yours and sometimes it's the only way to get on the property ladder.

Some lenders will go a much as six times income.

Have a look at Abbey and Halifax for comparison.

JoeK

AJP1_2

JoeK wrote: »

National statistics say that 1 in 4 people in the UK are arranging
an interest only mortgage with 75% of those being in London.

As long as you know what you are doing, the choice is entirely yours and sometimes it's the only way to get on the property ladder.

Some lenders will go a much as six times income.

Have a look at Abbey and Halifax for comparison.

JoeK

Hi Joe,

Thanks for the reply.

It's interesting that so many people go for an interest only mortgage. The reason why I'm questioning the point of getting it is that I've calculated that my repayments would be around £700 per month. That's higher than my monthly rent.

Checked out both Abbey and Halifax but they don't offer 100% mortgages. I'm seeing a mortgage broker tomorrow, so we'll see what he says.

Thanks,
AJ

JoeK_3

AJP1 wrote: »

Hi Joe,

Thanks for the reply.

It's interesting that so many people go for an interest only mortgage. The reason why I'm questioning the point of getting it is that I've calculated that my repayments would be around £700 per month. That's higher than my monthly rent.

Checked out both Abbey and Halifax but they don't offer 100% mortgages. I'm seeing a mortgage broker tomorrow, so we'll see what he says.

Thanks,
AJ

Your response implies that you think that the current property that you are looking at is to expensive.

Take stock and decide now before you get sucked into the house buying process.

Yes, the mortgage required is going to cost you more than your current rent, even if you go for an interest only loan.

JoeK

silvercar

If you think house prices won't rise in your area over the next two years you may be better off renting. If you think you will be priced out of the market if you don't jump on now, then that's what you need to do.

You need to take a view on prices in the area you want to live, national trends will not tell you how prices in your area will move.

_Andy_

AJP1 wrote: »

I went to HSBC the other day to enquire about their Graduate Mortgage (for which I am eligible) and it seems that I'd be able to borrow at least £135,000 (that's what I asked for but may need slightly more) but I would only repay interest rather than capital for the first three years. I would like to sell the flat in 2 years to buy a bigger one... would paying interest only cause a problem?
Many thanks,
AJ

Sounds like you've been quoted on a Homestart mortgage, which, to be fair, is designed for FTBs. However it makes no odds to HSBC whether you want this or a CR mortgage as far as them making a lending decision, e.g. it wouldn't affect the amount you could borrow.

worriedfirsttimebuyer

We got a mortgage from Halifax with only a 3% deposit? Had to scrape it together and borrow a bit from Bank of Mum and Dad, but at least we have a favourable rate of interest (5.29% fixed for 5 years - higher lending charge of 2k swallowed up within mortgage). Worth considering if you can scrape together 3% although realise this is still a lot on a 135k flat.