How much could I borrow? Another FTB.

SkintChick_2

Hi I am currently earning £27,000.00 per annum and am a recently qualified solicitor.

Would really love to get on to the property ladder but need to look at what I could realistically borrow (and afford to pay back!!).

I have currently got savings of about £5000.00 but also have a personal loan of about the same amount which I intend to pay off using the savings leaving me back at the beginning with no deposit.

I am currently living at home and as my parents know that I am saving a deposit they don't charge me any rent so once my loan was paid off could save quite a bit quickly. Is my best option to get on the property ladder now with a 100% + mortgage or to give myself another year with prices still increasing and save a bit of a deposit?

Not sure what my best option is and any advice would be appreciated.

matty2767

you dont mention where you want to buy but from my experience house prices rise faster than you can save. my previous house was £54k when i bought it and doubled in 4 years when i sold it. not sure how the market is currently (you could tell me ) but can you save more then £1k/month?.

you also need to consider mortgage rates and whether you could get a fixed rate now at a good deal?.

think about what you would like to buy now and what it will likely cost next year. consider your pay rise and how much you expect to save and compare whether it is worth staying at home.

JoeK_3

SkintChick wrote: »

Hi I am currently earning £27,000.00 per annum and am a recently qualified solicitor.

Would really love to get on to the property ladder but need to look at what I could realistically borrow (and afford to pay back!!).

I have currently got savings of about £5000.00 but also have a personal loan of about the same amount which I intend to pay off using the savings leaving me back at the beginning with no deposit.

I am currently living at home and as my parents know that I am saving a deposit they don't charge me any rent so once my loan was paid off could save quite a bit quickly. Is my best option to get on the property ladder now with a 100% + mortgage or to give myself another year with prices still increasing and save a bit of a deposit?

Not sure what my best option is and any advice would be appreciated.

Some lenders would allow you to borrow up to £162,000.

Joe

MortgageMamma

You could consider buying now and taking a 125% mortgage that way your saving would remain in your pocket as you will need them for solicitors fee's stamp duty furniture etc etc

95% of the mortgage is secured on the property and the other 30% )or whatever % under this amount) is an UNSECURED loan over the same term as the mortgage usually at the same rate as the mortgage. Ultimately it would mean you paid more interest on your loan but its a means of doing what you want and not being outrun by the house prices on your savings

There are currently 4 lenders offering this type of mortgage (this is off top of my head there may be more but less competitive)

MM

thebyp

i would say 162,000 although achievable from a lender would be something you would really need to look at carefully to make sure you can adequatly afford the repayments.

Most lenders will lend you up to 95% of your property to the tune of 120k - 140k depending on where you go, and what other comitments you have (credit cards etc) and as said above, there are also those that will lend you 125% of the value. I can think of three such companies, racking my brain for the fourth! But be very careful there! You tend to pay a premium for the privilige, and keep in mind that borrowing extra will cost you a lot more in the long term.

One last option to consider is to get a professional mortgage which may allow you to extend your borrowing options, and also utilise a temporary person to act as guarantor.

hope that helps.

SkintChick_2

Thank you for your posts. It looks like I need to speak to a mortgage advisor once I've actually had a look at the properties out there & find out what the best deal will be for me.

£162,000.00 seems like quite a lot - six times my salary? Do any of you know what the monthly repayments on that would be if I took a loan out for this amount on a repayment basis even if I had it over a period of say 35 years?

I work in conveyancing so have seen these mortgages where they offer you part secured and part unsecured loans- I know Northern Rock do one. Do you get hit with worse interest rates with these mortgages?

The professional mortgage which I looked at which was with Scottish Widows would only lend 4.5 x my current salary - are there other lenders that offer these mortgages?

Thanks in advance.

thebyp

the mortgage payment on 162k over 35 years would be circa £900 to £1k depending on who you went with. assuming a rate of about 6%.

Your always going to pay more for something like a 100% mortgage. For example, Northern Rock (since you mentioned them) have the together mortgage to lend you 100%. for a 2yr fixed version of this your looking at is currently running at 5.95% (on the assumption you pay the higher arrangement fee of £2k).

Their 2yr fixed at 95% is running at 5.49% (again with fee).

I guess the point here is though that you need to do your research on what you want to do. If you really must borrow 162k then your going to have a very limited range of lenders, and thats going to cost you in terms of offers and choice.