Help - First Time Buyer!!

Clarky2

Good Afternoon,

I am 23 years old and hoping to buy later on this year.

I just wanted a bit of help and advice, I have currently moved home to save and pay off some debt. All being well I will have paid off most and left with a £3k loan and £7k savings.

I have a credit score of around 650 which experian tells me is poor but reading other forums suggest I don't listen to that TOO much.

I will have financial help with setting up costs and fees etc.

£8000 total deposit and fee's taken care of. Based on £26,000 income (£150 credit outgoings) and an apartment totalling £130,000.

Whats the likelihood of me getting a mortgage at my age with my deposit and credit score.. Any help would be appreciated.:)

StuC75

Loan to Value looks too high a %, really need a 10-15% deposit.

Also looks quite a high earnings multiple, many high street lenders looks at 4/4.25 times your earnings..

Credit score only really matters to experian, its not really worth anything to anyone else..

kingstreet

Is the flat likely to be second hand, or newbuild? This may impact the maximum loan to value and therefore possible deposit you'll need.

If you have no adverse credit - defaults, judgments, missed payments etc, it may be worth getting a credit card and paying it off, in full, every month so you pay no interest.

Positive data on well-managed credit will help you.

Clarky2

It will be a new build, I have one default from 2010 (Orange mobile b****s) but all my other credit files are fine and I have many clean settled credit accounts.

I do have a credit card which I pay off in full, is my credit likely to improve due to paying off loans, credit cards and overdrafts within the next 10 months?

Clarky2

Thanks for your replies btw

I forgot to mention I can have a guarantor if ultimately necessary..

Bufger

are you aware of the nightmare some people have with overvalued new builds? You will want a better deposit than 10% to take out alot of the risk unless you're looking at staying in the property long term (ie its suitable to bring a family up in just incase that happens!).

£8k isnt 10% of £130k so you really need to save up. Whats the rush? if you're in a good situation at the moment set a goal and go for it as house prices dont look like they're going anywhere soon. I'd say go for a 20% deposit and only look at areas rather than individual properties for now (that way you dont fall in love with a property and sacrifice financial stability).

Unless there is a rush and you need to get this property soon?

Clarky2

In an ideal world I would stay home but im in a position where I either need to buy or rent again..

Clarky2

Don't get me wrong I can look at a 1bed for £100k-ish but I always figured 2bed is best for various reasons

kingstreet

A newbuild flat may see you needing a 25% deposit as some lenders really, really don't want to lend on newbuild flats.

The default is also going to make life very difficult for you. It's going to be visible to a lender for six years from the date it was registered.

You are going to find it very difficult getting a mortgage, based on the data you've disclosed here.

Bufger

If I were you then i'd be looking at saving for a 10% deposit on an older established property. This eliminates some of the risk of negative equity. If you get a 95% deal on a new build the chances of them being over valued by that 5% are extremely high so you'd then be forced into long term ownership of that property to build up equity. With more established property the theory is that your deposit is still there as equity should you need to move.

Someone posted on here only today that they bought a new build 4 years ago and are now in 12k negative equity and cannot remortgage when the term ends. This is a real thing that does happen alot!

The issue with apartments is that it only suits a life without children. I know you probably wont be planning them now but believe it from someone that got married and had 2 kids within 2 years - it happens quickly so you want to set yourself up to be as flexible as possible for anything life throws at you. I'm saying this because even if you got a longer term fixed mortgage the chances of you wanting a bigger place soon is high.

Clarky2

kingstreet wrote: »

A newbuild flat may see you needing a 25% deposit as some lenders really, really don't want to lend on newbuild flats.

The default is also going to make life very difficult for you. It's going to be visible to a lender for six years from the date it was registered.

You are going to find it very difficult getting a mortgage, based on the data you've disclosed here.

So even if I were to provide 10% deposit with a guarantor on £100k earning £26k you don't think I will have any luck?