FTB finances and affordability

lukealexander

Hi

My partner and I are starting the process of looking at mortgages and properties, and would welcome views from the forum on affordability and likelihood of acceptance for a mortgage.

We currently rent in a 4 to 5 year old building in Liverpool City Centre which has around 300 apartments, of which around 50 remain with the developer. We've decided that we want to remain in the centre, so have spent several weeks looking at flats but think that this building is our favourite and would like to buy here.

Age: mid-to-late twenties
Jobs: private / public sector professional
Salaries: £34k / £26k
Savings: £30k
Debts: none
Credit history: excellent / one late CC payment in April 2010
Rent: £905pcm

The properties we like are listed at around £175k to £200k, but I'm hoping we could cut at least 10% from those asking prices given the market is pretty sluggish. I also understand that the developer is looking to dispose of the remaining units before the end of the year.

We can save around £1500pcm, but I'm working on the basis of a deposit of £25k so we have money for fees, furniture, contingencies etc.

Thrugelmir

From what you've written seems achievable.

Start negotiating with the developer.

japmis

Looks like you've made great head way in getting yourselves mortgage fit!! Why not go and have an informal chat with your bank to get a feel for the market? I went to nationwide who suggested I opened a save2buy account, you only need to pay in £50/month for 6 months and then they are able to offer you a preferential rate. If you decide at the end of the 6 months you can get a better offer elsewhere, then you aren't obliged to take a mortgage from them, it just gives you another option when you're ready

HappyMJ

Late payment is over a year ago and usually ignored. I wouldn't worry too much about that.

How many floors does the building have? More than 3 and you will be limiting the mortgage provider that you can choose.

Personally I'd aim for at least 25% deposit and put other costs on an interest free credit card. You will get much lower interest rates that way. Pay the minimum you can on the mortgage and pay off the credit card ASAP before the interest free period expires.

What service charges does the developer want? You aren't paying them at the moment as your landlord is paying them but as an owner you will have to pay them. That should cover your buildings insurance.

Your income multiples are fine. The minimum you would qualify for is £165,000. I'd just get that deposit increased before buying. Maybe wait right until the end of the year when the developer will heavily discount to get rid of the properties.

lukealexander

Thanks for the tip on the interest free credit card idea - I'm quite into 'stoozing' but I'd not considered using the credit in this way.

I spoke to First Direct earlier (amongst others) and they said they target an income multiple of 2.5 - which felt quite low, but I know from my own experiences with HSBC group that they're pretty conservative (which is fine).

Thrugelmir

lukealexander wrote: »

I spoke to First Direct earlier (amongst others) and they said they target an income multiple of 2.5 - which felt quite low, but I know from my own experiences with HSBC group that they're pretty conservative (which is fine).

Good lending rates as well.

GMS

Which block is it? There are many apartments in Liverpool being sold off at discounts by property clubs. Be careful of what you offer.

Remember to factor in any service charges into your affordability.

From what you have said there should be options for you.

lukealexander

GMS wrote: »

There are many apartments in Liverpool being sold off at discounts by property clubs. Be careful of what you offer.

That is interesting - do you know (or is there a way to find out) which are being sold by property clubs? I've not come across that phrase before, and a quick Google hasn't revealed much - what exactly is a property club?

GMS

The Mann Island development is being pushed by a company currently with big discounts off the lost price. Mortgages are difficult to obtain with this sort of arrangement but if you could match the price with the developer directly then should be easier.