First time buyer questions - Pls help

Starjust

Don't be tempted to take on debt to get your deposit quicker. You want to be debt free ideally when you make your application.
My brother recently got offered a mortgage for just 11k recently because he had a car loan with repayments a little over £100/month. Without the loan the offer would have been 10 times greater.
Why they would even bother to offer 11k is beyond me......

yorkshire_terrier_owner

This is not what you want to hear, but you need to stick it out and save your deposit. To be honest, the mortgage you are looking at will be more than your rent, so if you can't afford your rent and to save at the moment then how are you going to afford the mortgage?

Getting the money for the deposit from your family will also not make a mortgage application straight forward.

FYI I have just been on the Nationwide mortgage calculator and run through using the figures you have given, 2 children, £25k loan (guesstimate figures used) but it said:

Based on a loan to value of 90% they could lend you £81300. Without the £25k loan it's £120800.

Therein lies your problem - your affordability is way off. That is why your mortgage application last year was rejected, and more than likely will be again.

thedalmeny

Totally agree with what people are saying here, you need to readjust your thinking not just from a deposit perspective but also an affordability one.

Aim for your total debt (Mortgages, Loans etc) to be around 20-30% of your net monthly household income. I know this is may be difficult for you - but with 2 children you need more financial stability.

moneyistooshorttomention

I learn something new every day here.

I must confess to being astonished that someone would spend some of their deposit money on renovating someone else's house on the one hand and the rest of the deposit money didn't even exist basically (as it was needed to pay off a loan).

Echo the others = you have absolutely no deposit at all - unless you can get your mother to repay you what you spent on renovating her house (but I am guessing that you and her have a different way of thinking about this to most of us - ie that you both regard that money as a gift, rather than a loan).

I am also surprised to see someone spend deposit money on someone else's house when they have children needing a secure home (ie one of your own).

It does look like you need to change your basic way of thinking about what constitutes house deposit money and its priority over other peoples requirements for THEIR house or you will never manage to get a deposit together.

Are you planning on refusing the request next time any of your family ask you for YOUR money? You may well have set a precedent here by giving your mother some of your money for her (and possibly other members of your family) to treat your money as if it were theirs.

thedalmeny

An example:

You wanted a 190k mortgage, at around 4.5% on a 10% LTV you're looking at £1067 per month repayment.

On 35k you earn £2218 net per month.

Assuming you have zero debt elsewhere, your total monthly debt repayments would be roughly 49% of your net monthly income.

Now lets say rates jump 2% in 3 years (Entirely possible).

Your mortgage is now £1300 and 59% of your net monthly income...

With 2 children i can't see how that is affordable now, let alone after a rate jump.

I'm assuming your wife doesn't work since you haven't mentioned any income from her side?

kaaip75

thedalmeny wrote: »

An example:

You wanted a 190k mortgage, at around 4.5% on a 10% LTV you're looking at £1067 per month repayment.

On 35k you earn £2218 net per month.

Assuming you have zero debt elsewhere, your total monthly debt repayments would be roughly 49% of your net monthly income.

Now lets say rates jump 2% in 3 years (Entirely possible).

Your mortgage is now £1300 and 59% of your net monthly income...

With 2 children i can't see how that is affordable now, let alone after a rate jump.

I'm assuming your wife doesn't work since you haven't mentioned any income from her side?

Sorry I haven't mentioned, my wife works & earn around 12k per year.

I totally agree with your calculations. But still I can save some if I stopsky TV etc...

The reason I repaid my loan last year is to build my credit record from badto good. But still fair (843)...:(

Also I helped my mum as I am the only son I have to do something from my end(end of the day it is my house anyway...). I know this is not the ideal with mysituation but It was urgently needed.

Thanks

yorkshire_terrier_owner

Have just re-run Nationwide mortgage calculator using your wife's income:

£157500 with loan
£197100 without loan

Basically, you cannot afford the property you want with a loan for the deposit, even if you could get a lender to lend to you on that basis.

If you go into it debt free then you stand a chance taking your wife's income into account.

But I would still re-iterate what I said in an earlier post - if you can't afford £800 rent plus a few hundred into savings every month now, how are you going to afford the mortgage?

bretts

Just want to tell you one more thing
these calculators are way off they just multiply your salary 5 times
I checked that and thought i am in a very good position to get a mortgage and more than what I needed but then when I went through the complete application probably based on my score and everything I got almost 30k less than what was shown on the calculator. My credit history I think was very good as I never ever had any loans and all my CC payments were on time and my credit report was all green too but still keep yourself open to the reduced amount the bank might be willing to pay.

Do not want to dishearten you but this is what I have been through myself and wanted to let you know.

thedalmeny

Sorry I haven't mentioned, my wife works & earn around 12k per year.

I totally agree with your calculations. But still I can save some if I stopsky TV etc...

The reason I repaid my loan last year is to build my credit record from badto good. But still fair (843)...

Also I helped my mum as I am the only son I have to do something from my end(end of the day it is my house anyway...). I know this is not the ideal with my situation but It was urgently needed.

Thanks

I would say that even though some mortgage calculators show you can lend upto 'x', doesn't necessarily mean it's a good idea to do so or that you'll get such a mortgage.

Even with your wife earning 12k, i still think £190,000 mortgage is to much.

Me and the wife are 29 and have 1 child, we've just bought our first house (Due to move in August) and will have a £170,000 mortgage (4 bedroom detached home). I earn quite a bit more than you do and my wife earns 8k-10k (She works part time, when she goes back to full time she'll be back on 20-24k. She is likely to go back into full time once we move into the new home). We also have cash saved.

When including your wife salary your mortgage is 35% of your monthly net income.. With 2 children and at your joint salary level, while i wouldn't call it unaffordable, i'd say it was cutting it fine.

Another thing to consider is that interest rates are at a record low, this won't last forever and you'd have to be pretty confident your salary is going to keep pace with any rise.

Personally i think somebodies debt to income ratio should be no more than 25% when they have dependents and no more than 30-35% when they have no dependents in the current financial climate. (Obviously excluding people who have very very high salaries).

It means any rate hike you could sensible absorb and anything like a big car repair or large unplanned expense would not hit to badly.

kaaip75

thedalmeny wrote: »

I would say that even though some mortgagecalculators show you can lend upto 'x', doesn't necessarily mean it's a goodidea to do so or that you'll get such a mortgage.
Even with your wife earning 12k, i still think £190,000 mortgage is to much.
Me and the wife are 29 and have 1 child, we've just bought our first house(Due to move in August) and will have a £170,000 mortgage (4 bedroom detachedhome). I earn quite a bit more than you do and my wife earns 10k (She workspart time, when she goes back to full time she'll be back on 20-24k). We alsohave cash saved.
When including your wife salary your mortgage is 35% of your monthly netincome.. With 2 children and at your joint salary level, while i wouldn't callit unaffordable, i'd say it was cutting it fine.
Another thing to consider is that interest rates are at a record low, thiswon't last forever and you'd have to be pretty confident your salary is goingto keep pace with any rise.

Thanks for your reply...
I am not asking 190k mortgage, I said I had a viewing last Saturday– it is a shared ownership property asking 150k & rent is 470.00 per month.
I am still considering my best possibility as I don’t haveenough savings.