Another First Time Buyer

Freshfaced

Hi everyone,

This is my first time posting on the forum after lurking and snooping here for some time. I'm just looking for an outsider and unbiased opinion on my current situation on whether you think my game plan is doable or just plain not going to happen - any thoughts would be greatly appreciated!

So, here's goes - Myself and my partner went for a few viewings last week at some houses a little out of our budget. And safe to say we fell for one of them, it's a nice 2 bed terrace on at £140k - although we are going to be offering less than that with the hope of getting it for around £125k - 129k if we were to progress.

Reason for the low offer? Mainly due to a new boiler needing to be put in, avoiding stamp duty (if he took a low ball), new bathroom needed, re-tiling the kitchen, double glazing on the rear and decorating throughout & a case of damp that needs to be checked in the cellar. That and the fact that houses in much better condition have sold for around that price in the same area. Also, the property was bought buy the current owner in 2006 for £120k and rented - and it would appear minimal work to the house has been done since and most houses brought at that time (2006-07) have dropped in price when sold in the past 2 years.

Anyway, I'm getting off track - so here's our financial position I'm in a very secure job in the family company, with a pre-tax salary of £17.5k - but I do also receive a commission which I've averaged an decreased to be safe at £250 a month as it fluctuates. My salary is set to increase in the coming years also. No other financial commitments other than my student loan, as my car & mobile are all covered through work. I've also got £15k towards a deposit. My partner is a primary school teacher, on a salary of £21k, with no other financial commitments other than phone, car and student loan. With £4k in the bank which we are planning to use for fee's.

Our (dream) plan is for me to take on a mortgage in my name only for the first two-three years, on a guarantor mortgage with my Dad as a guarantor (he's in a suitable position for this according to what I've read re: his salary and current mortgage. And he's willing). While my partner saves £500 a month so we can remortgage in 2-3 years time an pump another £10-15k into the mortgage, and get a better rate etc.

So that's what we were thinking, are we being too naive and stupid? We're off to the estate agents mortgage adviser on Monday, but we'd really appreciate what you mortgage buffs out there have got to say (as it would be nice to not have him laugh in our faces).

Thanks in advance :money:

R_P_W

Sounds possible if your credit history is good.

Be careful going to estate agents mortgage advisor. You are effectively showing them your hand financially and they will only have limited options for lenders. Make sure you do your an research into deals available before you go

ACG

Why do you not want to do this in joint names?
The reason being is that a guarantor is there to bridge a gap, not make up 30-40% of the purchase price.
Also guarantor mortgages you are basically limiting yourself to 1 or 2 products.

One other thing, dont go off what people purchased the property for - its pointless it was a different market.

Freshfaced

Hi guys, thanks for your rapid replies.

R P W - This was one of my concerns, don't want them really knowing I was only really going for the initial appointment to see how feasible our plan was, which I'd then go and find someone else - maybe Which?

ACG - the reason for going solely on the mortgage is my partner is due to start her new (and first paid) teaching position in September and thus hasn't received a pay packet yet (and won't until end of Sept.) and I don't know how this will sit when applying for a joint mortgage. And doing this would allow my partner to save to plum a lump sum in when we came to move it to a joint mortgage. And we wanted to be sure everything is well with us living together (despite being together for nearly 5 years and being very happy) but this could be more with us being over cautious.

I understand what you're saying regarding the guarantor mortgage, as this is what we're aiming to do (re: making up the purchase price) to allow us to get on the ladder and get a house we really like (despite its downfalls) in an ideal location - as I think we can add some good value doing it up over time. And I can understand not going solely off the previous purchase price, we're just trying to justify our low offer really - but thanks for the advice on that one.

ACG

You buying a Mortgage or in joint names for the same price makes no difference does it? You will still have to pay the same amount each month. Which means your partner could still save up a lump sum?

There are lenders who will look at someone with a contract of employment even if they havnt received a pay packet yet - especially when its from someone like the local council or a private school.

I think this will be more difficult using a guarantor and to be honest i wouldnt fancy your chances.

I see the point about living together and i completely understand - i bought my house with my mrs but the deposit was mine and the mortgage is solely in my name should it not work out then nobody is tied into anything, but your income doesnt support what you are looking to do and i think you would either need to lower your expectations or look at a joint mortgage.

Freshfaced

I see what your getting at now, and that does make good sense. And especially in regards to being able to get a better deal as there are more offers available when not looking at a guarantor deal.

Would these lenders have an issue that her current contract is only temporary for a year (covering maternity)? And will be applying for permanent position again next January for the coming teaching year. Sorry I probably should have mentioned that before. Would it need to be a permanent position for them to make a consideration such as that?

Again many thanks for your reply!

ACG

Ha, Columbo style there... just one more thing

Yup that would make it trickier.
I think for this you need to sit down with a broker, you your partner and the potential guarantor. Try to find as many ways of being able to do this as possible, it should be possible but i think the options are going to be pretty limited.

Freshfaced

Columbo's my middle name - haha!

Thanks again ACG, would you recommend any broker in particular? Or will the estate agents be an OK starting point?

At least I know I'm not going to be completely wasting anyone's time by going and seeing what and whether it's going to be doable.

ACG

Theres no such thing as wasting anyones time, worse case scenario is it cant be done and you get some direction as to what can be done so you can plan a route.

We're not allowed to recommend brokers on here. Personally i would tend to avoid estate agent brokers, they get nice easy cases all day long anything out of the ordinary might cause some issues. Also do you want a broker who works for the estate agent knowing what you can afford? This could put them in a stronger position when negotiating a price.

Freshfaced

Wise words!

Yes I did think that would be a problem, no worries I'll have a browse and see if I can find someone to discuss with other than the estate agents. How much can I expect to pay for a broker to arrange the mortgage if they find something worthwhile? Just so I know what's going to be too much? Say £300 - 400, or does it work on percentages?

Thanks again.

ACG

Some dont charge, others do. The ones that do typically charge from around £250-299 through to £1k or 1% of the mortgage amount.

I have seen people charge 2-3% - but avoid these people, just rip offs in my opinion.

Also some will charge a fee and rebate any commission.

Try to make sure you get either an Independent or Whole of Market broker. Tied or Multi tied means they have less selection.