i want an int only mortgage, do i qualify?

ronni_2

i want to take out an int only mortgage of around £100000.00-£120000.00 if possible.
my net income is around £1500.00, no exiting loan or credit card outstanding.
i'm trying to purchase a studio or one bed flat and upgrade it in a few years time maybe. from how i understand, at lease i can get on to the property ladder by doing this. is it correct? please give me some advice.
thank you.

herbiesjp

What is your gross annual income - is it around £25k?

Do you have a deposit? If so how much?

JoeK_3

An interest only mortgage is certainly one way to make mortgage payments cheaper but you must realise that the mortgage loan amount will never be repaid, unless you convert to a capital and interest repayment mortgage at some future date.

Another way to look at getting on the property market is a shared ownership property.

If you are unable to buy a property outright on the open market, then shared ownership is the ideal solution for you. Shared Ownership is a part buy, part rent scheme, which enables purchasers to buy a home in stages. Purchasers can buy an initial share between 25% and 75% of the value of the property and pay a subsidised rent on the remaining value of the property. Shared ownership properties can be provided by housing associations, housing trusts and local authorities. These organisations try be as flexible as possible with regards to the initial share purchased, but this may be as much as 50% of the market value at some of their developments.

A service charge will normally be payable to cover the cost of communal maintenance. The service charges payable can remain the same whatever percentage you own of your home and continues to be payable should you purchase your home outright where possible. You will need to have sufficient savings to cover the initial cost of home ownership: legal fees and stamp duty for example. You will need to be able to meet the costs of rent, mortgage, service charges and other associated outgoings.

As your income increases, you can buy further shares of your home until you could own 100% of the value and no longer share the ownership with the housing association or trust. The greater the percentage you own, the lower the percentage on which you pay rent. However, if you do not wish to buy more shares in the property, you do not have to. Obviously, the more you own, the less you pay in rent. And, if you can buy your home outright in the future, then no rent will be payable.

Hope this helps.

JoeK

ronni_2

herbiesjp, i don't have much saving myself, but i might be able to borrow some from my parents, how much would the minimum deposit be ? and my gross salary is about £23000.00

JoeK, thanks for your advice. i've actually spokent to housing assiciation regarding the shared ownership,apprantly there's a long waiting list and key workers are the priority. if i could start with an int only mortgage, as long as the property doesn't devalue, after a few years time even if i do decide to sell the property, at least i've got some money in there, is it right? its just really hard to save up while paying the rent at the same time.

herbiesjp

Well you do not need a deposit if you are happy with a 100% mortgage
Some lenders may go up to 106k -£116k depending on your credit score and the term you are looking at

Some lenders may give you 5 times your income if you are a graduate or if you are classed as a professional (you need to see what occupations they class as professional)

HTH

JoeK_3

ronni wrote: »

JoeK, thanks for your advice. i've actually spokent to housing assiciation regarding the shared ownership,apprantly there's a long waiting list and key workers are the priority. if i could start with an int only mortgage, as long as the property doesn't devalue, after a few years time even if i do decide to sell the property, at least i've got some money in there, is it right? its just really hard to save up while paying the rent at the same time.

Ronni, unfortunately there is no guarantee that the property wont devalue.

Based on your income you could consider a 105% or even a 125% mortgage, although you would be better off seeking the services of a good whole of market mortgage broker.

All the best.

JoeK

ronni_2

thank you to both herbiesjp and JoeK, i think i will take to chance to have a chat with a good whole of market broker at some point, any reccommendation? i'm in bournemouth.

JoeK_3

Sorry but we are not allowed to make any recommendations on this site.

JoeK

ronni_2

i thought so, but thanks a lot for following up this thread, Joek.:T

herbiesjp

Can friends or family help with a recommendation?

ronni_2

is there any website maybe i can take a look?