Getting a mortgage at the age of 26/27. Thoughts?

Insert_Username_2

Am currently purchasing in East London, am 25, and this was all brand new to me too.

One poster above pointed out credit history. Definitely do this now. Get a free trial on experian, and get yourself on the electoral roll if your not already. I didn't and then had a bit of a sweat on waiting to hear if it was ok - not what you need with all the other stresses. (It ended up being fine)

I also used a mortgage broker, they were brilliant. Really patient, "held my hand" along the way etc. After 20-30 minutes on the phone with them I felt way more comfortable and had a decent overview of what I can borrow. At our age, with a stable job, 5x salary (excl. bonus etc) is a good proxy. So for you, £150k is probably a max figure. With brokers, just beware of the upsell on legal advice etc as the ones they offered me weren't much cop - I was recommended others by a friend that have been, to date, decent.

Back of the envelope - if the property is £150k, you have a decent shot. Much more than that (160+), £10k is probably not going to be enough for a deposit (you'll incur 1k-2k of legal fees, plus stamp duty at 1% of purchase price). Just beware that with this LTV, you probably won't get the best interest rate on the mortgage.

I'm sure I'll get corrected if I'm wrong, but that's my view!

Kynthia

Get the £2 statutory copies of your credit reports rather than signing up for anything and check that you're on the electoral roll, have no CCJs or late payments, etc. Then save enough money to have 10% of the property value, stamp duty, legal fees and mortgage arrangement fee. In the meantime look at the property market and see what you can afford in what areas. Plus read up on the buying process, the difference between leasehold and freehold, mortgages, shared ownership, etc. If you feel ready then 26 is a great age to buy, it's when I did, and no matter what age you are the first time is scary.

dee4life2005

another thing to bear in mind is mortgage product fees, and that the initial mortgage payment can be much more than the rest and I think this depends on when your completion date is compared to the date you want to pay your monthly payments on. As an example my first payment is £1100, and the others are £700.

BigAunty

nickgowdy wrote: »

I work as a programmer in Central London and I am earning around 30k per year. My job is stable and there is plenty of work from what I can see so I don't have any concerns about losing my job.

No jobs are stable. Look into income/sickness protection policies though I expect a lot are rip offs and have too many exclusion policies, not sure if they are 'worth it' but do check. Do some research to understand what little help there is to unemployed home owners and how the govt may be reducing it further (Support for Mortgage Interest scheme). Make sure you build up a good nest egg in the event you become long term unemployed.

My friends in IT technical and consulting roles (I know lots of PMs, project support and software testing professionals) are routinely hammered by factors like the recession and the off-shoring of their roles overseas.

I was made redundant from two roles in a row (one company lost a major client account, the other moved part of our company into the existing parent company's infrastructure) and then left the third job before the redundancy process targetted my grade structure (general downsizing followed by a move from central London to Milton Keynes to save more costs).

My last position involved a move from the center of the city to, I kid you not, an office above a Farm Foods and Wetherspoons in a deprived area outside the city because the public sector aren't supposed to have nice offices.

Soleil_lune

nickgowdy wrote: »

At this moment, I have £5700 in a cash ISA and £4000 in a S&S ISA. I also have 2k in the bank. In my mind I wanted to put more cash into my cash ISA when the new tax year begins. Then I am going to evaluate the situation then. I am also trying to get more money as a programmer which is a work in progress :sad:

Would it be worth going to a mortgage broker now even though I haven't acquired all the money needed for a deposit?

Also I am looking at property at around 150-200k.

Sorry but £12K is nowhere NEAR enough for a deposit on a property in London. I would stay put if I were you. You're with your folks, and can save better there, and as someone said, a one-bed place is a bad idea, and you will struggle to sell it.

I am not a fan of buying. Having been a homeowner for 18 years, having rented in private let, and now in social housing, being a homeowner is my least favourite of the three. But each to their own. If I were you though, I would definitely NOT buy right now. You're too young (IMO) to be tied down with the ball and chain that is a mortgage, and a one-bed is a bad idea. You'd be better waiting til you meet someone, getting a place together (eventually,) so you can halve the costs, and getting a 2-bed. Being alone is VERY costly.

Stay put. I would, if I were you.

Marie27lol

Conflicting ideas there Nickygoody; so here are my £2 quids worth.

I can see the attraction of owning your own: I bought at 21 with an heritance, but the mortgage was only £15k (55%).

I am afraid at 5% deposit, in London, 1 bedroom. I would wait a little while, save real hard and get:

* 10-20% deposit - considerably better rates
* 2 bedroom home - can rent the 2nd if the going gets tough, or room if you find someone special to move in with you

I don't know what the prices of the places are down there, but rule of thumb is:

* Deposit - xyz
* legal & moving fees £3-5k
* stamp duty - dependant on price
* decorating costs - £2-500 inc paint, labour etc

AND keep back enough for:

* House insurance
* Car insurance / travelling costs - will they increase?
* Food / petrol - expect to pay until you find a seller u like / good deals
* Utilities and CT
* etc, the list can be endless...

Generally, I would say at least the same as what you spent on legal and moving fees, and ensure you have 3 months of savings ready for the odds and sods that you haven't thought about... e.g. curtains, light bulbs, washing machine / fridge...

Don't be afraid, but really consider all the sums before you go hunting.
M

nickgowdy

MaxTheCat wrote: »

If I was you I'd be looking at increasing your earnings considerably first, 30k as a programmer in London is pathetic I was on more than that in 2000 when I moved to London and I wasn't contracting. You need to up your income and I recommend looking at contracting permie work is really not the way forwards. You will find that your ability to earn and save will run ahead of any house price increases and you will be able to buy a better property without shared ownership or silly help to buy traps.

I'm not sure how much I said about my work but I am a junior/mid level programmer using C# and .NET with about 2 and a half years commercial experience. Do you think I should be earning more MaxTheCat?

I will definitely start looking up mortgage brokers as well so I can gather more information and a professional opinion.

dominoman

Im now 38 and have always rented, despite being in a well-paid London job.

I certainly wish I had bought years ago, but was always waiting for the crash that never came...

Having said that - I'm not sure now is a great time to buy in London. Property is so ridiculously overpriced...

Angelicdevil

nickgowdy wrote: »

I'm not sure how much I said about my work but I am a junior/mid level programmer using C# and .NET with about 2 and a half years commercial experience. Do you think I should be earning more MaxTheCat?

I will definitely start looking up mortgage brokers as well so I can gather more information and a professional opinion.

I think you should be seeking a raise, if you fancy it and have the confidence to ask for it.....I'm a junior c#, .NET programmer (16 months experience) working outside of London and I'm on (much) more than £30k......

That aside, you do need to up your deposit considerably if you are hoping to purchase a property of £150k +.