1st Time Buyer What Can I do !!! PLEASE HELP

bowlingo

Hi all,
Me and the Wife have been renting now for 10 years and are both in our early 30's.

We need to get on the property ladder but it seems impossible.

I earn 21k and the wife is on disability Living Allowance (non means tested) and gets around 7k per year.

When I looked into getting a mortgage 2 years ago the most they would give me was £75,000 here in Bournemouth that couldnt even buy us a garden shed.

I need to get a mortgage for around £150,000 in order to get the home we need (2 bed house, 2 bed bungalow or 2 bed flat considered)

Ive been ringing up all the housing asscoiations in the Bournemouth area today and have registered with a few and ive also applied to be put on the council housing register (I need to do this in order to qualify for Shared ownership although I will be at the very bottom of the list)

Firstly I need to find a lender that will lend me 75,000 on a shared ownership basis I also need to get a mortgage guarantee so that when/if a shared ownership property comes on the housing associations books I will have a mortgage guarantee in place. I can put £5000 down as a deposit and have another £2500.00 for any fees that will be needed.

Please can someone tell me the best places to get a shared ownership mortage in my circumstances. Im also wondering what might be best as ive been told the 50% share that the housing association requires each month is about £170.00 I would like to go as far as £600.00 per month including the rent and the 50% mortage that I hope to obtain. Im also wondering if I should go for an interest only or a repayment mortgage in a shared ownership situation.

Im also wondering if there is a way of borrowing 150,000 from a lender on a interest only basis spread over 30+ years or something.

Sorry for all the questions im also wondering if theres another way of aquiring a shared ownership property other than through a housing association?

I work in the building industry so even if the property is in need of a complete refit this shouldnt be to much of a problem.

Thanks in advance
Alex

meanmachine_2

The MAXIMUM you could borrow on 30 years interest only is £110,000, putting down a £5,000 deposit.

Repayments would start at around £560 then rise to around £630.

Of course, if IR rates were to rise, you'd be looking at paying back much more.

If there is no way of increasing your earnings, that is what you're looking at.

Why MUST you buy right now? We're at the tail end of a property boom and prices will not be jumping up like they are have over the last 3 years, so there's no need to panic. In 12 months' time you'll be just as able, if not more able, to buy - in my opinion.

Your last option is a self cert (or lie to buy), whereby you state your own income. But people with these mortgages are the first to lose their homes in any recession, so be very careful about overstating your income (not least because it's a fraudulent act).

Mate, I know estate agents who have rented for 20 years and wouldn't take on a mortgage if you paid them, so don't feel like you're a second class citizen.

bowlingo

Hi,
I phoned the Halifax earlier to enquire about there Shared Ownership Mortgages I told them I earn 21K and my wife is on 6K (disabilty living allowance this is taken into consideration as its not means tested)

After telling them mine and the wifes earnings and also that I owed £3000 on credit cards of which I can pay out right tomorrow and also that I can put £5000 down as deposit and have £2500 for fees.

I was told that they could lend me £54000 !!!

When I applied for a mortgage with the halifax 3 years ago they said i could have £75000

I was amazed when they offered me £54000 as that wouldnt buy me anything at all.

In order to qualify for shared owndership at 50% as my local housing associations only offer 50% I would need £75000

Im wondering if its because its a shared ownership mortgage im applying for that the money they are willing to lend me is so low?

I will need a guarantee of £75000 in order to qualify so im wondering if a mortgage broker could help me.

Im assuming the reason they only offered me 54000 is because they add money on for the rent id be paying the housing association each month for there 50% share?

Any ideas on how I can get the £75000 required under the shared ownership scheme?

Thanks in advance

Alex

herbiesjp

There may well be other lenders that will look at the shared ownership situation more sympathetically, and offer a higher loan amount.

It all boils down to circumstances and affordability.

Scott

Part of the reason that banks profits have almost all risen across the board, with around one not making so much last year, is because they have improved drastically on bad debt.

Meaning: it's harder to get more from them. For a while, lenders were allowing people to drastically over-borrow, making their Arrears departments very busy.

meanmachine_2

If you walk into any high street lender, they're unlikely to be flexible. It'll most likely be a case of "computer says no".

Talk to a mortgage broker who will have access to hundreds of policies, including 50% ownership.

But as I say, you *could* borrow up to £110,000, so if you were prepared to buy a "fixer-upper" outright, that could be an option for you. But with your wife presumably being unable to increase her earnings, just in case you get into trouble, i'd advise against stretching yourself.

If you're willing to pay the interest, there will be a mortgage lender out there willing to give you the moon on a stick.

bowlingo

Hi,
Im wondering if the reason they only offered me 54000 is because im applying for a shared ownership mortgage?
and if id of just asked for a normal say fixed mortage they would of given me more?

Can anyone advise me on any good mortgage brokers that other people have had good experience with?

Thanks
Alex

Fairdo_2

I am flabergasted that they only offered you £54,000. Only 3 x your salary would be £63,000!

I know there is rent that they need to take into account for affordability purposes, but believe it or not, the rent is design to be less cumbersome than private rent, so it should not have a major effect on affordability.

You are showing all the right signs for commitment, with the fact that you could pay off the outstanding credit, put a reasonable deposit down and cover purchase fees.

I think someone at Halifax did not hear you right, as I am sure I would have had a different response from them.

Portman, Nationwide, Leeds & Holbeck, Newbury Building Society, amonst others offer Shared Ownership mortgages and you should not be penalised that much by having shared ownership instead of a standard mortgage.

I am baffled.

homersimpson_3

Usual rule of thumb for mortgage - 3x main salary, 1 x lower salary or 2.5x joint. Applying this either way - 70k which is close to figure required. Some offer 4x but do not overstretch yourself. Ask Halifax why not applying standard rule- age?, nature of work?, are they including disability benefits in calculation?. How safe is your job? Do you have large outgoings because of wife's disability- so whilst you earn good salary (good compared to mine) and
receive benefits there's not too much disposable income? Or do benefits cover this?
You say you are a builder and could do refit- could you buy cheap repossession etc and do house up? Obtain surveys, legal advice, know your limits etc. A 1 bedroomed place would be cheaper- do you really need or want 2 bedroomed place. You could always sell 1 bedroomed place when better off financially.
It's important you shop around for mortgages and as aswell as contacting a mortgage broker you need to do your own research- generally brokers receive commission on products sold but they should declare these. Various websites which do mortgage searches. and visit all the building societies and banks. building societies generally are better. ask why they won't lend you amount required and ensure you keep and take all documentation required. banks/building societies need to assess the ability to pay the debt. If you understand their thinking you can be more prepared-Thanks

Woby_Tide

Fairdo wrote:

I am flabergasted that they only offered you £54,000. Only 3 x your salary would be £63,000!

£21k - £3k credit card debt = £18k x 3(single salary multiple) = £54k mortgage

that'll be thanks to the archaic way a lot of banks calculate mortgage lending off the cuff rather than affordability

Scott

If you're wanting a bank that will take your affordability rather than simply your income, go see Ulster Bank. They make you fill out a big affordability form, but as far as I remember, they also assess upon that.

Might be worth the half an hour to try it out.