First time buyer!

natjscofield

Afternoon all - I apologise in advance for any part of this that might seem stupid but I really am a bit clueless as to what we need to do/save.

My husband and I have got £5,000 saved so far.
We've been casually looking at Rightmove at the houses we'd like and what we'd need to borrow and we're ideally looking at buying a house between £90-95k.

I really don't know where to start with all the fees etc! I'm hoping to get the 5% deposit scheme and borrow the remaining £90k to be able to buy a house worth £95k. That would mean I'm putting down £5k and hopefully getting a 90% mortgage for the rest. Is that how it all seems to work? Obviously what we can and can't borrow will depend on how the meeting with a mortgage advisor goes but I've got my fingers crossed.

Do they judge it on 3x income or your outgoings? If the latter, is it only things you've got an obligation to pay for? (Rent, CT, gas, electricity, phone, loans etc). Or will they take into account how much I spend on food shopping and the like?

What other fees are involved from a buyer's perspective?
Survey? Around £300 seem fair?
Solicitors fees?
Any admin fees?
Not quite sure how much extra we're going to need for all the above but a family member will be lending it to us and we'll be paying it back over a period of time so its not a huge concern I just want to know what to expect in terms of what we need.

Any help would be kindly appreciated.

Nj

kingstreet

If you buy for £95,000 and put down £5,000 deposit and borrow £90,000 that's 94.7%, not 90%.

Some lenders base affordability on ONS averages, others analyse every penny of your expenditure in arriving at what you can borrow.

You'll have valuation, survey and legal costs to pay, for which you should budget at least £1,500. There are mortgage products with low/no fees and a cashback which would suit your smaller mortgage better than a lower rate.

An independent broker would suit you best for fleshing out the little you know about the process and associated costs.

natjscofield

kingstreet wrote: »

If you buy for £95,000 and put down £5,000 deposit and borrow £90,000 that's 94.7%, not 90%.

Some lenders base affordability on ONS averages, others analyse every penny of your expenditure in arriving at what you can borrow.

You'll have valuation, survey and legal costs to pay, for which you should budget at least £1,500. There are mortgage products with low/no fees and a cashback which would suit your smaller mortgage better than a lower rate.

An independent broker would suit you best for fleshing out the little you know about the process and associated costs.

Apologies - I actually meant to write 95% mortgage not 90. All these numbers are getting too much for me!

Many thanks. I'll look into a mortgage broker.

cinnamon442

It's 4.5 times your income or less, usually. Some banks will go higher but then you'll need to have a serious chat about whether you want to take on that much debt.

They do also take into account things like food shopping. I was quizzed by Santander about how much money we spent on food a month and they said it was too much, despite us currently paying for a family of three, two dogs and two cats and we'd be moving out to live by ourselves, so it's a good idea to cut down on all unnecessary spending for 3 - 6 months prior to a mortgage application.

Other fees you can expect are things like solicitors fees. Ours were about 3K but they can be more expensive or cheaper depending on your solicitor. Make sure you try and get one that'll give you a fixed quote - ours adds stuff on whenever anything arises and it's painful!

Surveys, you can sometimes get a valuation done as part of the mortgage package with some banks, but it can be anything from £150 to £300-£500 for a Homebuyer's and £800-£1000 for a building survey, though the latter is really only recommended on older houses.

Not really any admin fees, but you'll also have removals costs, furniture costs if you haven't got any, if you end up getting a leasehold then you'll have ground rent and service charges, buildings insurance, contents insurance, life insurance, parking permits if you need one, etc etc.

If a family member is lending you money for you to pay back, it may also cause a few issues with the bank as they may class it as a loan you'll have to pay back and take it into account in your affordability calculations. Your solicitor will probably recommend they give it as a gift to you to ease complications in that respect.

Robin9

Add moving costs, carpets, curtains and a whole host of small things - perhaps £1000

Funiture, fridge, cooker ......

natjscofield

cinnamon442 wrote: »

It's 4.5 times your income or less, usually. Some banks will go higher but then you'll need to have a serious chat about whether you want to take on that much debt.

They do also take into account things like food shopping. I was quizzed by Santander about how much money we spent on food a month and they said it was too much, despite us currently paying for a family of three, two dogs and two cats and we'd be moving out to live by ourselves, so it's a good idea to cut down on all unnecessary spending for 3 - 6 months prior to a mortgage application.

Other fees you can expect are things like solicitors fees. Ours were about 3K but they can be more expensive or cheaper depending on your solicitor. Make sure you try and get one that'll give you a fixed quote - ours adds stuff on whenever anything arises and it's painful!

Surveys, you can sometimes get a valuation done as part of the mortgage package with some banks, but it can be anything from £150 to £300-£500 for a Homebuyer's and £800-£1000 for a building survey, though the latter is really only recommended on older houses.

Not really any admin fees, but you'll also have removals costs, furniture costs if you haven't got any, if you end up getting a leasehold then you'll have ground rent and service charges, buildings insurance, contents insurance, life insurance, parking permits if you need one, etc etc.

If a family member is lending you money for you to pay back, it may also cause a few issues with the bank as they may class it as a loan you'll have to pay back and take it into account in your affordability calculations. Your solicitor will probably recommend they give it as a gift to you to ease complications in that respect.

Many thanks for taking the time to help.

In response:

Currently in a rented house so furniture is fine and all the white goods are ours to take with us luckily. My father in law is a truck driver so he's happy to move us in an out. Again, we're lucky in that sense.

I agree about the loan - will follow your advice on that.

I already pay contents insurance and we have life insurance anyway. Will factor in ground rent etc - thank you. We'll be looking for a house with a driveway so no need on the parking permits.

We both have a good credit score and I pay £30 a month as a loan repayment from when I borrowed £1000 a few years ago for driving lessons and a car. Other than that we've got no finance or credit cards etc so hoping that will go in our favour. No defaults or late payments ever.

It's just concerning because as it stands we pay £500 a month in rent and judging by the mortgage calculators we've used its looking at between £400-450 per month for a mortgage. I know we can afford that its just if someone from the outside looking in can see it etc.

I'm also concerned about nursery fees. I currently pay £400 ish per month for nursery for our daughter. She starts school in 2 years so the nursery isn't a long term thing as such, but I'm not sure if that will limit our chances of being approved.

As before - many thanks for replying.

JimmyTheWig

Consider how much notice you need to give to end your rent contract.

When you buy a house the most important bits are exchange of contracts (at which point everything - including price paid and moving date - is agreed and set in stone) and completion (which is the day the house becomes yours).
There is generally about two weeks between exchange and completion. Sometimes less. If you need to give your current landlord four weeks notice then you can't do this before exchange (as things can go wrong up to that point and if they did you would end up homeless) so may mean you pay rent for a couple of weeks after you own the house (at which point you need to start paying the mortgage).

natjscofield

Robin9 wrote: »

Add moving costs, carpets, curtains and a whole host of small things - perhaps £1000

Funiture, fridge, cooker ......

Thanks Robin.
We've got all our furniture and white goods. We currently rent so thats all okay.

Moving costs are fine - family member will do it as he has a truck.

Carpets, curtains etc - not looking to move anywhere that isn't 'ready to live in' per say. Old fashioned decor I can deal with and we'll just decorate as we go room by room.

kingstreet

natjscofield wrote: »

I'm also concerned about nursery fees. I currently pay £400 ish per month for nursery for our daughter. She starts school in 2 years so the nursery isn't a long term thing as such, but I'm not sure if that will limit our chances of being approved

It won't reduce your chances, but it will certainly reduce what you can borrow.

natjscofield

JimmyTheWig wrote: »

Consider how much notice you need to give to end your rent contract.

When you buy a house the most important bits are exchange of contracts (at which point everything - including price paid and moving date - is agreed and set in stone) and completion (which is the day the house becomes yours).
There is generally about two weeks between exchange and completion. Sometimes less. If you need to give your current landlord four weeks notice then you can't do this before exchange (as things can go wrong up to that point and if they did you would end up homeless) so may mean you pay rent for a couple of weeks after you own the house (at which point you need to start paying the mortgage).

Thanks Jimmy. Yes we only need to give 4 weeks notice.
I appreciate the advice. I hadn't thought of that. I'll make sure we've got an extra months worth saved just in case!

JimmyTheWig

natjscofield wrote: »

I pay £30 a month as a loan repayment from when I borrowed £1000 a few years ago

See what your broker says (assuming you see a decent broker and not someone who works within an estate agents) but it may make sense to use some of your saved deposit to pay off the loan in full.