First time buyer

Dhrucku

I am looking to buy a house for around the £200,000 mark so I want to set this expectation.

I work a steady corporate banking job of £31k with personal savings of around £22k at the age of 29. Am currently living with my parents who still work also both bringing in around £2.5k a month and have £50k savings between them which they are happy to let me use in providing a deposit (asian family perk). Combined monthly income for all of us would be around £4k.

Questions:

1) Would the bank lend me £140k if I offered to put down a deposit of £60k combining mine and my parents savings?

2) I have done some calculations on Zoopla and the difference between monthly repayments of putting a 10k deposit as opposed to a 60k deposit at 1% interest rate, mortgage term of 10 years (I am hoping I will get this as I get the bank rate (colleague rate) with great credit history) is £438. Not a great deal considering the deposit difference would be £50k? Which is a Nissan GTR!

3) I have one saving grace to this which is my parents are pretty selfless people and they are helping me to get on to the property ladder (only child - before I get negative comments I would like to say this is not a brag thread or anything of the kind - this is asian culture) before I get married which will be within two years. They are offering to help me pay with mortgage and deposit. What would you suggest is the best strategy for me to maximise my situation. Would a huge deposit be the way to go or the benefits of comfort that 3 people are earning so mortgage repayments, even if slightly higher due to lower deposit, is the way to go.

Thanks for reading and I look forward to the answers as I will be starting my house hunting as of tomorrow when I visit my bank.

I will try my best to keep this thread updated for future readers.

Pixie5740

1) Maybe. It depends on your other financial commitments and the money from your parents would have to be a gift.

2) A 10k deposit on a £200k property equates to a 95% LTV which you might get as a FTB but obviously the bigger the deposit you have the more choice of mortgage products available to you and better interest rates. I'm not sure what these Zoopla calculation you are doing are but a 75% LTV mortgage will attract a better interest rate than a 95% LTV mortgage.

Rather than looking at the repayments, look at home much interest you would pay over the lifetime of the mortgage with both LTV scenarios.

3) some lenders allow parents' income to be taken into account in a joint mortgage arrangement.

Personally I'd go with a bigger deposit to get the best interest rate so that overall I'll pay less in interest over the whole mortgage term but that's just my opinion.

Maybe you should go and see a whole of market broker to work through your options.

Annisele

If you're wanting a staff mortgage rate, then your employer's lending criteria will be the one that matters. I think most (all?) lenders would be prepared to accept a gift of £50k from the borrower's parents, but a loan would be a different matter - and I'm not sure what you mean by "let me use".

Is there an argument for waiting a couple of years and then using your future spouse's income to support your application?

Dhrucku

Annisele wrote: »

Is there an argument for waiting a couple of years and then using your future spouse's income to support your application?

It's kind of expected that the outset is provided by myself (the man) and then my spouse will pay mortgage (if required) after marriage.

I agree it's prehistoric thinking but I'm afraid it is this way still in my family and many other asian families.

"let me use" = pay for

Pixie5740 wrote: »

1)Maybe you should go and see a whole of market broker to work through your options.

Does this mean, see different banks?

dimbo61

The main problem with a £200K property is your Income!
Now most lenders will do 4X Income so £124K for you at the moment.
Maybe 5X Income as you work in the bank ( But you need to read up what the they will offer you)
Please forget the 10 year term AFFORDABILITY is the buzz word and you should look at 25/30 and maybe 35 years term
You can overpay and clear it in 10 years if you can afford this ?
I would thank your Parents and use as much deposit as possible.
£50/70,000 deposit will get you the best rates available and mean smaller repayments each month ( chance to overpay :-) )

Dhrucku

dimbo61 wrote: »

The main problem with a £200K property is your Income!
Now most lenders will do 4X Income so £124K for you at the moment.
Maybe 5X Income as you work in the bank ( But you need to read up what the they will offer you)
Please forget the 10 year term AFFORDABILITY is the buzz word and you should look at 25/30 and maybe 35 years term
You can overpay and clear it in 10 years if you can afford this ?
I would thank your Parents and use as much deposit as possible.
£50/70,000 deposit will get you the best rates available and mean smaller repayments each month ( chance to overpay :-) )

Very sound advice thanked.

When you say rates, what do you mean? What would you expect the rates to be for someone like me in my situation?

Edi81

For someone who works in corporate banking you don't sound very financially savvy.

Mortgage rates are dependent on the LTV. The higher the LTV the higher the interest rate. If your parents are willing to gift you some of the deposit that will help you get the best rate and reduce your monthly payments.

The other thing you need to remember with a staff mortgage is the additional tax you need to pay.

Dhrucku

Edi81 wrote: »

For someone who works in corporate banking you don't sound very financially savvy.

Mortgage rates are dependent on the LTV. The higher the LTV the higher the interest rate. If your parents are willing to gift you some of the deposit that will help you get the best rate and reduce your monthly payments.

The other thing you need to remember with a staff mortgage is the additional tax you need to pay.

I'm afraid working in Project Management earns no points in aiding me (a first time buyer) in housing market lingo, but I can claim some dignity in the fact I run a portfolio worth £20m so I have a bit of financial nouse

What you say does make sense though and am aware of it so I guess I can call myself financially savvy! Was just clarifying what the previous poster meant by rates and wanted to make sure he was referring to interest rates and not tax rates or some other rate the government has levied. This is noddy stuff I agree but I am wanting to make sure I'm making the correct decision(s).

Pixie5740

Dhrucku wrote: »

Does this mean, see different banks?

No it means go and see a whole of market mortgage broker. The broker will look at your situation, income, expenditure, deposit, etc and search the whole of the mortgage to find the best/most suitable for you. It could be that there's a better product than the staff mortgage available to you.

Dhrucku

Pixie5740 wrote: »

No it means go and see a whole of market mortgage broker. The broker will look at your situation, income, expenditure, deposit, etc and search the whole of the mortgage to find the best/most suitable for you. It could be that there's a better product than the staff mortgage available to you.

Examples of these mortgage brokers on net?

Just did a search and got a few but what are the recognised ones?

Pixie5740

As with finding any financial advisor, try having a search on the Unbiased website.


http://www.unbiased.co.uk