Mortgage/Investment advice for a 22 y/o finance graduate.

G83JD219

So I have £30k and want to buy a house costing roughly £200k. £20k would be used as a deposit and the rest would be used to pay for the broker, arrangement fees, stamp duty etc. as well as some repairs if anything is left over.

I might be thinking unrealistic here, at least for the first two years of me working, but I'd like an opinion on your thoughts anyway.

There are 3 options that I am considering. If I pick the first one, I would either live with my parents till for an extra year or two till I get paid enough at work to pay for the mortgage or I would take an interest only mortgage and then (help me out here, can you change from an interest only to a capital+interest whenever you want to ?) once I get paid enough to cover the costs of the mortgage and living I would change it to a capital+interest mortgage.

Option #1

£20k deposit for a 10 year, 3.5%, £180k mortgage with monthly payments of £1780.

£10k for all of the other expenses that come when buying a house.

At age 33-35 I am mortgage free with a property worth £250k (the average price for properties here is £230k already let alone in 10 years time)

Then I take a re-mortgage and invest it. What do I invest in? This doesn't matter yet.

Option #2

£20k deposit for a 30 year, 4.8%, £180k mortgage with monthly payments of £840.

£10k for all of the other expenses that come when buying a house.

Mortgage finishes at roughly 55. For the 30 years, I pay £850 a month for mortgage and save up £950 a month (the difference between the 30 year and 10 year monthly payments) for 12 months X 9 years ( - 1 year in case I am not able to save the money for some reason) adds up to just over £100k in cash.

I use it for some sort of investment.

I would also not re-mortgage at any point, looking to get my mortgage paid off once I am 55.

Option #3

£20k deposit for a 30 year, 4.8%, £180k mortgage with monthly payments of £840.

£10k for all of the other expenses that come when buying a house.

Same as above, mortgage should finish at age 55. I would also plan to save money as in option 2. The only difference would be that I would take out re-mortgages whenever possible and using the money to invest.

I am a person that knows how to save money and I believe each of these plans are realistic as long as my job gives me £30k per annum before tax

Which of the three options would you take ?

ACG

You cant get a Buy to let mortgage with a 10% deposit.

Speak to a broker, discuss what is and is not possible.

G83JD219

ACG wrote: »

You cant get a Buy to let mortgage with a 10% deposit.

Speak to a broker, discuss what is and is not possible.

Who said I want a buy-to-let ? I wanted the property for myself, as a first time buyer.

Edit: I hope I'm not coming across as a d**k. It was not my intention.

nubbins

I think you are going to struggle with any of those options on 25k. I might be wrong but you are only going to get between 100-125k mortgage which means you will be looking at properties between 125 and 150k. On top of that getting an interest only mortgage these days is very difficult and you need to show you have a replayment vehicle in place to pay off the capital, I am not sure regular savings are counted anymore.

Thrugelmir

Do not assume that interest rates will remain at current levels for 30 years.

A £30k salary is not sufficient to support a £180k mortgage.

Withdrawing equity to invest carries all sorts of risk. Current interest rates are abnormally low for a reason. So expect the unexpected.

Suggest you simplify your plan to buying a home. Then take it from there as your life unfolds. Life is a rollercoaster. Plans may well have to be constantly revised.

ACG

Sorry - I read that you wanted to stay with parents. I was on hold when I read that, I thought you meant whilst the property was let out.

Teach me for trying to multi-task! Thats for women only.

jayson043

Option 1 : too risky what if you lost your job, that 1780 mortgage is a huge monthly commitment. Better to have a longer term, save to the same amount to give you flexibility. 30 years mortgage is too long.

dimbo61

Affordability is a term you will come across when you apply for a mortgage.
Please do not forget !
Council Tax, Gas, Electric, Water, TV licence, Broadband, Repairs, Life Assurance, Buildings & Contents Insurance, ETC as the bills and list goes on and on.

You can get lodgers to help pay the bills if the property is big enough.

laura_louise

I might be wrong but don't a lot of lenders have a 4.5x income limit for the majority of applications now (plus affordability)?

ViolaLass

Whichever option you go for, why wait until the mortgage is paid off to re-mortgage and use the money in invest in something?

I pay off our mortgage and have a S&S ISA at the same time.

Post 6 has a point though. Are you really expecting everything else to cost you less than £200 a month?