First time buyers advice 31 March 2015 at 7:51PM edited 31 March 2015 at 8:55PM in Mortgages & endowments 5 replies 723 views

Cheetah

Me and my girlfriend are looking to buy a property together (we've already been renting for 3 years).

Just wanted to know if there is anything specific about our situation that could allow us to save money/anything we should be considering.

Looking at properties around 425k, we have 38k in savings, plus the potential to get a gift payment from GF's parents but I would like to avoid that at all costs (even if it means higher mortgage repayments)

Joint income is 99k, split 53k, 46k. Only debt is standard student loans through Student Loans England.

We don't care about the "contract" surrounding the property (ie how its split etc)

Based on the online calcluators, this should be achievable, but how do I confirm? Do I go to a mortgage broker?

EDIT: Someone said that applying as tennants in common could mean that we pay less stamp duty, however, I am unsure how this works...

enthusiasticsaver

I personally have never gone to a mortgage broker. Do some research online as to which banks or building societies are offering the best rates and make an appointment to see one or two of them to get quotes, further information. Sounds achievable on the figures you have given unless you have a lot of debt already.


If you purchase the property as tenants in common rather than joint it means that you each own a share (50/50 say) and on death each share gets treated differently rather than it going to the surviving party. I am not sure whether this is beneficial from a stamp duty point of view but common sense would say you would both be charged on a smaller purchase price - ie if you bought half each you each pay on £212,500 which is a lower band than £425,000 and would consequently be cheaper. You would have to double check how the nil rate band works though.

Cheetah

No debts apart from student loans (repaid at 9% of anything over 21k or something similar to that)....I'm assuming these will be taken into account for affordability checks...

I pay into a pension scheme and buy shares, both completely optional...are these taking into account for affordability checks?

goodwithsaving

Cheetah wrote: »

Looking at properties around 425k, we have 38k in savings, plus the potential to get a gift payment from GF's parents but I would like to avoid that at all costs (even if it means higher mortgage repayments)

.......

We don't care about the "contract" surrounding the property (ie how its split etc)

If they are prepared to gift your girlfriend some money, this will inevitably help with payment costs, LTV and enable you to get a bigger place so you don't have to move again (costs '000s more next time due to selling and buying). Don't let pride get in the way. How does your girlfriend feel about the gift? (I was in your position and accepted it, on the condition it was protected for my OH by our Tenants in Common (TIC) agreement as I didn't want any claim over the money).

Re. 'contract' you should care! Ideally go in as TIC as in the event there was a separation you would both be protected. Many more are taking this approach, even if married (although mostly for inheritance purposes prior to amendments - I think - being made to enable allowances to be passed to the surviving spouse). If your girlfriend's parents gifted some money, this would also be protected in her "share". You could own 50/50 but top slice the gift until your deposits are even. That way it's equal but family money is rightly held for the party from who it originated.

Being flippant about it is not the approach to take when there is such a large sum of money involved. All may be good now, but who's to say 3, 5 or 10 years down the line it will still be?

With stamp duty, we're buying as TIC and paying the full stamp duty. I don't believe there to be any benefits to saving of SDLT due to the 'type' of ownership sought.

Cheetah

If I don't go through a broker, is there a checklist of things I have to do/have sorted/sort out.

Things I have so far:

- Actual mortgage application
- Solicitor to sort out legal side - how should I go about finding one?
- Buildings insurance

Is there anything I have missed?

lucie_1985

You can't save on stamp duty by doing it one way or the other, the stamp duty is calculated on the purchase price of the entire property and that figure would then be split into two shares proportional to your ownership levels as tenants in common - so the whole amount would still be the same. Any "saving" on your part would only be matched by an excess for your girlfriend but she would also own more of the property.


I'm married and we bought as joint tenants but having done our wills we've switched to tenants in common, purely as a planning tool in the event that (many years from now) one of us needed long term care that only half of the property would count as an asset that would be liquidated to fund it before the state stepped in.


I realise there's pride involved in having a helping hand from your "in laws" but as the above poster mentioned as tenants in common it can only sit within her share rather than feeling like it's your debt. Although I'm sure there are many more factors, when there's family plus money there usually are! Her parents may even feel better about this, such that if you ever split up their gift would be protected as hers.