FTB Questions - Help/Guidance appreciated

pilnet101

Hi all,

I hope I'm in the right place here and I hope someone may be able to help/provide some advice if possible. Just to give an overview of my current situation: I work in Hampshire and rent a room and my partner works in Birmingham and lives with her parents. We're both in our early 20's and want to buy a property and move in together asap. I earn just over £45k (including bonuses). My partner is currently on minimum wage and working part time hours, when we move in together she may be out of work for a few months but will eventually get a full time job with similar pay.

We have both been into an estate agents and have been told, with our situation, we can borrow up to £260k (including deposit). In light of this, we are narrowing our property search to houses priced no more than £250k (and maybe slightly more at a push if needed). Currently we have saved £14.5k and are both putting away what we can monthly. Our original plan was to go for a 10% deposit (on a 250k house), meaning we'd need to save around £30k (including fee's which we were told would be around £5k) which would be do-able for us by the end of the year, but we've both said that if a nice enough house comes up in the area we are looking in we will bite the bullet and go 5%.

We recently put an offer in for a house which came on the market but it wasn't accepted apparently due to our situation with funding. Perhaps this was because we were FTB's going with a 5% deposit up against people with 20% deposits or more.

Anyway, sorry to ramble on. Obviously this is all new to us both and my main questions are as follows:

- Is a £250k house too much? Looking on comparison websites the repayments seem affordable, but many calculators suggest that a mortgage should be 2.5X the joint salary?
- When we began our house-searching process, we went into one of the well known estate agents on the highstreet and have simply stuck with them since. Should we be mixing our options up a bit? Calling independent advisers? Also is the £5k+ fees which they have suggested a lot more than normal?
- Bearing in mind we want to be living together asap, should we be still go for the 5% deposit if the right house comes up? Or wait longer and go for a 10?
- Are we at risk of not getting a mortgage at 5%? I've sensed nothing but confidence from the estate agents who we've been seeing about how we should be fine.
- We didn't get our last offer accepted on a £250k house even though we raised to £255k, are we seen as a bit too 'risky' for sellers for some reason?
- Should we go for 30 years? Or try and push it to 40 years?
- I know this is more subjective but - should we be going for a really nice/bigger house in an OK area or a smaller/decent house in a great area? I would have thought the latter.

Sorry for going on and I know this post is a bit of a mess! Just so much running through my mind with it all. Any replies/guidance is/are greatly appreciated!

[Deleted User]

Get a broker and seek some decent advice.

pilnet101

okay then ,

Malmo

Do not place your faith in what estate agents tell you. They do not work in your best interests and they act for the vendor / seller, who pays their fee.

As said, find a good whole of market mortgage broker who will hand hold you through the process. Avoid brokers based in estate agents.

Have a read of this MSE article which describes a simplified timeline and milestones of the buying process. It doesn't really factor in the complexities of a chain and the impact of that on the end to end process, but it is still useful as a guide.

Here is also a MSE guide that refers to the likely buying fees & costs to factor in and when they may be due.

Generally, the lower the Loan-To-Value ratio (LTV), in other words, the mortgage amount as a percentage of the agreed purchase price or surveyor's valuation (whichever is lower), the better the consumer terms, such as interest rate. So a LTV of say 65% (where you provide the remaining 35% as deposit) on a mortgage product would have better terms than a LTV of 95% (where you only provide 5% as deposit). The term (duration) of the mortgage also significantly affects the total interest you repay over the full term.

As well as the above, I'd also urge you to take the time to thoroughly review your credit files/reports from all 3 Credit Reference Agencies (Experian, Equifax, Callcredit/Noddle).

I've read countless threads here where posters haven't done this in preparation ahead of time and have had problems either obtaining a mortgage agreement / decision in principle (AIP / DIP - they're the same thing) or have been refused at full application or underwriting.

Take a look at this post for what you should do.

kingstreet

You earn £45,000 inc variable/non-guaranteed elements?

The latter may be excluded if you can't evidence such income for a year or two.

Where is the property? If your partner is giving up a job to move down south, her income shouldn't be included in affordability.

Assuming all your earnings can be included, 4.5x is the max income multiple for HTB - Mortgage Guarantee, so I'd say a maximum mortgage of £202,500 would apply, to which you would add your 5% deposit.

Echo suggestion to get independent mortgage broker advice.

pilnet101

Thanks for the replies. I'll definitely look at seeking the advice of an independent mortgage adviser as suggested.

kingstreet - Property would be in Basingstoke ideally. We took our payslips and bank statements to an adviser in a high street estate agents just to build a bit of a picture as to what we could afford and they were quite confident with us both going up to 260k including the deposit. At the time, this was with a 10% deposit - but we have since decided on doing a 5% if the right house comes up. I did ask our adviser whether or not this would impact the borrowing amount and they said no.

My partners income was factored into the equation on the basis that she would remain in her current role up until the point the sale for the house goes through, after which she would be leaving her job and moving to another.

ellie27

pilnet101 wrote: »

We recently put an offer in for a house which came on the market but it wasn't accepted apparently due to our situation with funding. Perhaps this was because we were FTB's going with a 5% deposit up against people with 20% deposits or more.

I know sometimes a selling agent may ask if you have a mortgage agreement how do they know anything about what kind of deposit you have? Did you tell them you had a 5% deposit? Did they ask about this?

pilnet101

Hi ellie,

They did ask so I told them, I'm guessing not the smartest move but I wasn't really sure what to say. He just asked what our adviser had said about us getting a mortgage and I explained we had nothing set up yet but she was very confident we would get one without any issue. Since then my mortgage adviser has set up an agreement in principle for us in the hopes that having this will increase our chances of being accepted in the future.

pilnet101

Regretting saying that we had 5% only now!

chris198232

As previous posts have suggested go to a broker, maybe someone like London and Country. They will tell you what you can afford.

If you need. Ny help in the a Basingstoke Market let me know (advice on areas etc).

PixelPound

If your offer wasn't accepted, its probably more because they are holding out for more - it doesn't make much difference selling to someone with 5% deposit and 20% deposit, both are mortgage buyers - cash buyers might make a difference. Probably want to get you signed up to use their broker services before letting any offer get accepted.

You can find out what you can afford using the calculators on lenders websites.