First Time Buyer

Bazlovejoy

Hi Guys

Me and my girlfriend have decided to take the plunge and buy our first house, however being first time buyers we only have a general idea of the processes involved in buying a house. So one of my first stops his here to ask the knowledgeable people of MSE some advice.

The first thing we need to decide on his how much we are able to get a mortgage for. Our current salaries are £13,000 and £12,000 and we have savings of just under £10,000. I have used a mortagage calculator, which gives us £88,000 as our maximum amount available to borrow. We were hoping we'd be able to borrow nearer £100,000. How flexible are mortgage companies? We have also been told about schemes where you share ownership of the house ie 60%/40% split and you pay rent on the 40% you dont own. However i cant find any information on these schemes. We are hoping to buy in the area of Macclesfield, Cheshire. We are assuming we will need a deposit of 5% of the house price.

Thanks for taking the time out to read my post, Ive got loads more questions but dont want to bombard people too much. Any extra advice would be very much appreciated though.

Thanks,

Baz

barnaby-bear

Bazlovejoy wrote: »

Hi Guys

Me and my girlfriend have decided to take the plunge and buy our first house, however being first time buyers we only have a general idea of the processes involved in buying a house. So one of my first stops his here to ask the knowledgeable people of MSE some advice.

The first thing we need to decide on his how much we are able to get a mortgage for. Our current salaries are £13,000 and £12,000 and we have savings of just under £10,000. I have used a mortagage calculator, which gives us £88,000 as our maximum amount available to borrow. We were hoping we'd be able to borrow nearer £100,000. How flexible are mortgage companies? We have also been told about schemes where you share ownership of the house ie 60%/40% split and you pay rent on the 40% you dont own. However i cant find any information on these schemes. We are hoping to buy in the area of Macclesfield, Cheshire. We are assuming we will need a deposit of 5% of the house price.

Thanks for taking the time out to read my post, Ive got loads more questions but dont want to bombard people too much. Any extra advice would be very much appreciated though.

Thanks,

Baz

Halifax seem willing to do that sort of figure assuming no debts/student loans.
http://www.halifax.co.uk/mortgages/affordability_calculator.asp
(make sure you select joint)
Whether it's a good idea is another matter and since you are both on not much more than min. wage - I'd advise a trip to the family planning clinic and some very effective contraception as 4 or 5 x joint would become 8 to 10 times single salary plus there'd be an extra mouth to feed.
Just because you are able to get a mortgage for a certain amount at a rate a lender dictates doesn't mean you should necessarily - these are fairly pushing it multiples of salary so I'd seriously consider increasing the salary or reducing the multiple.

pinkshoes

Realistically, you shouldn't borrow more than 3.5x your joint salary, so (£13k + £12k)*3.5 = £87.5k!!

Borrowing more than this is irresponsible, and could leave you in difficulties if interest rates rise, or one of you looses their job, or if you have a child...

A good rule of thumb is that you should be able to afford your mortgage payments even if interest rates rise to 12%

So, if you borrowed £87.5k over 25 years, you should make sure you can pay at the rate of £930/month incase interest rates rise.

Bazlovejoy

Hi

Thanks for the replies. I agree with what your saying about borrowing no more than 3 times our salaries. We both expect to increase our salaries within the next year which is why we wanted to pay more know so we'd get a nicer house. We are both ridiculously careful with money, so we would never enter into a kind of loan if there was any doubt about our abilities to pay the money back.

Our problem is we only have two options renting or buying and it would pain me to rent as i see it as a waste of money.

Thanks,

Barney

Melissa177

Hmm - your salaries are very very low. I'm presuming you're both young, maybe better to wait a bit?

Pinkshoes - I think your rule of thumb about the 12% interest rates is rubbish! I bet very few people at the moment could cope with that sort of raise, and I think that may have held true many years ago, but I'll bet you my flat that interest rates don't go anywhere near that for the next ten years.

KingKenny

You must be bloody mad to buy now, you are buying into a market which has peaked, peaked, and peaked. The bloodbath is only just starting, at best you might see 10% real falls 30% nominal falls over the next five years.

At worst it could get messy, just do NOT BUY, save yourself, rent enjoy life, your time will come, believe me, just do not buy into this madness!

Bazlovejoy

Our only options are rent or buy, so do you think we should rent first?

KingKenny

Rent, be happy, enjoy life, for god sake, owning a home is not the be all and end all.

You buy now, you will be a slave to the bank for the next 10 to 15 years!

Negative Equity, google it, us oldens remember it well!

m00m00

also if you aren't currently living together, it's probably a good idea to rent together for a few months at least. It can be a bit of a shock when you first move in with someone.

Lavendyr

Rent and save money in the meantime. You will probably be able to rent for a lower amount per month than you would have to pay on mortgage repayments, so you can save the difference towards a bigger deposit. If you borrow £100k on your salaries you would have absolutely no slack if something were to go wrong (illness, injury, pregnancy, job loss etc), and could end up facing repossession.

We too are FTBs and would not consider buying at the moment, even though we are earning more than twice what you are earning. And I echo what is said about renting first if you haven't lived together before!!

Bazlovejoy

We have lived together before, so thats not a problem. But the general vibe im getting is rent and i must admit I agree with everything everybodys said. Buying seemed like the thing should do not necessarily what I wanted do. Renting is much less stressful.

Thanks guys