Advice needed!

moneycantbuyyouhappiness

Me and my partner are hoping to reserve a new build property next year.

The house styles we like all range from 230k-260k

We are hoping to have around 50-60k saved by this point. This will allow us a 15% deposit and the rest to cover fees etc.

Partner earns 30k per year I earn 17.6k. I have debt that will be paid of in the next few months. We both have good credit history no late payments, defaults etc. We also have no outgoings other than an unlimited card each and a sim only phone contract (about £40 each pcm)

Is this overstretching ourselves? I am concerned we won't be able to lend that much.

Also do you think we should take advantage of the HTB Equity Loan. I am not so sure. I feel if we can afford it without we may as well just get an 85% mortgage and know where we stand but my partner feels the HTB EL will be best as we are hoping to start a family within the next 5 years and he thinks the lower mortgage payments would take the pressure off while I'm on maternity.

Any advice would be great. I am a natural born worrier and OH is very laid back. When I tell him my concerns I just get 'it will be fine' :rotfl: and I can't work that way.

Thank you in advance
MCBYH x

kingstreet

You are a borrower, not a lender.

You should enter your details in lender affordability calculators to see what you can borrow.

Then work out the monthly cost using a rate you feel realistic in the longer-term.

Prepare a budget and establish how much you will feel comfortable paying each month. Is the monthly cost you calculated within what you feel to be comfortable?

If not, scale back your borrowing/purchase price.

Help To Buy is something you are going to have to research carefully to see if it suits you.

Read the buyer's guide and establish the pros and cons;-

https://www.helptobuy.gov.uk/equity-loan/equity-loans/

Finally, if you need help, speak to an experienced newbuild broker who will cover the Equity Loan in more detail.

moneycantbuyyouhappiness

I have used a lot of the high street calculators, Halifax, HSBC Nationwide and they all say we can afford this without using HTB. The only one that confuses me is the one on this site which showed that the maximum we can borrow is around 180k.

I think in a few months we are going to try and find a specialist broker to talk us through our options.

I've completed a rough budget and we could comfortably afford a mortgage payment of up to around £1k pcm. We plan to overpay/save the rest if we do use the HTB and end up with a monthly payment.

Thanks for your advice Kingstreet. I just feel way in over my head. I'm the first in my family to buy and its a bit overwhelming for me.

MortgageMamma

I don't think you have anything to worry about simply because you are thinking about long term implications and changes of circumstances and planning ahead. I can't really add a lot to what kingstreet has already put other than you could consider taking the mortgage over a longer term then overpay to reduce balance quickly, that way should you become parents and have a drop in income the minimum monthly repayment will be as low as possible and you can still overpay if you need/want to. Another thing to consider is can you save regularly whilst owning the property at the £1k pm mortgage? you will need savings to do repairs or cover periods of maternity leave etc. If you can save would an offset mortgage work well for you? somebody can do the sums for you but I think there is a calc somewhere on this site.

It is important at this stage that you filter out the opinions of laymen no matter how well meaning and get professional advice before you purchase. The property developer that you buy from will no doubt point you in the direction of a mortgage adviser but there is no harm in finding your own prior to making an offer, your offer stands more of a chance if you have a recent decision in principle at hand for the developer. This, if you don't know already is just a very basic credit/affordability check to prove you can borrow the money.

Good luck

MM

moneycantbuyyouhappiness

Thank ever so much Mortgage Mamma That is really helpful.

The idea of taking it over a longer term and overpaying is fantastic. I'd never thought of that.

We would be able to save a little and are hoping to go in with a 3k emergency fund to get us started but that may end up getting swallowed up.

Great idea about the DIP. We are hoping to be able to put in a bit of a cheeky offer so that will stand us in good stead.

Thanks again :j