Im 24, can i get a morgage? House prices are scary

Raikkonen_2

Hi guys, i just found this great site whilst googling for mortgages,

Im 24 and need to buy my first house, i will be joint buying 50/50 with a friend, who is also 24, we have long term jobs with minimal risk of loosing them, we have both been employed since 2002.

We have the means to put down a deposit of either £10,000 or £20,000

Ive used a few online mortgage programs and they say they will give us a mortgage of £120,000,

The problem is houses where i live at the moment cost £190,000 - £200,000 for a 2 bedroom which is an absolute joke.:cool:

How the hell can anyone afford to buy their first house if all we can afford is a bag of crisps and half an onion in today's housing markets?!

pollyanna24

Must admit, if I was looking to get on the ladder now, I don't think I would be able to do it. It just seems to be getting harder and harder. I thought we had it hard in 2003 when we bought our first house when we 21, but it has steadily gotten worse and I don't think we could afford our current house if it was the first one we were to buy at today's prices.

I think you either have to sit it out for now as a lot of people simply don't think prices can keep on going up forever and will start coming down. The other option is to buy in a different area. My parents live in North West London, so of course, when it came to buying a house, I wanted to do the same thing due to being near family, work etc. etc. but eventually realised to get on the ladder, I had to move out further and work my way in.

maninthestreet

You havent told us your respective incomes are in order to determine whether the £120,000 you refer to is the most you could expect to borrow together.

herbiesjp

Also do you have a good credit history?

Do you have any other debts in the background i.e personal loans/credit cards etc?

Badger_Lady

I'm 24 and on my second mortgage :-D

Unfortunately, a lot depends on where you live - it's much easier if you have a high salary in a cheap area, but that's pretty rare!

How wide is your search area? What would your options be within budget - could you move to the outskirts (if you're in a city), get something that needs a bit of work, or even a 1-bed flat that's got a separate living room you could use as a bedroom?

(I realise the latter doesn't sound ideal, but when you've got a big bedroom each plus a kitchen/breakfast room, you don't really miss the sofa too much).

If you're really not happy with any of the options you can afford, then maybe this isn't the time for you to buy... but I've never regretted getting on the property ladder with a poky flat.

Raikkonen_2

Thanks pollyanna24, i think we might have to move further afield, but preferably in the Berkshire area.

I forgot to mention the income, we are both on £27,000 and £26,000 respectively a year

I do have £3,000 outstanding on a car worth £6,000

We have no criminal records and perfect credit history..

Badger_Lady

Raikkonen wrote:

I forgot to mention the income, we are both on £27,000 and £26,000 respectively a year

Oh, well you can definitely get more than £120k then! My income is £30,000 and my new mortgage is £137,500 on my own (see other debts below).

Raikkonen_2

Badger_Lady wrote: »

[QUOTERaikkonen]
I forgot to mention the income, we are both on £27,000 and £26,000 respectively a year

Oh, well you can definitely get more than £120k then! My income is £30,000 and my new mortgage is £137,500 on my own (see other debts below).[/quote]

hmm this is interesting because if we could both get a similar sized mortgage, we could afford that £200,000 house.

pollyanna24

So a combined income of £53,000. That's quite good really! Me and bf have a combined income of £56,000 and you can see how big our mortgage is from my signature. While we think this is a huge amount, it is affordable and will still be when our fixed rate is up next year. We've had to give up a few things and hope that in years to come, things will become easier for us, but we are happy as we are, for now.

Just to let you know, we bought for £210,000 last year in South Hertfordshire, so chin up, things aren't all bad.

You just have to really sit down and work out your budget and what you can afford. We also have a car loan for £5,000, so you just have to make sure you work everything, and I mean everything into your budget. I have random ones for things like £5 lottery, £10 dog treats, etc. etc.

rjm2k1

Have you actually been told you can only get 120k? If so it might be due to the other person being a "friend", in which case one of you can be expected at some point to want to get a place of your own, which would put the other in the position of not being able to afford the mortgage. If you were a couple or married then your future together could be expected to be longer.

Martinslovechild

Standard multiples have generally gone by the wayside in recent years, or else there would probably have been a housing credit crunch several years ago as banks wouldn't have been able to sell restrictive mortgages and buyers would never have been able to borrow enough.

Generally, affordability is the key. When I spoke to my ex-mortgage lender a couple of years ago, I had a general conversation about how much they would be prepared to lend me should I wish to purchase another property in the future. At this point, they immediately quoted the standard multiples, which at the time were 3.5x joint earnings (I think!), although they did say that these multiples were being reviewed 'in line with market forces'.

I then asked the question 'OK, but if I wanted to borrow a bit more than that because the house I've seen is more expensive that that, then how much will you lend me?'. They went away to look at some figures and came back with a figure very close to 5x joint earnings.

This worried me slightly - a 10 minute conversation and they were suddenly prepared to offer me another 1.5x joint earnings! Now, my situation may be different than yours in that I had a good amount of equity which would have equated to a 40% deposit on the theoretical new house in question (supposedly indicating that I am a better risk than a first-time buyer with just a 5% deposit), but even so - it's worth asking around at some of the banks, or visiting an IFA to ask what sort of amount you could borrow.

Personally, I would always determine the maximum size of your mortgage (and therefore the property you eventually choose) on your own personal affordability. You haven't said whether you have other loans, children or expensive hobbies - these all need to be taken into account. Affordability is a much better calculation than simple multiples because it's much easier to say 'I can afford a maximum of £1000 per month on a mortgage after all other bills are accounted for' rather than 'I can afford the repayments on a 3x mortgage'.