I know nothing - does this seem credible?

Tyrone_Black

Hi all,

Have spent a year paying down credit card debts, saving and getting promoted. Ultimately it still leaves me nowhere near being able to buy in my town and with a massive commuting bill I can do little about, but I can potentially move my job to the North with no salary implications.

- I earn just over £30k, so I take home just over £1,800
- I owe about £2,500 on 0% for nearly 3 years, being paid back by direct debit of well over the minimum payment
- I've checked Noddle and Experian and both look decent
- I want to buy a flat within walking/cycling distance from work for around £100k and will likely have a 15% deposit

Is this looking fairly straightforward with a Help to Buy mortgage? The next thing that worries me is the mechanics of actually finding and buying somewhere when I live and work so far away right now but I'm sure there'll be a way.

AnotherJoe

If you've got a 15% deposit and will be only looking to borrow around 3x salary I dont see why you'd need a HTB mortgage.

Tyrone_Black

I thought I'd be needing 20%+ to get a regular mortgage?

amnblog

Don't worry yourself about whether mortgages are labelled Help to Buy.

If you want to borrow £85,000 on £100,000 you seem well set to do it.

mildredalien

There are plenty of regular mortgages around for deposits of 10%+ these days.

Could you move up North and rent for a few months while you look for a flat to buy? That way you'll have a better feel for the areas you'd like to live in, plus you don't start down that route before it's absolutely in the bag that you can move your job.

Mortgage_Moog

You seem to be in a very similar position to myself. I had just finished paying off debt and that makes no difference. They don't ask about past debts, how much you have owed or anything like that. So long as you have no debt it makes things easier, borrowing with nay debt hugely knocks down the amount they'll lend you (roughly 5 times the amount of debt is taken off the mortgage offer).

The main thing I'd ask you is whether you're aware that you can't ever buy a flat? If you haven't looked into leasehold/freehold then now is the time as that's something that came as a big surprise to me.

Also make sure you're aware that it's very hard to get a mortgage on a flat due to many of them being of non-standard construction. I've just been through that nightmare as you'll see from other posts of mine, most flats are built from concrete or materials that mean lenders will run a mile when they find that out.

An easy way to check is to find the property on Rightmove and look up the EPC guide. If it's not the full one (a 4 page document) click on the broadband checker which will give you the postcode. Go to https://www.epcregister.com/home.html and type the post code in. Where it gives the ratings it will say "Walls" and then the build type. Anything other than "cavity walls" is a system build, concrete etc. and harder to mortgage, in turn making it harder to sell as your buyers will find it hard to get finance.

Brick/Cavity walls = normal. Anything else = maybe harder to get a mortgage/sell

Don't just trust those guides though. One I was about to buy said brick walls and it turned out to be concrete. Someone sack that surveyor! It's actually very, very hard to find out what some buildings are made of, to the point some surveyors I asked rejected the work and just didn't want anything to do with it.

I wish someone had told me those two things months ago.

I actually found it easy to get a mortgage with Barclays (Woolwich). They did warn me of potential problems selling in the future but were happy to lend on it. I guess it depends if you're planning on selling for a profit or, like me, just want to live there.

Tyrone_Black

amnblog wrote: »

If you want to borrow £85,000 on £100,000 you seem well set to do it.

Cool, thanks. I may actually be able to get a little more so that sounds promising.

mildredalien wrote: »

Could you move up North and rent for a few months while you look for a flat to buy? That way you'll have a better feel for the areas you'd like to live in, plus you don't start down that route before it's absolutely in the bag that you can move your job.

The plan is to get agreement in principle from work to move, then go for it as soon as I can find somewhere. If I don't overstretch myself now then there's no reason I can't move on again in a couple of years with a bit of equity behind me. I have a couple of credible backup possibilities for coming home if it doesn't work out.

Mortgage_Moog wrote: »

The main thing I'd ask you is whether you're aware that you can't ever buy a flat? If you haven't looked into leasehold/freehold then now is the time as that's something that came as a big surprise to me.

Also make sure you're aware that it's very hard to get a mortgage on a flat due to many of them being of non-standard construction. I've just been through that nightmare as you'll see from other posts of mine, most flats are built from concrete or materials that mean lenders will run a mile when they find that out.

To be honest the leasehold/freehold thing hadn't really crossed my mind. I anticipate buying a new build so you'd hope the leasehold would run for a very long time.

I had no idea about the construction issue. Definitely need to do some reading.

HappyMJ

Tyrone_Black wrote: »

Cool, thanks. I may actually be able to get a little more so that sounds promising.



The plan is to get agreement in principle from work to move, then go for it as soon as I can find somewhere. If I don't overstretch myself now then there's no reason I can't move on again in a couple of years with a bit of equity behind me. I have a couple of credible backup possibilities for coming home if it doesn't work out.



To be honest the leasehold/freehold thing hadn't really crossed my mind. I anticipate buying a new build so you'd hope the leasehold would run for a very long time.

I had no idea about the construction issue. Definitely need to do some reading.

Don't buy a house/flat for just a couple of years. It's not worth it.

You're gambling on capital gains which may or may not occur.

If the value drops you will be stuck in the property and unable to move.

My advice....rent until you find your "forever" home and then buy.

I would only advise buying if you intend to stay in the property for at least 10 years over which time any potential drop in value should be offset by the reduction in the outstanding mortgage over that time.

New build properties will always depreciate when compared to a second hand property. Are you prepared for that?

Leasehold's also depreciate compared to freehold's as time goes by.

Mortgage_Moog

Is it a shared ownership that you're looking at? From you saying it's a new build for 100k and you're using help to buy then I guess so. If it is I'd seriously think about it first, I was happy to do that until a broker pointed out all of the drawbacks, now I'd never even consider it.

RIPironman

I can't see why 15% wouldn't be more than enough. I've been looking at 95% mortgages which are now reasonably easy to come by as long as you have a very clean credit file. I wouldn't use help to buy unless you want to buy a property that is quite a bit more than you can afford.

kingstreet

RIPironman wrote: »

I wouldn't use help to buy unless you want to buy a property that is quite a bit more than you can afford.

How does that work then?

Both HTB - Mortgage Guarantee (95%) and HTB - Equity Loan (20% Government loan on newbuild) are both capped at 4.5 x income.

If he's looking at shared ownership, the rent on the unowned share and service charges will reduce mortgage borrowing power.