want to buy a house

wantahouse

hi - first time poster here, hoping for some advice - not sure if this is the right thread though.
i live with my husband and little boy in a housing association flat, but we are desperate to buy our own property. We are both in good jobs, my husband is full time, and i will be going back to work 3 days a week when i return from maternity in december.
We will be earning around £36,000 yearly between us - and should be able to live relatively comfortably. We have so far managed to save £8500.00 towards a deposit, and also have another £1200ish in other savings for emergencies. We are waiting for me to return to work, and have a few months of settling into our new way of living before starting to look at what we can get - this should be april/may 2017 - by then we should hopefully have around £12-13000k saved up.
My worry is that i have a default, from april 2012 for £1200 which i paid off as soon as i was made aware in jan 2013. So this will be due to disappear 2018.
My other worry is that the 5% help to buy scheme is going to be finishing in december, so i dont even know wether £12-13000 is going to be enough - we are looking into shared ownership schemes as well.
What do people think? are we just living in a dream world to think that we will be able to afford to buy anything??
thanks

Pixie5740

I wouldn't worry too much about the default, people have been accepted for mortgage with far worse in their credit files than a single default.

How much are you expecting to spend on a property? If you're thinking that £13k would be a 5% deposit that would indicate that you're looking at properties in the price region of £260k. Is it HTB EL or HTB MG you were hoping to use? HTB EL can work out well if you have an exit plan i.e. know how you'll pay off the loan. HTB MG means you'd be looking at a mortgage of £247k which is pretty big when your income is £36k.

Have you both opened up HTB ISA yet?

You have a secure tenancy so I wouldn't worry too much about buying somewhere just now. Yes you could go for Shared Ownership but that would still be an HA Property except this time you'd be paying rent and a mortgage. Again you'd need to have some kind of strategy for stair casing.

wjr4

In relation to the help to buy 5%, the equity loan for new builds is continuing but the mortgage guarantee (for older properties) is supposed to end by the end of the year. The interest rates for this scheme are quite high anyway. Someone told me on here that 95% normal mortgage - without help to buy - are available anyway. So we are looking for a 'normal' mortgage rather than the mortgage guarantee. Agree with above - get the help to buy ISAs opened asap!

wantahouse

thank you for the responses so far - we were hoping to get something in the £150,000 region so were thinking £7500.00 for the deposit and then the remainer for any legal fees, moving costs and furnishing that we might have to do.
I was hoping to get on to the mortgage guarantee scheme - but as you said it will be finishing at the end of the year, and i think the other scheme the new builds will be too far out of our price range.
I have been saving the deposit money in the nationwide help to buy isa - where we could be eligable for a 95% mortgage if we take it out with them. Is this a good one? or should we put the money somewhere else??
Its an incredable weight off my mind to think that the default isnt going to cause a problem - i was imagining not being able to get a mortgage until 2018, and at 33 i really want to get a foot on the ladder and start planning another child.

booksurr

£8,500 in total? If you buy anywhere costing more than £125k your stamp duty will have to come out of that and you will also have the legal fees to pay. How much are the houses you aspire to own?

wantahouse

we would be looking around the 150k mark, so 5% deposit would be £7,500, then the stamp duty would be £500. This was my understanding of it. Then legal fees etc would come out of the rest (£5000)

wantahouse

ive replied but just realised that you might think that my whole deposit is £8500 - i'm actually intending on saving £12/13k.

booksurr

wantahouse wrote: »

we would be looking around the 150k mark, so 5% deposit would be £7,500, then the stamp duty would be £500. This was my understanding of it. Then legal fees etc would come out of the rest (£5000)

OK, those figures work except that you intend to have another child "soon" at which point your costs will rocket again and your standard of living will plummet just at the time when interest rates will be rising and the economy will be crashing into Brexit recession!

wantahouse

yes we might need to hold off for a bit - i guess its more being in the position where we can consider a 2nd child, and arent having to put it off due to space

wantahouse

so my plan seems doable then?? i just wanted to see if this was something that we could actually acheive or if i was bonkers even thinking about it what with the default and everything

tlc678910

Hi, affordability is a big factor in the size of the mortgage you can get now, not just multiples of income.

Do you have grandparents or anyone that will provide childcare or will you have to pay for it? Don't commit to extra payments such as cars on HP, expensive phone/tv contracts, gym memberships with tie-ins etc unless you appreciate that they will reduce what you can borrow. Every £1 committed is reducing your disposable income when it is assessed.

I guess some lenders will be more thorough than others but be prepared to be asked how much do you spend on clothes, holidays, etc etc and then this is taken off what you have to spend on mortgage payments.

Good luck

Tlc