First time buyer, worth looking around?

ft_buyer

Hi,

I've been thinking of buying a flat but didn't think it was possible because of lots of credit card debt.

One of my colleagues is relocating to Germany next spring and is planning to put his flat up for sale. I have been over to his place a few times and quite like it.

I need a 300k mortgage on a 335k flat, income of 75k, about 33-34k in credit card debt (a mix of 0%, low interest, etc). I have access to about £45k (shares + bank of mum and dad) which should be ok for a £35k deposit after stamp duty and other costs.

Upon browsing these forums, I came across links for some (very) detailed affordability calculators. I clicked through to two high street banks and both their calculators show that they could lend me a little more than 300k! I was happily shocked at the result and what looks like an early Christmas present. :j

I'm aware that these affordability calcs are just indicative and might not translate into successful applications, but are they even remotely reliable? Do people think it's worth talking to a broker at all to assess my options?

Many thanks in advance. :beer:

Noel

armchaireconomist

Personally i'd clear the substantial credit card debts and not rely on the "bank of mum and dad" before I even considered buying a flat. They'll be a hell of a lot harder to repay when you've also got mortgage commitments and all the other costs associated with ownership.


Without being too offensive please think long and hard about what you're proposing because in what little information you've given you don't strike me as financially astute.

ft_buyer

Thanks for your thoughts. The monthly mortgage payment + service charge is significantly lower than the rent that I'm paying now, so I shouldn't find it too hard to maintain payments. I know what you say about the cc debt makes sense, but it's only because this particular flat is coming on to the market that I'm considering buying now.

I can understand why some people might not want help from their parents to buy a home, but I (or my parents for that matter) are not particularly averse to it.

armchaireconomist wrote: »

Personally i'd clear the substantial credit card debts and not rely on the "bank of mum and dad" before I even considered buying a flat. They'll be a hell of a lot harder to repay when you've also got mortgage commitments and all the other costs associated with ownership.

No offence taken. Even I don't think I'm financially astute!

armchaireconomist wrote: »

Without being too offensive please think long and hard about what you're proposing because in what little information you've given you don't strike me as financially astute.

csgohan4

You need a good broker as your debt will impact on your affordability, have you played around with the online affordability calculators that are around ?

ft_buyer

Yes I have. The two detailed ones that I looked at said 300k is possible. It asked for all the details - cc debt, income, deposit, dependents, etc etc. When I removed the cc debt it went up moderately.

csgohan4 wrote: »

have you played around with the online affordability calculators that are around ?

ACG

Some lenders have Debt to income calculations in the background - typically these start to kick in when your debt is around 50% of your Gross pay, although some lenders do start to kick in around 30%.

The calculators are pretty reliable assuming you enter the information in correctly - I rely on them day in day out and never really have any issues.

muhandis

In your place I would definitely see a broker who can look at the whole picture and give you an assessment. I know it seems counter intuitive that you could get a mortgage with 35k deposit and 34k unsecured debt. High credit card debt definitely reduces the amount you can borrow but is not a deal breaker by any means.

ft_buyer wrote: »

I'm aware that these affordability calcs are just indicative and might not translate into successful applications, but are they even remotely reliable? Do people think it's worth talking to a broker at all to assess my options?

Many thanks in advance. :beer:

Noel

Thrugelmir

ft_buyer wrote: »

The monthly mortgage payment + service charge is significantly lower than the rent that I'm paying now, so I shouldn't find it too hard to maintain payments.

As long as interest rates remain at current low levels. Which is unlikely for the next 25/30 years.

getmore4less

You need to understand if you can afford it not what the lenders think.

The monthly mortgage payment + service charge is significantly lower than the rent that I'm paying now, so I shouldn't find it too hard to maintain payments

have a look at your debt accumulation and what you have been spending over the last few years.

If debt has been growing then have you afforded the rent or you have been borrowing to pay it?

do a proper full income/outgoings for 2016 and get that to balance, many find what they are really spending does not match what they thought.

ft_buyer

Very true. Once my outgoings drop sharply because I won't be renting any more, hopefully I will be able to overpay significantly before interest rates rise too much.

Thrugelmir wrote: »

As long as interest rates remain at current low levels. Which is unlikely for the next 25/30 years.

I know what you're saying. But I'm confident I can afford it and think I'll be more inclined to save and overpay once I have somewhere concrete to put the money into as opposed to chucking it down the bottomless pit of my landlord's mortgage and his late model Range Rover

getmore4less wrote: »

You need to understand if you can afford it not what the lenders think

Yes, that's exactly what I thought! I will ask around for recommendations for a good broker.

muhandis wrote: »

In your place I would definitely see a broker who can look at the whole picture and give you an assessment. I know it seems counter intuitive that you could get a mortgage with 35k deposit and 34k unsecured debt. High credit card debt definitely reduces the amount you can borrow but is not a deal breaker by any means.

getmore4less

ft_buyer wrote: »

Very true. Once my outgoings drop sharply because I won't be renting any more, hopefully I will be able to overpay significantly before interest rates rise too much.

ownership comes with costs you don't have with renting.