First time buyer with low earnings

Liam12345

Hi, hopefully someone here can help. I'm looking to buy my first property within the next few months or so, but I am unsure if there are any mortgages suitable for me.

Firstly, I am a student that has a job lined up, the pay is pretty good but nothing great, however my pay is expected to increase pretty quickly within that job once I'm qualified. So, in the mean time I am working part time earning (at best) £500-600 per month.

However, I would be able to put a decent size deposit down on a property. I am anticipating being able to put down 40k or so as a deposit, which would be 20-25% of the property value.

Obviously, I am not earning enough to be given a mortgage based on my earnings, although I have savings to tide me over until my job starts, and my job would make me enough money to pay the mortgage comfortably etc.

I have had a look at guarantor mortgages (my parents would happily go as guarantor - they earn pretty decent money) but these mortgages seem more suitable for people that are unable to put down a larger deposit, and therefore seem to have higher interest rates.

Effectively what I am after is a mortgage with interest rates that match the size of the deposit I'm putting down, but the ability to borrow more than my earnings would currently let me. As I say my parents would be happy to go as guarantor or whatever if that helps, but I can't find much online about people in this situation. Can anyone help me with what I can do, or let me know if I'm being naive to think this is even possible!

Thrugelmir

Without an earned income that supports the borrowing that you require. The idea is a non starter.

Liam12345

So there's no way they can take my parents earnings into account in the short term then?

ACG

I dont mean this to come across as rude but what you want is not realistic.

You could look at it in 2 ways:
1) You are a higher risk and having to rely on your parents. There is more work involved and so the cost of lending you the money is more - therefore a higher rate to cover the costs. Touch wood nothing happens, but if something does happen to your parents, they lose their guarantors.

2) You have fewer options and so in a commercial world where supply and demand dictates - they can charge more, so they will.

I have no idea which is the right answer although I would say a little bit of both.

They could lend that money to 1000 other people who would be nice and simple to administer, or they could lend it to you where Personal guarantees are needed, extra credit checks, extra underwriting etc etc.

It can potentially be done, but you are not going to get market leading rates. It does not benefit me to say this, but earning £6-7k a year is not enough to be a homeowner. Your monthly expenditure before the mortgage would eat up the bulk of that.

AnotherJoe

Just wait until you've been in your long term job for a few months

Liam12345

In truth that's kind of what I was thinking. I accept I wont get rates as low as someone else in a 'simple' situation (although I probably didn't make that clear above), but my main aim was to see if there was anything for people in my situation - I guess not.

In terms of the affordability of it the 6-7k is what I am earning whilst I finish my degree. I already have a job lined up with a salary around 25k, which should increase fairly quickly. The property I'm looking at would be around £180k, meaning I personally would earn enough to qualify for around £100k mortgage (based on 4x salary), plus my 40k deposit, meaning I would effectively be 40k short. This is where I was hoping to be able to use my parents salary as some kind of security against that amount.

I've budgeted it myself and am confident affordability wont be a problem for me, but obviously the bank need more than just my word on that.

Liam12345

Waiting a few months after working in that job is the most likely scenario, the reason I wanted to find an alternative is that there are some new-build properties being released very soon in my area, and there are in the perfect location (city centre, close to work etc) and reasonably priced. I am expecting them to sell out immediately so was hoping to be able to get one of them. Trouble is, they are released before I start my new job.

csgohan4

bare in mind new builds are overpriced much like a new car. Why not establish your career first and then buy when you are earning much more.


Whatever you do not mix money and family, plenty of threads on here where it has turned sour.


There is no rush in buying. I rented for almost 15 years before I bought.

Liam12345

csgohan4 wrote: »

bare in mind new builds are overpriced much like a new car. Why not establish your career first and then buy when you are earning much more.


Whatever you do not mix money and family, plenty of threads on here where it has turned sour.


There is no rush in buying. I rented for almost 15 years before I bought.

I never really considered that to be honest. The property seems very fairly priced and finished to a high standard. Comparable properties in the area are much more expensive, and properties at this price point are usually found in the 'worse' parts of the city.

Although everyone probably says this, the family agreement wouldn't be a concern to me. It would be a mutually beneficial system to both of us and we have a very strong relationship.

My concern with renting is that it seems like throwing away money and never getting anything in return (not to mention it's usually more expensive than a mortgage too!). Especially with house prices increasing so dramatically in the area. But I do appreciate what you're saying

ACG

Sorry I misunderstood your original post. I thought you wanted to buy a house whilst on £7k a year.

What you have now described is a little more understandable/realistic. I would think there are lenders that may offer mortgages at around the 2.5% mark. Obviously still a little higher than a normal mortgage but nothing too bad (although it is not my money so it is easy for me to say that).

Liam12345

ACG wrote: »

Sorry I misunderstood your original post. I thought you wanted to buy a house whilst on £7k a year.

What you have now described is a little more understandable/realistic. I would think there are lenders that may offer mortgages at around the 2.5% mark. Obviously still a little higher than a normal mortgage but nothing too bad (although it is not my money so it is easy for me to say that).

No problem, I probably didn't explain it very well.

I'd be happy with the 2.5% mark, that wouldn't be too bad as you say, so thank you I appreciate your help.