100% Ftb

marginalone

Hello,

Im kind of in a predicament right now as I am currently coming to the end of my rent lease and Im not sure if I should continue it!

My rent is £450pm rising to £500+ within the new lease in 2 months time ( if I sign it! ) However I would really like to get into the property market before Im 30.

I currently work in sales and my earnings so far including comms are a guarenteed £26k +uncapped per year before tax. I am also debt free.

The problem I have, is that I have no deposit for a mortgage and would be looking for 100%+

Im looking at a flat in Scotland for £98k and Ive been told that if I go for interest only, I can sell off the flat in a few years, pay off the mortgage and have a nice deposit for a bigger place.

Is that a sound idea? I appreciate advice!

Cazza

You will have a bigger deposit on your next home if you go for a repayment mortgage. I would really strongly suggest that on a 100% mortgage, you should be looking at repayment rather than interest only, as this is the only guaranteed way to build up your own money in the house. What would you do if prices don't go up?

Go to see a good whole of market mortgage broker to look at all the lenders that offer this type of mortgage and good luck. There are many people who don't like 100% mortgages, and you do have to be careful, but I wouldn't have been able to buy my flat 2 years ago otherwise!

marginalone

I think the kind of off putting part is that a mortgage would be £700+ on repayment.. from what Ive seen! I usually earn £1533pm after tax.

herbiesjp

In terms of mortgage amount - you should be able to find lenders to agree that for you.

If you look at interest only, then you are pretty much hoping that house prices will increase over the next few years, so that you can sell and then have a deposit. However will it increase enough to give you what you are looking for?

Don't forget you will have other costs, i.e. costs of selling your place, costs of buying new place, so you have already eaten up some of the gain made without putting any deposit down

As Cazza rightly says, a repayment mortgage will normally help increase your equity more quickly (assuming no house price crashes). However if that seems more expensive, then you can look at part repayment and part interest only, so at least that way you can start chipping away the mortgage balanace on a regular basis.

Alternatively, and this will need discipline, take out the interest only mortgage, but set up regular overpayments yourself.

Again this will help reduce the mortgage balance, but you are not tied in to any pre set mortgage repayments - as they are overpayments, you control them, and can stop/start them when you want

Dan_Collins_2

marginalone wrote: »

Hello,

Im kind of in a predicament right now as I am currently coming to the end of my rent lease and Im not sure if I should continue it!

My rent is £450pm rising to £500+ within the new lease in 2 months time ( if I sign it! ) However I would really like to get into the property market before Im 30.

I currently work in sales and my earnings so far including comms are a guarenteed £26k +uncapped per year before tax. I am also debt free.

The problem I have, is that I have no deposit for a mortgage and would be looking for 100%+

Im looking at a flat in Scotland for £98k and Ive been told that if I go for interest only, I can sell off the flat in a few years, pay off the mortgage and have a nice deposit for a bigger place.

Is that a sound idea? I appreciate advice!

Got me on the ladder!

You will find that the better of the 100% deals will have 10% or 5% of the amount on an unsecured loan, this has to be taken on a repayment basis but the secured part can be interest only, but I would go repayment if you can afford it!

marginalone

I had a mortgage in principal with Northern Rock and they were able to offer £137,500 which is £838pm

A lot of money, a bit too much for a single man!

I want to buy a place, but again I want a good quality of life..

Mr_helpful

I prefer interest only if you are likely to sell it in a few yrs. the amoubt you pay off in the first few years is pretty small anyway. You can always save the difference as a deposit on the next house. If prices havent risen let this one out and buy another

marginalone

Well, if I did buy a place Id live in it for about 5 years maximum. It wouldnt be the " dream home"

Dan_Collins_2

marginalone wrote: »

I had a mortgage in principal with Northern Rock and they were able to offer £137,500 which is £838pm

A lot of money, a bit too much for a single man!

I want to buy a place, but again I want a good quality of life..

Interest only or Repayment NR have the highest rates in the 100% market at the mo, try C&G, Alliance and Leicester, Abbey or the Coventry BS. They deal in 100% and most will beat NR's rates. Also with NR's criteria being tightened you should get the same AIP.

Good luck

marginalone

I spoke with an independant Financial Advisor tonight and it was a good conversation ( they charge the mortgage provider )

He said that I should be able to afford a mortgage at £700 pm and that NR is not the best deal out there..

Do others recommend IFAs?

Dan_Collins_2

marginalone wrote: »

I spoke with an independant Financial Advisor tonight and it was a good conversation ( they charge the mortgage provider )

He said that I should be able to afford a mortgage at £700 pm and that NR is not the best deal out there..

Do others recommend IFAs?

Yeah if he good he will take the pressure off of you and deal witht he paper work ect for you. If he is not charging you a fee and is whole of market go for it!