FTB - Does age matter

Debtsgonebutnotforgotten

Hello all.

I have been lurking on the Debt free wanabee board for the past 18months and with everyone's help my partner and I are almost debt free.

I still have a deffered student loan outstanding for approx £6000 that I will have to start paying this April anyway, but I should have cleared that by April.

So in our new (nearly) debt free status our thoughts have turned to buying a property in the fairly near future.
We didn't want to jump straight in at the deep end with a 100% mortgage, and have always intended to start approx saving £1100pm towards a decent deposit over 2 or 3 years.

However we are being evicted (or should I say "lease not up for renewal") from our current property in November as the Landlord wants to sell up. This is the 3rd time this has happened in 4 years and is beginning to frustrate us now!. To cap things off an ideal rental property that we had secured has just fallen through at the final moment. This leaves us less that 4 weeks to find somewhere else.

My partner is now really fed up and wants us to find somewhere cheap to rent for three to six months and start the buying process at the same time. This would probably mean taking a 100% mortgage. I am more cautious and am still inclinded to save first, however I am now beginning to waver.

I have been doing a bit of reading up this week and now think in theory it may be feasible, but I still am very wary.
I still think it would be wiser to wait but there is one issue really bugging me.

Most mortgages quote over 25yrs - I realise this is not set in stone, but a guide.
However I am 30yrs and my partner is 45yrs. Would his age cause us a problem if we did want a 25yr (or longer ) mortgage.
I would hate to wait and save up for a few years only to find out they couldn't take his income into account. I am in the South of England so a property bigger than a garage isn't feasable on one salary.

Our financial situation is as follows.
Salary Me £35,950 (still awaiting this years payrise)
Salary Partner approx £37,000
Savings at the moment £4000 (will increase at the rate of appox £1000pm)
Debt -Student Loan £6000 - repayments will be approx £120pm

We would want to borrow around £250,000 for a bog standard 3 bed semi in our ideal area.
Rental prices for 3 bed semi are about £850pm.

The other thing to add is that we have a lodger(relation) paying £60pw. He is only there 1 night pw and uses room mainly as storage. He would lodge whether we buy or rent.

I would be interested to hear your opinions and advice.
Many Thanks
Victoria.

pamaris

I would have a really hard time shelling out £1629 a month (25 year mortgage at 6%) knowing that I could rent the same place for £850 a month.

Financially it is much cheaper to rent than to buy. Only about £249 per month of that £1629 will actually be going to the principal. Whereas if you rent you will have £779 more each month compared to a mortgage. So, in effect that is £400 a month "dead money" going to a mortgage.

If you save £779 a month for 2 years you would have £18,696 to plonk down as a deposit. On a mortgage, you would have paid off £6329 of the principal after 2 years.

Unless I am totally missing something, you are much better off renting.

Not to mention the distinct possibility that house prices will fall in the near future.

Mortgagehero

Many lenders are happy to lend up to the age of 70. If you wanted to extend the term beyond this age some lenders, such as the Halifax will do so if you can give them an explanation as to how you intend to keep up the repayments during retirement i.e sufficient pension provision.

Ideally when purchasing a property you would have a deposit of 10%, but there are mortgages available with just a 5% deposit at competitive rates. When you get into the realms of the 100% mortgage rates tend to be higher, and with the "credit crunch" problems at the moment, these loans are seen to be of an even higher risk by lenders meaning that the rates and associated fees are likely to be on the up.

It might be an idea to keep saving hard untill next summer, get the 5% deposit together and in the meantime watch what happens with house prices.

Mr._H_2

IMHO, now is definitely the wrong time for you to buy a house. You will be better off renting and saving up for that deposit. Whilst you are saving, in all probability house prices will either fall or stagnate.

Do you have dependants? Given your stated incomes, I think you should be able to save more than £1100 pm.

WildHaggis

If the landlord wants to sell, and you are happy living where you are, why dont you buy your current property?