FTB with Contractor Job - Advice Please

russelleng

Hello, I'm a first time buyer, 27 years old, enjoyed house sharing all around the country for most of my working life, but now feel it's time to have a more permanent base. I have just secured a 6 month contract in Sheffield and would quite like to live in the area as the peak district is close by for weekend activities and houses seem reasonably priced compared to where I last rented in Reading.

I feel that the main choice I have to make is should I go for a flexible mortgage and pay lots off while I work with a little put away for non-working periods, or go for a cheaper non-flexible deal and just put away savings while in work?

My financial circumstances are

Savings 15,000
Income 1,000 per week when in work (so averages around 36,000 per year)
Proposed Property Price 80,000 to 90,000 (North Sheffield or Rotherham)

Thanks,

Russell

WildHaggis

You can do both. Go for the cheaper, non flexible deal. Stash your savings away into a tax-free isa, and wack a lump sum into your mortgage every so often - either at the end of the deal period, if you really have an infelxible deal. Most inflexible mortgages do have some facility to pay off 5% or 10% or overpay monthly by 10% without penalty. Check with your adviser.

herbiesjp

How often has your contract been renewed? How long have you been during your current role?

The figures seems fine assuming no other debt

SOme deals allow underpayments/payment holidays, as long as previous overpayments have been made - however these may have other implications depending on how you go about it i.e. interest rolled up on the unpaid part.

So depending on your exact plans, it may well be worth keeping any savings accessible, in order to transfer to you current account, in order to keep paying the mortgage direct debit

russelleng

herbiesjp wrote: »

How often has your contract been renewed? How long have you been during your current role?

This is a new role with a company that I had a short term contract with in July and August in their Reading office. They seemed to like my work, so offered this new role in Sheffield a couple of weeks ago. A move to permanent has been discussed at the end of the 6 month contract period if successful, but I'm taking that with a pinch of salt.

I think you're right to focus me on the consistency of my income, as that's the biggest variable in my situation, the level has previously been maintained by being mobile and working anywhere in the UK. I have to decide if I am confident on maintaining an income to service the mortgage debt while limiting myself to jobs in the local region.

herbiesjp wrote: »

The figures seems fine assuming no other debt

Luckily I have no other debt, so it's good that the figures seem OK to others.

All things considered it looks like I should build a chunk of money during working periods as a mix of small mortgage overpayments and cash in a savings account. Should be a nice safety net if I am out of work for an extended period and if things are going well around the point of an remortgage date I could move some to reduce the mortgage debt.

Thanks guys.

Russell