Rent / buy stuck in a pickle?

n1guy

We've been renting since 04 and moved 5 times due to landlords selling and it's about to happen again so we decided to look into buying.

The mortgage advisor said we'd get up to £140k however due to high rent costs we've never been able to save anything for a deposit, she then recommended a scheme where u buy half rent half and it doesn't need a big deposit, the kicker with it is your credit file needs to be squeaky clean and mine isn't.

Renting is starting to also go beyond us as rental prices are sky rocketing. If we did get a mortgage we'd make a massive saving, our house we rent at the moment for £570 pm has a mortgage of around £400.

Any advice on this folk?

G_M

https://www.helptobuy.gov.uk/

or shared ownership though I've never been a fan

n1guy

G_M wrote: »

https://www.helptobuy.gov.uk/

or shared ownership though I've never been a fan

Help to buy apparently stopped in NI and shared owner ship here is the scheme I was on about above.

haras_nosirrah

shared ownership can work for a lot of people. I do a lot of shared ownership mortgages as I am recommended by a housing association. You would need 5% of the value of the share and then around 2k on top to cover costs if your share is under 125k. The mortgage, rent and service charge added together need to fit within the housing associations affordability ratio against your income (the housing association I work with are 45% of your net income)

Maybe get an idea of what properties are available under shared ownership and then you can look at the affordability

n1guy

haras_nosirrah wrote: »

shared ownership can work for a lot of people. I do a lot of shared ownership mortgages as I am recommended by a housing association. You would need 5% of the value of the share and then around 2k on top to cover costs if your share is under 125k. The mortgage, rent and service charge added together need to fit within the housing associations affordability ratio against your income (the housing association I work with are 45% of your net income)

Maybe get an idea of what properties are available under shared ownership and then you can look at the affordability

Your credit file has to be perfect or they don't entertain you. It was the first thing offered to me by the mortgage advisor.

Pixie5740

You want to buy but you can't afford to even using a shared ownership scheme because a) you have no deposit and b) your credit history is a bit ropey. There's no magic cure for either of those. If you want to buy you will have to save some money by reducing your expenditure and/or increasing your income. As for your credit history time is the great healer. Did the mortgage broker look at all 3 of your credit files (Equifax, Experian and Call Credit) and say your credit history was an issue?

If you can't buy and the rent is getting too high for you then could you move to a less expensive area or look into getting social housing which should at least give you some security?

n1guy

Pixie5740 wrote: »

You want to buy but you can't afford to even using a shared ownership scheme because a) you have no deposit and b) your credit history is a bit ropey. There's no magic cure for either of those. If you want to buy you will have to save some money by reducing your expenditure and/or increasing your income. As for your credit history time is the great healer. Did the mortgage broker look at all 3 of your credit files (Equifax, Experian and Call Credit) and say your credit history was an issue?

If you can't buy and the rent is getting too high for you then could you move to a less expensive area or look into getting social housing which should at least give you some security?

No just Experian which is the main one apparently. Co-Ownership which is shared accommodation here in NI can't have as much as 1 late payment. A regular mortgage is more forgiving but don't have a deposit.

We could move area which would mean having to get new jobs or social housing as you say but growing up myself in a council estate that really would be a last resort, not something I'd want for my kids.

tori.k

Why not post up a SOA (statement of affairs) on the debt free wannabe board, often others can see savings in a budget that are not obvious to us, it not going to be easy but if this is what your family want it won't come without sacrifice, you either have to up your income or lower your outgoings preferably a mix of both.
We built our deposit 1% at a time as that felt an achievable amount where as 20% felt unattainable at the time.
Good luck

AdrianC

n1guy wrote: »

The mortgage advisor said we'd get up to £140k... however due to high rent costs we've never been able to save anything for a deposit

our house we rent at the moment for £570 pm has a mortgage of around £400.

Hmm... How much are you each earning? I find it very hard to believe that a household struggling to pay £570/mo rent is going to qualify for a £140k mortgage... Unless you REALLY need to get your other expenses in order...

n1guy

AdrianC wrote: »

Hmm... How much are you each earning? I find it very hard to believe that a household struggling to pay £570/mo rent is going to qualify for a £140k mortgage... Unless you REALLY need to get your other expenses in order...

Me £16k the Mrs something similar once you add in tax credits

AdrianC

n1guy wrote: »

Me £16k the Mrs something similar once you add in tax credits

So £32k between you? Your £140k borrowing is simply not going to happen, sorry...

http://www.moneysavingexpert.com/mortgages/how-much-mortgage-borrowing
gives a figure of £80k-£112k borrowable. With a poor credit rating, the lower end of that, with a higher deposit, depending on how bad your credit rating is.

Even 90% LTV would require you to borrow £126k against a £140k property - with £14k of savings behind you.

As for £400/mo "mortgage repayment" - nope, sorry... £126k borrowed at 3% would cost you £597/mo repayments, or £315 interest-only. Forget interest-only. Apart from the impossibility of finding a lender who will offer you that, you'll still have £126k to pay back in 25 years time...

£400/mo repayments will see you borrowing about £85k maximum.
http://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator

With you each earning £16k/year, you should be seeing about £1,200/mo after tax. That's £2,400/mo household income. Yet you're paying £570/mo rent, and failing to save anything? Where's that other £1,830/mo going...?
http://www.moneysavingexpert.com/tax-calculator/