Nearly there - but help with next stage pls!

goatelope16

Hello,

So I am nearly there with clearing all my debt, including a hefty 2k overdraft, and two credit cards.. in another month or two I will be completely clear.

But - my next challenge is what to do about getting a mortgage or how I can improve my situation. I am on a low wage and I live alone in London; it is very difficult to save money and I dont have any family who can help or support.

My question is, now that I have cleared my debts, I still wont be able to save quickly and I am 38 so time is running out for a mortgage.

Does anyone have any ideas about what i can do? How small a deposit could get me something??

I am so desperate to have a home and feel a bit more secure but no deposit saved

Karonher

Most people seem to suggest a credit card that you spend a little on and pay in full each month plus being on the electoral register.

If you have defaulted in the past or have CCJs it will be harder. If you just paid it off, your credit rating should be better but I dont think there is any quick way to save and get accepted.

Silver_Queen

You can try doing help to buy or shared ownership as long as you make sure you don't overstretch yourself. For help to buy, you can buy with a 5% deposit and the govt will lend you 40% of the purchase price in an equity loan if you buy in London (20% outside of London). You then only have to get a mortgage for the remainder.

The equity loan is tied to your house value though - it's 40% of the value of your house, so if your house value doubles then you'll owe double, if that makes sense! It's secured against your home and you start paying interest on it 5 years after purchasing.

Christoph2390

It depends on how deep in debt you got I think. For me, I need to wait 6 years after paying my final debt before I even think of getting a mortgage, because I want a good rate and it takes that long for the defaults to fall off your credit file. So I plan to save the money I would have been paying into my debt payments, into a LISA and after the 6 years, I will have a decent deposit for a house.

If you haven't gotten as deep as I did, and have never missed any payments then you may still have a decent credit file and so you should look into a LISA (the govt give you a 25% bonus) to save a deposit and look into the help to buy scheme. Really get to grips with it though, the govt loan is nice to get you on the ladder but time to repay that comes around very quickly - as some of my friends have found out.

System

goatelope16 wrote: »

I am on a low wage and I live alone in London; it is very difficult to save money and I dont have any family who can help or support.

My question is, now that I have cleared my debts, I still wont be able to save quickly and I am 38 so time is running out for a mortgage.

Does anyone have any ideas about what i can do?

Leave London and move 200 miles or more north. In Hull for example you could buy a house with a deposit of under £3000 on nothing more than a 3x multiplier of a full time NMW job. There are of houses sub £100,000 north of the Midlands and the unemployment rates are within fractions of a percent of that of London.

JayRitchie

How much do you earn? Is it possible to do your work outside of London?

Its very hard to buy in London on a low wage - even a single good wage. Best to check the feasibility and consider alternatives.

sourcrates

goatelope16 wrote: »

I am on a low wage and I live alone in London;

I would be interested to know what is classed as a low wage in London, I assume your taking about the living wage, which is what, £10 an hour approx.

With property prices sky high in London, the average house there costs £481,556.
Where i live, in East Yorkshire its £157,762.

In Hull, as Tarambor suggests, they can be half that, and Hull is not the dump you may think it is, some parts are a bit dodgy, as with any UK city, but on the whole its a really nice place to live and work, with the beautiful Yorkshire coastline on your doorstep.

How do you ever hope to raise such a massive mortgage on your wage ?

enthusiasticsaver

Honestly I would say if you want to buy a home and live in London your best option would be to move away. We did it 30 years ago even with 2 good wages it was a struggle to buy anywhere in a nice area. Moved to Cornwall and never looked back.

If you really need to stay in London then Shared ownership is a possibility. If you are a key worker (teaching, nursing etc) I think there are schemes to help you. Open a help to buy ISA. Most mortgages need a 10% deposit then fees on top so look in your area to see what a one bed flat would be as realistically that may be all you can afford. Check Noddle to see what your credit file looks like. Once the debt is cleared just keep one credit card (the oldest) and use it and pay off in full every month to improve your credit score.