First time Buyer - Where to start!!

j0nathon2

I would like to buy my first house, I haven't found one yet, but in the area I am looking in, would be looking around £100 000 to £120 000 for a 2 bedroom house, there is just me and I currently have savings and investments of just over £30K, (£9.5K Cash ISAs, £5.5K S&S ISAs and the rest online high interest accounts). I earn £29K a year (there is little chance of this increasing anytime soon) and have no debt and never had.

The type of mortgage immediately tempting me is a 2 or 3 year fixed rate mortgage so I know exactly what I am paying each month for these first years - does this sound like a good idea? I assume I would have no problem getting a mortgage for that kind of value? I would also like the ability to overpay.

I'm really not sure where I should start with regards to the mortgage!

MortgageMamma

The best place to start is with a fee's free, whole of market mortgage adviser. whether you do this over the phone or see someone face to face is not really that important, but you need to find someone you are comfortable with and who you trust completely.

Mortgages are a minefield. There are some people on forums such as this who think they are straightfoward but really they are not. Its really important you get the first step of the process right, and find the right mortgage/lender to suit your circumstances.

As you say you have no debt and never had, you may be in a position whereby your credit score is a little low. that often happens to people who do not borrow money. It can be a small obstacle when looking for a mortgage, as lenders like to establish your creditworthiness by seeing a past history of timely repayments.

from an affordability point of view, you are well within your budget. you have a good deposit and are not looking to spend too much.

Have you got to the stage where you have found property you are interested in yet?

herbiesjp

Based on your figures, you should be fine.

How much of a deposit did you want to put down?

Assuming your credit history is fine then as you say you have never had debt.

Plenty of mortgage nowadays allow for overpayments - however to make sure you get the most benefit of any overpayments you make, make sure the lender you go for, charges interest on a daily basis, as this means that they will re-calculate your balance and interest payable straight away.

How much in overpayments do you think you will make? SOme lenders have a monthly limit, whilst others have a maximum 10% of the outstanding mortgage amount

j0nathon2

Thank you to you both.

I haven't actually found a property yet, just trying to make sure that when I do, I know what I am going to do next!

For the deposit, I would ideally pay as much as possible, but I want to buy and insure a car, which is going to reduce that figure, and there is obviously the fees to pay and then things to buy for the house.

Regarding debt, I have actually just taken a credit card with a view to it giving me some kind of credit rating - I always pay it all off in full each month with direct debit.

I don't expect to make massive overpayments, but I get a quarterly bonus, which is not guaranteed, and some money from irregular freelance work, again not guaranteed, which I might like to use to overpay as it's all in addition to my fixed salary - combined they could be around £5000 a year.

I might actually not be able to overpay, I have very little outgoings now, owning a house would obviously change that, but I don't know how much til it happens.

MortgageMamma

well you have done the right thing by sorting your mortgage before you look for a property. ideally you need to have something called an agreement in principle in place, to present to the estate agents when you make an offer. (this assures them you have funds in place and are committed to buying). Some estate agents will give you the heavy hand to try and make you use their mortgage adviser, but remember you are not obliged to and you are free to arrange your mortgage how you wish. but you do need that mortgage promise!

Have you been in and put your name on the lists in the estate agents where you want to buy? I am estate agency based and people come in every day going on the list. In generally if you speak to the agents on a weekly basis once on the list they tend to remember who you are, and sometimes you may get a call before a property is even formally marketed.

jonewer

j0nathon2 wrote: »

I would like to buy my first house, I haven't found one yet, but in the area I am looking in, would be looking around £100 000 to £120 000 for a 2 bedroom house, there is just me and I currently have savings and investments of just over £30K, (£9.5K Cash ISAs, £5.5K S&S ISAs and the rest online high interest accounts). I earn £29K a year (there is little chance of this increasing anytime soon) and have no debt and never had.

You seem to be quite financially savvy! :beer:

You are of course in a stronger position if you look under the nil-rate stamp duty threshold. This will substantially reduce your outlay (we are looking at >£250k, which means moving costs of around £10k eeek!).

I might disagree with Martin Lewis on this, but I would always keep those ISAs, simply because you can never get that tax-free allowance back ever. Others may disagree with me, but its something to bear in mind.

Best of luck pal!