First time buyer help

kirsteenkiki

Hi looking for some help! I am looking to hopefully buy my first house! And any advice would be greatly appreciated! I am back living with my parents ( I stayed with my partner  but it was his house/mortgage) for along time and wasted money!  I have about £2000 of debt on credit cards which I will have paid off in the next few months! I have zero savings ( I’m ashamed to same) I really don’t want to rent my own place as I feel it’s a bit of wasted money and would rather buy my own house! After tax and national issuance I earn about £1500 outgoings are around £800. I’m 31 years old and been with my work place for 14 years. House price £120,000 to £150,000!  it’s just where on earth do I start? Is there any chance of me getting a mortgage myself or not a chance! thanks in advance  

MaryNB

Where's the £700 going? That's a significant amount if you can save it every month. 

Don't be ashamed. A lot of people have no savings a LOT more debt than £2k. 

Start by logging everything you spend. Everything. I did this every month when I wasn't saving enough (and again in the few months before I applied for a mortgage) and it helped massively - no more rounding down what I was spending on non-essentials, no more going out for meals just because my housemate and I were bored and lived in the centre. No more forgetting to return things within 28 days. Then I put together a reasonable monthly savings goal - and if you're short one month, try make it up the next month.  (I was awful for setting aside a month where I didn't save and starting afresh next month, and then repeating this...). Set up a standing order to put your savings in a savings account just after pay day so you only spend what's left in your current account (but you need to make sure there's still enough to cover all direct debits throughout the month). 

Check your credit files with Experian (use MSE credit club), Equifax (use Clearscore), Transunion (use credit karma). Don't pay any subscriptions, use the free websites in brackets. Make sure all your info is correct (score is irrelevant, it's the info that matters).  Check if you have any defaults, CCJs or missed payments. Some high street lenders need them to be a few years old before offering a mortgage. There are adverse lenders but their interest rates will be higher.

Get on the electoral register if you aren't already.

Keep your credit card debt to about 30% of your limit. One you've got the £2000 cleared may sure you pay off any future balances off every month. But do keep using it. Banks like to see you using credit responsibly. 

Do not miss payments, do not get pay day loan, avoid using your overdraft. Avoid taking cash out on your credit card.

Aim to save a 10% deposit, 15% if you can. Banks are back to giving mortgages with 10% deposits but for several months last year were for the most part unavailable and 15% was the minimum. Based on current lending, if your finances are in a good state you can expect a mortgage that is 4.5x your salary.

ETA: Based on a take home pay of £1,500, I assume you're on about £21k. Unfortunately you might struggle at a house price of £120k, more like £100k-£110k plus you'll need money for solicitors fees (approx £1,200 with searches), mortgage valuation fee (approx. £300), surveyors fee (approx £400). Mortgage product fee could be £1k but you can probably add this to the loan. You'll need quite a large deposit to make up the difference, or a pay rise. I realise it's a bad time to ask, but any chance of negotiating a salary increase at work? I know a few people who were in jobs for many years and they never asked for an increase and the company never bothered offering because they knew they weren't going to go anywhere. I realise this is way easier said than don't but i know a few people got stung by their company just because they never asked. Doesn't hurt, all they can say is no. 

K_S

kirsteenkiki said:

Hi looking for some help! I am looking to hopefully buy my first house! And any advice would be greatly appreciated! I am back living with my parents ( I stayed with my partner  but it was his house/mortgage) for along time and wasted money!  I have about £2000 of debt on credit cards which I will have paid off in the next few months! I have zero savings ( I’m ashamed to same) I really don’t want to rent my own place as I feel it’s a bit of wasted money and would rather buy my own house! After tax and national issuance I earn about £1500 outgoings are around £800. I’m 31 years old and been with my work place for 14 years. House price £120,000 to £150,000!  it’s just where on earth do I start? Is there any chance of me getting a mortgage myself or not a chance! thanks in advance  

@kirsteenkiki At 1,500 net I assume your annual gross pay is around 22k? That being the case you *could* potentially borrow 4.5-4.75x income so in the region of 100k or so. For a standard purchase (no government schemes) you will need a minimum deposit of 10% of the purchase price. If you had that, your max house price budget would be in the region of 110k or so.

As you appear to be a first time buyer, you may also be eligible for government schemes such as help2buy (5% deposit but likely over your budget) and shared-ownership schemes (low deposit).See here for more details https://www.moneysavingexpert.com/mortgages/mortgage-schemes/

On the plus side, you're only 31 so there is a lot of flexibility in the mortgage term if you need to extend it to tackle affordability issues as per lender calculations.

brownbagsFTB

It might take you a couple of years to save a deposit but no reason why you can’t if you’re nearly out of debt. First thing to do is open a LISA. You can save £4K a year and the government will give you a 25% bonus. So effectively £1K free for every year of saving if you max the £4000 annual saving limit. It’s really helped me to save a deposit. Secondly, as someone else has said, check your credit file. It’s worth doing this on checkmyfile as opposed to just Experian or Equifax as it holds all the information from your different credit files. Getting on the property ladder is achievable if you’re committed to saving and understand it will take a bit of time. Good luck! 

hayley2411

I was in the exact same position infact I still am at the moment, just turned 32 an just bought my first house (still in process). Earn more or less the same it is doable 😊 

The pandemic actually helped me....I couldnt go out and fritter my money away cos there was nothing to do and go out drinking and go on several holidays which I was doing! I was off to America for a month last year just cos I could....I had no intentions of moving out anytime soon 😂 but when everything got cancelled and I couldn't leave the house I realised I was ready for out. And luckily enough in the past 10 months I've actually managed to save my deposit (been strick also once I'd decided) basically stopped the 10 new look and asos parcels arriving every week 😂 and I've done it. 
I found it so hard and so boring at times but now I'm at the stage where I'm giddy I'm excited I'm picking out furniture and paint and can say I've done this all myself and it's such a great feeling. 
Good luck 😊 xx

kirsteenkiki

hayley2411 said:

I was in the exact same position infact I still am at the moment, just turned 32 an just bought my first house (still in process). Earn more or less the same it is doable 😊 

The pandemic actually helped me....I couldnt go out and fritter my money away cos there was nothing to do and go out drinking and go on several holidays which I was doing! I was off to America for a month last year just cos I could....I had no intentions of moving out anytime soon 😂 but when everything got cancelled and I couldn't leave the house I realised I was ready for out. And luckily enough in the past 10 months I've actually managed to save my deposit (been strick also once I'd decided) basically stopped the 10 new look and asos parcels arriving every week 😂 and I've done it. 
I found it so hard and so boring at times but now I'm at the stage where I'm giddy I'm excited I'm picking out furniture and paint and can say I've done this all myself and it's such a great feeling. 
Good luck 😊 xx

Thank you so much. That is so good to know!! Yes that is totally me too!!! ASOS get most of my wages each month! That’s Amazing you have done that and good to know I hopefully can aswell!!! Thanks again 

kirsteenkiki

brownbagsFTB said:

It might take you a couple of years to save a deposit but no reason why you can’t if you’re nearly out of debt. First thing to do is open a LISA. You can save £4K a year and the government will give you a 25% bonus. So effectively £1K free for every year of saving if you max the £4000 annual saving limit. It’s really helped me to save a deposit. Secondly, as someone else has said, check your credit file. It’s worth doing this on checkmyfile as opposed to just Experian or Equifax as it holds all the information from your different credit files. Getting on the property ladder is achievable if you’re committed to saving and understand it will take a bit of time. Good luck! 

Great advice thank again much appreciated 

kirsteenkiki

MaryNB said:

Where's the £700 going? That's a significant amount if you can save it every month. 

Don't be ashamed. A lot of people have no savings a LOT more debt than £2k. 

Start by logging everything you spend. Everything. I did this every month when I wasn't saving enough (and again in the few months before I applied for a mortgage) and it helped massively - no more rounding down what I was spending on non-essentials, no more going out for meals just because my housemate and I were bored and lived in the centre. No more forgetting to return things within 28 days. Then I put together a reasonable monthly savings goal - and if you're short one month, try make it up the next month.  (I was awful for setting aside a month where I didn't save and starting afresh next month, and then repeating this...). Set up a standing order to put your savings in a savings account just after pay day so you only spend what's left in your current account (but you need to make sure there's still enough to cover all direct debits throughout the month). 

Check your credit files with Experian (use MSE credit club), Equifax (use Clearscore), Transunion (use credit karma). Don't pay any subscriptions, use the free websites in brackets. Make sure all your info is correct (score is irrelevant, it's the info that matters).  Check if you have any defaults, CCJs or missed payments. Some high street lenders need them to be a few years old before offering a mortgage. There are adverse lenders but their interest rates will be higher.

Get on the electoral register if you aren't already.

Keep your credit card debt to about 30% of your limit. One you've got the £2000 cleared may sure you pay off any future balances off every month. But do keep using it. Banks like to see you using credit responsibly. 

Do not miss payments, do not get pay day loan, avoid using your overdraft. Avoid taking cash out on your credit card.

Aim to save a 10% deposit, 15% if you can. Banks are back to giving mortgages with 10% deposits but for several months last year were for the most part unavailable and 15% was the minimum. Based on current lending, if your finances are in a good state you can expect a mortgage that is 4.5x your salary.

ETA: Based on a take home pay of £1,500, I assume you're on about £21k. Unfortunately you might struggle at a house price of £120k, more like £100k-£110k plus you'll need money for solicitors fees (approx £1,200 with searches), mortgage valuation fee (approx. £300), surveyors fee (approx £400). Mortgage product fee could be £1k but you can probably add this to the loan. You'll need quite a large deposit to make up the difference, or a pay rise. I realise it's a bad time to ask, but any chance of negotiating a salary increase at work? I know a few people who were in jobs for many years and they never asked for an increase and the company never bothered offering because they knew they weren't going to go anywhere. I realise this is way easier said than don't but i know a few people got stung by their company just because they never asked. Doesn't hurt, all they can say is no. 

That’s is really great helpful advice! Thank you for taking the time to explain that all to me. Very much appreciated!! Thanks again