Mortgage options for the future?

Wardee

Hi all, I've recently paid off a decent sized amount of debt and my eyes were fully set on saving hard and getting a mortgage mid/end of next year to get out of the rent trap I've been in for so many years. I hate my current living situation but I don't want to keep moving around either, places are becoming more and more expensive and I'm getting so demoralised by it all. I don't have a lot saved as I've only just become debt free but it could be possible to borrow a small amount from a family member which as of right now would bring me a deposit of just under 6% of a property I've seen. If I continue saving the way I have by Christmas it could be 10%.

Is it worth speaking to a mortgage broker now? I'm starting to get a lot of anxiety from the doom & gloom I keep reading about and just need a bit of a nudge in the right direction as I literally don't know where to start.

PK_London

Well done for being debt free however 10% is an insanely low amount to save for a deposit. What about legal costs? Interest rates might be the last thing you worry about if property prices fall, negative equity and repossessions creep in and banks refused to lend at low LTV especially if you have a chequered credit history

Continue to save the best you can and review the situation in the new year when the markets are more settled and the picture is clearer. You might still be looking at mortgage rates between 6-7%.

Wardee

Thank you for the reply, sometimes I feel like I'm going stir crazy watching the months tick by and finding I'm still in the same position. I know I've paid down my debt but it'd be nice to know that it's been a worthwhile accomplishment as besides not having the debt now it doesn't seem it. I can't move if I want to save heavily but it's far from ideal where I am now but it's cheap.

That's why I wasn't sure if speaking to a mortgage advisor would help, do they offer advice/plans if I tell them what I want or is it just a case to find out what I'd get offered in my present situation? I think I'd feel better with a plan in place knowing it's heading somewhere rather than just seeing what happens in a few months/years. My credit score is maxed out on Experian, I know it means nothing but I was very careful with repayments not to tarnish it.

dander

Bear in mind that if interest rates are going up for mortgages, they are also going up for savings. You could find you've actually timed things really well - had debts and paid them off when rates were super low, got into a position where you're saving just as the rates are going to start helping you do that. 
Personal opinion only but if I were a first time buyer I'd sit tight right now, keep saving hard and wait to see what happens to the market. It seems likely to me that these rate hikes are going to impact house prices at least to some extent. How much remains to be seen but I'd expect your money to go further next year than it would now. 
The thing to be mindful of though is that mortgage lenders might tighten up on LTV and affordability assessments and so the amount they'd be prepared to lend you could also shrink. 
I wouldn't talk to a broker now though when things are so chaotic and busy, they probably wouldn't be interested in spending time on you when they have queues of people trying to get mortgages immediately. I'd focus now on keeping the saving going and maximising the returns on those savings. Get on the savings pages on this site and research what the best account or savings method for you is.

K_S

Wardee said:

Hi all, I've recently paid off a decent sized amount of debt and my eyes were fully set on saving hard and getting a mortgage mid/end of next year to get out of the rent trap I've been in for so many years. I hate my current living situation but I don't want to keep moving around either, places are becoming more and more expensive and I'm getting so demoralised by it all. I don't have a lot saved as I've only just become debt free but it could be possible to borrow a small amount from a family member which as of right now would bring me a deposit of just under 6% of a property I've seen. If I continue saving the way I have by Christmas it could be 10%.

Is it worth speaking to a mortgage broker now? I'm starting to get a lot of anxiety from the doom & gloom I keep reading about and just need a bit of a nudge in the right direction as I literally don't know where to start.

@wardee From a mortgage point of view, as an FTB, a deposit of 5% is sufficient to purchase a property. However, if it is borrowed (as opposed to a gift or savings), that massively reduces the lenders that are willing to consider as other than a few exceptions, most lenders do not allow a borrowed deposit.

As an FTB, it always worth speaking to a broker sooner rather than later so you can get a realistic idea of where you stand (you might already be in a position to start looking) or what you need to work towards and a decent idea of your budget.

Ibits4321

10% deposit is not 'an insanely low' amount  🙄

nick1234

Agreed even 5% is normal deposit l, 10% is actually quite good

however..as u point out interest rates are only/already going up 5% seems to new norm and this will rise as base rate does (only 2.25% currently).  So u have missed the boat in terms of a low rate, however house prices will fall (who knows if in proportion to rate rises or beyond), so as u have cheap rent keep saving, looking at the market and be in a good position when prices go down and move quick.  

iazcac

If house prices fall that 10% could well be 15% soon!!

Wardee

Thanks all, some great points made by everyone. As I don't have much of a deposit currently I guess I'm stuck continuing to save for now. The reason I'm struggling to see a positive side is because it feels like my life is (still) on hold and has been on hold for some years since I targeted my debt. I put all my wages into the essentials and save the rest. I'm sure it'll all be worth it in the end with a bit of patience.

nick1234

Wardee said:

Thanks all, some great points made by everyone. As I don't have much of a deposit currently I guess I'm stuck continuing to save for now. The reason I'm struggling to see a positive side is because it feels like my life is (still) on hold and has been on hold for some years since I targeted my debt. I put all my wages into the essentials and save the rest. I'm sure it'll all be worth it in the end with a bit of patience.

House prices are only going one way so you are not in a bad position and if u can get 10% deposit by Decemebr, aim for 15-20% for the best deals and security.  Speak to a broker in a few months once the hype has died down and get a mortgage in principle letter so u r in good position to buy.  Many BTL landlords are looking to sell as rates dont make it viable so there will be a lot of supply next yr