It's a mortgage, still a dream?

wigglers

afternoon, After some advice please.. We have been renting our place and rent has just gone up to £1100, I've been in a new job for a year where I earn double what I used to now on £40-45k before tax and partner works in a school term time she gets roughly 10k a year.. We have £5 on cards and k have 9k left on a loan I pay back £450 a month.

We have 10k saved up which could be 5% deposit of a95% mortgage or a bit more of a shared ownership, looking around Halifax etc say mip offer around 200k, it's it worth us applying and following it through even with the cards and loan still outstanding

Mark_d

Your income has gone up a lot faster than your outgoing, so that's a good thing.  I would focus on repaying card and loan debts before committing to purchasing a property.

Getting on to the property ladder is a good thing in the long term but if you wait until you've repaid your debts, then you might be able to get a bigger mortgage and make a better property investment.

lika_86

What about money for fees? I'd allow for at least £1500 for solicitors, a few hundred for mortgage-related survey type fees, moving fees, the cost of any overlap period where you're paying rent and a mortgage, an amount for kitting out a new house with essentials (if in furnished rented accommodation) etc.

Ideally you'd also have an emergency fund in place of a few months' bills (including mortgage payment).

It sounds like you're cutting it fine on deposit as is. I'd try and prioritise clearing the debt and building a pot for moving before trying to buy.

Herzlos

If you've got the MIP with the debts declared then you can move forward from there, BUT you'll find that if you can reduce the debt your mortgage affordability will go up. You may find (if I recall correctly) your £5k in card debt would equate to about £20k more mortgage if you cleared it first.

The loans not as big a concern as it's a fixed amount, but it's still £450/month off your affordability.

TheJP

Herzlos said:

If you've got the MIP with the debts declared then you can move forward from there, BUT you'll find that if you can reduce the debt your mortgage affordability will go up. You may find (if I recall correctly) your £5k in card debt would equate to about £20k more mortgage if you cleared it first.

The loans not as big a concern as it's a fixed amount, but it's still £450/month off your affordability.

No chance clearing £5k debt would equal an additional £20k borrowing. The £450 per month is for the card and loan totalling £14K even so this still wouldn't unlock an additional £20k. 

amandaleeds

Given the incredible value of properties around Halifax, or west/SW Bradford (e.g. Clayton, Queensbury), I'd say 4x your income plus the deposit would be fine, but if it's tight, then maybe fix the rate for a longer term to avoid any nasty surprises.