Confused First Time Buyer - Advice would be lovely...

Silaqui

Hi, I've been lurking for a while and thought I would now start posting proper, so hello everybody. Thank you for taking the time to read my plea!

I'm currently renting a flat and have been for about 18 months, but would now like to get on the property ladder because I just feel like my money is going nowhere!

The problem I've got is that I don't really know where to start in terms of finding out what I can borrow, in order to then start looking at houses in my price range - when I've looked at the mortage calculators on various sites, they give me a very low figure which, to be realistic, wouldn't get me anything. I know people who are in a similar situation (earnings and debts etc) who have managed to get much more that this. I am a teacher in my second year, and earn a reasonable amount compared to some people my age, but lots of my friends who earn less have managed to buy houses. I don't want the whole green grass and picket fence straight away, I know thats not going to happen, but I would like somewhere to call my own.
I have no deposit but am *trying* to save something - its unlikely that I will be able to come up with enough for a decent deposit.

I have spoken to a mortgage advisor (who my parents have used) but he wasn't very specific and didn't really help much.

Just to clarify (I can ramble a bit I know!) - Where do I start? How can I find out a realistic mortgage figure that will fit in with the amount of repayment I could afford? I have though about going into some banks and doing the whole process to find out more details but would this affect my credit rating?

Thank you to anybody who can help (and who bothered to read this!)
Silaqui

ameliarate

I have no doubt someone with more knowledge than me will come along shortly, but I believe you should look at borrowing about 3 to 3.5 x your annual gross salary. If you have debts and loans these will be taken in to account and the amount you can borrow will be reduced.

I hope this is of some help.

Nenen

Welcome from a fellow-in-arms teacher! In answer to your question... Most of the Building Society websites have calculators on them that show how much you can borrow and what that will cost per month, e.g.
http://www.cheltglos.co.uk/calculators/mortgagePaymentCalculatorWWW.asp
It might also be worth having a look at your union website in case they have links to special discounts for teachers.

Having given that info I'd advise caution! With the demise of Northern Rock many Building Societies are increasingly worried about lending to someone with little/no deposit and will increase their charges accordingly. If you have little or no deposit you also run the risk (particularly in the current economic climate) of going into negative equity if house prices fall. If, as many (but certainly not all) predict, house prices are going down, then now is not a particularly sensible time to buy unless you really need family stability or you are buying something you can easily afford and will not need to move for at least 5-10 years (most economists think this is the top of the prices peak).
Assuming you are young (20s), in your first teaching job and single then this is not very likely as a promotion or relationship could mean you want to sell your house and, if you were in negative equity, then this would be very difficult. IMHO you would be better off waiting a while and doing everything you can to save a deposit. Remember you will also have expenses associated with house buying eg solicitors, mortgage arrangement, removals that can add another 1-2K.:eek:

In the current situation, when house prices appear to be stagnating or going down, the the rent you are currently paying is no more 'dead money' than the interest payments you will be making to a BS! IMHO, it is better to go for a cheap rented place and save as hard as you can for a few months at least while keeping a close eye on what is happening to house prices in your area.

meanmachine_2

If you've not got a deposit you've little chance today of borrowing a) enough b) enough at a decent rate.

Most of the 100% mortgages that do still exist charge upwards of 6.5%.

Some banks lend still on the basis of affordability (whatever that means) - see Halifax or A&L websites. But if you have debts that is going to impact on how much you're able to borrow.

I'd say right about now is the very worst time to buy if you don't have a hefty deposit behind you.

Happily, though, prices ARE falling. Which is good news for most people.

jdavanport

:beer:
Hi Silaqui,
Try your local housing association, they offer great deals to people in
Specified Occupations, as yours comes under thier criteria.
They offer deals where you find a place you like,tell them and they lend you
up to 50% of the asking price, which you can pay off at any time, or a
piece at a time. It worked for me. They will help, as it is a government
funded scheme.
Good Luck,
John:T

Silaqui wrote: »

Hi, I've been lurking for a while and thought I would now start posting proper, so hello everybody. Thank you for taking the time to read my plea!

I'm currently renting a flat and have been for about 18 months, but would now like to get on the property ladder because I just feel like my money is going nowhere!

The problem I've got is that I don't really know where to start in terms of finding out what I can borrow, in order to then start looking at houses in my price range - when I've looked at the mortage calculators on various sites, they give me a very low figure which, to be realistic, wouldn't get me anything. I know people who are in a similar situation (earnings and debts etc) who have managed to get much more that this. I am a teacher in my second year, and earn a reasonable amount compared to some people my age, but lots of my friends who earn less have managed to buy houses. I don't want the whole green grass and picket fence straight away, I know thats not going to happen, but I would like somewhere to call my own.
I have no deposit but am *trying* to save something - its unlikely that I will be able to come up with enough for a decent deposit.

I have spoken to a mortgage advisor (who my parents have used) but he wasn't very specific and didn't really help much.

Just to clarify (I can ramble a bit I know!) - Where do I start? How can I find out a realistic mortgage figure that will fit in with the amount of repayment I could afford? I have though about going into some banks and doing the whole process to find out more details but would this affect my credit rating?

Thank you to anybody who can help (and who bothered to read this!)
Silaqui

KiKi

Hi Silaqui

I agree that at the moment, you're probably better off renting somewhere cheap, saving like crazy, then buying when it's likely that houses will be cheaper next year.

However, when you're ready, the following things would be useful:

1 - To get an idea of what mortgage you can get, multiply your salary by 3.5. That's the average mortgage you are likely to get from a lender. Of course, some lenders will lend more, or less, depending on your circumstances. Also, pop into some high street branches - but DON'T commit to anything. When you need a mortgage offer go through a broker. The high street branches can provide an idea, though.

2 - You will need approx 10% of the house price for a deposit. I personally wouldn't take out a mortgage of more than 90% at the moment, but that's a personal choice.

3 - Get some recommendations for solicitors, and call them to quote you. Most prices exclude VAT, so make sure you check. Make sure also that whoever you choose gives you a full breakdown of ALL costs you'll need to pay.

4 - Budget for all your costs. As an idea, you'll need:
* Solicitors fees - 725 (inc VAT)
* Survey - 3 levels of survey, take your pick! Usually your lender will provide the basic mortgage valuation survey for free. You can also choose to pay for: 200ish for homebuyers, 500ish for full structural.
* Local search - 150
* Land registry search - 6
* Landlord's registration - 16
* Land registry - 150
* Stamp Duty - 1% of purchase price if under £250K.
* Deposit - 10% of purchase price (would not recommend paying any less)
* Bank transfer to transfer deposit - 30
* Leasehold transfer (if buying a leasehold flat) - 80

Plus moving costs if using a removals company.

So you'll need £2000 ish, plus Stamp Duty, Deposit and Removals costs


5 - Find a place you like!

6 - Speak to a mortgage broker to get a mortgage offer (it's helpful to start this process really before finding somewhere you like)

7 - Once you've found somewhere, make an offer. If it's accepted, you will have to give the Estate Agents your solicitors' name and number, and they will start the process. First thing you do on any property is get the survey done, and make sure you have a mortgage offer for that place. Only after that will the rest of the process happen - hopefully smoothly!

8 - You'll get to the point of exchanging contracts between the buyer and seller, and then about two weeks later you will 'complete' on the property when it finally belongs to you.


Hope that helps - there are many variables, obviously, and I'm sure other people have done it other ways. But this is my experience with the properties I've bought.

KiKi

Running_Horse

Silaqui wrote: »

I'm currently renting a flat and have been for about 18 months, but would now like to get on the property ladder because I just feel like my money is going nowhere!

Your money is not going nowhere, it is paying for the roof over your head.

Silaqui wrote: »

when I've looked at the mortage calculators on various sites, they give me a very low figure which, to be realistic, wouldn't get me anything.

Then you have your answer. You cannot afford to buy right now.

Silaqui wrote: »

I know people who are in a similar situation (earnings and debts etc) who have managed to get much more that this.

Then they are either very unwise, or have generous relatives. Start off by reducing your debts.

Silaqui wrote: »

I have no deposit but am *trying* to save something - its unlikely that I will be able to come up with enough for a decent deposit.

You say you are quite well paid, so why is saving so difficult? Have you considered a part time or school holiday job? It would be very unwise to buy without a deposit in a falling market, and if you are unable to save, how will you afford mortgage payments?

Silaqui wrote: »

I have spoken to a mortgage advisor (who my parents have used) but he wasn't very specific and didn't really help much.

Then he was not doing his job, and you could try another, but from what you have said it might be wiser to save for now and watch prices come down to a more realistic level.

Sorry if this is not the answer you wanted, but it sounds like its just not the right time for you to be buying a property.

Silaqui

Thanks for all your replies, it's good to see things from a different perspective, especially as you're all unbiased! The general consensus seems to be to wait and save, which when I really sit and think properly is probably right and I'm just being a bit too eager.
I'm not sure why I find it so difficult to save money - it just seems to be that I manage to save money up, then the car breaks down or something comes along that I end up blowing it on! I don't actually spend a huge amount on myself - all my spare cash goes towards my student credit card and student loan!
Thank you all for your help I think I will probably take the advice and hold fire for a bit longer and wait for my money to go up, and prices to fall!
Silaqui

Debt_Free_Chick

Silaqui wrote: »

I'm not sure why I find it so difficult to save money - it just seems to be that I manage to save money up, then the car breaks down or something comes along that I end up blowing it on!

I view these as two different things. There's an "emergency fund" for stuff like this and it's an essential part of my monthly budget.

Then, there's "money left over" (hopefully!!) which I can put to "savings" - an account I don't touch.

It sounds as though you need to build an emergency fund into your monthly budget and then look at what you can save.

I don't actually spend a huge amount on myself - all my spare cash goes towards my student credit card and student loan!

If - after your emergency fund - you have spare cash, it might pay for you to shove that towards your debts first. Once they're gone, then you can save even more

moneysavingwannabe

Hi,

I'm a teacher too! I don't think a part time job is the answer you already have a job and a half!! :rotfl: (Aren't holidays great tho!!)

I would save for a while too. Your wages will go up steadily, I tend to save the extra from payrises rather than spending it. If you get into a habit of saving it will add up quickly.

Do you need to be paying your student loan yet? I paid the minimum cos the interest is so low it got paid after a few years. You could save this money instead?
Good luck :beer:

firsttimetom

I'm a teacher too! I don't think a part time job is the answer you already have a job and a half!! :rotfl: (Aren't holidays great tho!!)

But what about a job in the Summer holidays?

A few hours fruit picking might bring in a grand over six weeks? (for example)