95% Mortgage for 19 year old - Advice

BungalowBel

Bigphil1474 said:

Had a look at the City of Leeds - there are 43 properties listed in Leeds for £60k or less, although some are plots of land and some are not really places to live. Leaves about 13 places to buy and live in. Had a look and I'd say 10 look to be in reasonable condition and maybe 3 I'd consider buying if I was looking at that end of the market. Cheapest is £45k, one bed flat in a converted terraced house in Armley with an 82 year lease. Not an area I'd want to live in myself, but I've lived in worse areas in the past and lots of people  do live there. https://www.rightmove.co.uk/properties/161928938#/floorplan?activePlan=1&channel=RES_BUY

Not sure why people think that every house or flat you buy has to be hundreds of thousands of pounds to be any good, especially when the OP is 19 years old. I would second the suggestion of waiting though. Even though he is 19 and on a steady income now, he won't have been on it long so not much for the banks to work with. I'd also suggest apartment/flat living is something you need to try before you buy. I lived in a flat for a year in my early years - hated it. 

No, everything doesn't have to be hundreds of thousands - people were just querying WHY it was so cheap, and if that was due to a short lease , because if it was , then that has a bearing on why the lad can't get a mortgage.

My own son bought a flat in 2012 for £65k.  It was a large two bedroomed flat but the reason it was so cheap was because the lease was only 66 years. He got a mortgage through a mortgage broker.  He has since extended the lease, paid the mortgage off and still lives there.  Bargain.

Bigphil1474

But the property isn't necessarily cheap because of the price is my point. I know that sounds odd, but a £100k house could be dirt cheap because it's a wreck and would be worth £250k if it was in good condition, or it could be in mint condition but £100k is just what that house is worth for it's location. My house was cheap compared to some on our street, but it's still cost us double what our last house sold for. 

RHemmings

BungalowBel said:

Bigphil1474 said:

Had a look at the City of Leeds - there are 43 properties listed in Leeds for £60k or less, although some are plots of land and some are not really places to live. Leaves about 13 places to buy and live in. Had a look and I'd say 10 look to be in reasonable condition and maybe 3 I'd consider buying if I was looking at that end of the market. Cheapest is £45k, one bed flat in a converted terraced house in Armley with an 82 year lease. Not an area I'd want to live in myself, but I've lived in worse areas in the past and lots of people  do live there. https://www.rightmove.co.uk/properties/161928938#/floorplan?activePlan=1&channel=RES_BUY

Not sure why people think that every house or flat you buy has to be hundreds of thousands of pounds to be any good, especially when the OP is 19 years old. I would second the suggestion of waiting though. Even though he is 19 and on a steady income now, he won't have been on it long so not much for the banks to work with. I'd also suggest apartment/flat living is something you need to try before you buy. I lived in a flat for a year in my early years - hated it. 

No, everything doesn't have to be hundreds of thousands - people were just querying WHY it was so cheap, and if that was due to a short lease , because if it was , then that has a bearing on why the lad can't get a mortgage.

My own son bought a flat in 2012 for £65k.  It was a large two bedroomed flat but the reason it was so cheap was because the lease was only 66 years. He got a mortgage through a mortgage broker.  He has since extended the lease, paid the mortgage off and still lives there.  Bargain.

How much, approximately, is the flat worth now? And how much, approximately, did it take to extend the lease?

Hoenir

ReadySteadyPop said:

Hoenir said:

ReadySteadyPop said:

Tabieth said:

ReadySteadyPop said:

Tabieth said:

ReadySteadyPop said:

Tabieth said:

My advice (FWIF based on knowing very little) is not to buy at 19. Instead save money for a bigger deposit and focus on university / work and spreading one’s wings and not being at school. Flat / house sharing is fun at that age and is a rite of passage. 

And 60k for a flat is very cheap. I’m assuming it must be a studio flat with a short lease and maybe not in a great location.  That’s not a great buy and certainly isn’t a good investment. 

Very few flats are a good investment now, a cheap flat (low debt) could be a good idea in this environment though.

https://www.investmentweek.co.uk/news-analysis/4516105/uk-gilts-truss-ousting-levels-reeves-speculative-market-marred-decisions-former-government

There must be a reason why it’s so incredibly cheap. Whatever that reason is, it’s unlikely to be a good investment. 

I believe they are buying it to live in, not as an investment. 60k is a reasonable chunk of debt for a 19 year old, especially with higher rates, any higher than that could get uncomfortable if mortgage rates spike.

But there must be something seriously and significantly wrong with the flat if it’s marketed at only 60k. None of us know, but I can’t imagine a flat being sold for 60k in 2025 would be comfortable / nice / safe to live in. I can only assume it needs masses of work and cash investment to make good. Maybe this 19 year old has the money (and the time and inclination) to do this but I suspect most don’t. 

Maybe the OP can let us know? The fact that the 19 year old is struggling to get a 5% deposit mortgage on such a cheap flat though should sound alarm bells for flat sellers everywhere?

Could simply be that this isn't the majority of lenders target market for 95% mortgages. Not economically or commercially viable.  

 A debt is a debt, they will make money on it same as any other debt owed to them?

Enough to make it worthwhile is entirely a different matter. Mortgage lending days of pile em high and sell loans like cans of baked beans ended with the demise of Northern Rock in 2008. 

RHemmings

Hoenir said:

ReadySteadyPop said:

Hoenir said:

ReadySteadyPop said:

Tabieth said:

ReadySteadyPop said:

Tabieth said:

ReadySteadyPop said:

Tabieth said:

My advice (FWIF based on knowing very little) is not to buy at 19. Instead save money for a bigger deposit and focus on university / work and spreading one’s wings and not being at school. Flat / house sharing is fun at that age and is a rite of passage. 

And 60k for a flat is very cheap. I’m assuming it must be a studio flat with a short lease and maybe not in a great location.  That’s not a great buy and certainly isn’t a good investment. 

Very few flats are a good investment now, a cheap flat (low debt) could be a good idea in this environment though.

https://www.investmentweek.co.uk/news-analysis/4516105/uk-gilts-truss-ousting-levels-reeves-speculative-market-marred-decisions-former-government

There must be a reason why it’s so incredibly cheap. Whatever that reason is, it’s unlikely to be a good investment. 

I believe they are buying it to live in, not as an investment. 60k is a reasonable chunk of debt for a 19 year old, especially with higher rates, any higher than that could get uncomfortable if mortgage rates spike.

But there must be something seriously and significantly wrong with the flat if it’s marketed at only 60k. None of us know, but I can’t imagine a flat being sold for 60k in 2025 would be comfortable / nice / safe to live in. I can only assume it needs masses of work and cash investment to make good. Maybe this 19 year old has the money (and the time and inclination) to do this but I suspect most don’t. 

Maybe the OP can let us know? The fact that the 19 year old is struggling to get a 5% deposit mortgage on such a cheap flat though should sound alarm bells for flat sellers everywhere?

Could simply be that this isn't the majority of lenders target market for 95% mortgages. Not economically or commercially viable.  

 A debt is a debt, they will make money on it same as any other debt owed to them?

Enough to make it worthwhile is entirely a different matter. Mortgage lending days of pile em high and sell loans like cans of baked beans ended with the demise of Northern Rock in 2008. 

Yes. Lenders nowadays have a responsibility to make sure that they are lending responsibility. This includes being confident that the loan is affordable for the borrower. https://www.experian.co.uk/blogs/latest-thinking/guide/affordability-vulnerability-responsible-lending/

If I had to predict what is preventing the person described in the OP's thread getting a 95% mortgage for the property, I would guess that this is it. But, that's just a guess. 

kingstreet

From the OP the applicant is being offered 90% at application submission stage. It's unlikely to be anything to do with the property that early.

ReadySteadyPop

Hoenir said:

ReadySteadyPop said:

Hoenir said:

ReadySteadyPop said:

Tabieth said:

ReadySteadyPop said:

Tabieth said:

ReadySteadyPop said:

Tabieth said:

My advice (FWIF based on knowing very little) is not to buy at 19. Instead save money for a bigger deposit and focus on university / work and spreading one’s wings and not being at school. Flat / house sharing is fun at that age and is a rite of passage. 

And 60k for a flat is very cheap. I’m assuming it must be a studio flat with a short lease and maybe not in a great location.  That’s not a great buy and certainly isn’t a good investment. 

Very few flats are a good investment now, a cheap flat (low debt) could be a good idea in this environment though.

https://www.investmentweek.co.uk/news-analysis/4516105/uk-gilts-truss-ousting-levels-reeves-speculative-market-marred-decisions-former-government

There must be a reason why it’s so incredibly cheap. Whatever that reason is, it’s unlikely to be a good investment. 

I believe they are buying it to live in, not as an investment. 60k is a reasonable chunk of debt for a 19 year old, especially with higher rates, any higher than that could get uncomfortable if mortgage rates spike.

But there must be something seriously and significantly wrong with the flat if it’s marketed at only 60k. None of us know, but I can’t imagine a flat being sold for 60k in 2025 would be comfortable / nice / safe to live in. I can only assume it needs masses of work and cash investment to make good. Maybe this 19 year old has the money (and the time and inclination) to do this but I suspect most don’t. 

Maybe the OP can let us know? The fact that the 19 year old is struggling to get a 5% deposit mortgage on such a cheap flat though should sound alarm bells for flat sellers everywhere?

Could simply be that this isn't the majority of lenders target market for 95% mortgages. Not economically or commercially viable.  

 A debt is a debt, they will make money on it same as any other debt owed to them?

Enough to make it worthwhile is entirely a different matter. Mortgage lending days of pile em high and sell loans like cans of baked beans ended with the demise of Northern Rock in 2008. 

Property was much cheaper in 2008, less risk for the buyer, a new scheme will be announced soon I believe to give people who can`t save deposits mortgage loans? Same as it ever was when sales/demand for debt drop.

BungalowBel

RHemmings said:

BungalowBel said:

Bigphil1474 said:

Had a look at the City of Leeds - there are 43 properties listed in Leeds for £60k or less, although some are plots of land and some are not really places to live. Leaves about 13 places to buy and live in. Had a look and I'd say 10 look to be in reasonable condition and maybe 3 I'd consider buying if I was looking at that end of the market. Cheapest is £45k, one bed flat in a converted terraced house in Armley with an 82 year lease. Not an area I'd want to live in myself, but I've lived in worse areas in the past and lots of people  do live there. https://www.rightmove.co.uk/properties/161928938#/floorplan?activePlan=1&channel=RES_BUY

Not sure why people think that every house or flat you buy has to be hundreds of thousands of pounds to be any good, especially when the OP is 19 years old. I would second the suggestion of waiting though. Even though he is 19 and on a steady income now, he won't have been on it long so not much for the banks to work with. I'd also suggest apartment/flat living is something you need to try before you buy. I lived in a flat for a year in my early years - hated it. 

No, everything doesn't have to be hundreds of thousands - people were just querying WHY it was so cheap, and if that was due to a short lease , because if it was , then that has a bearing on why the lad can't get a mortgage.

My own son bought a flat in 2012 for £65k.  It was a large two bedroomed flat but the reason it was so cheap was because the lease was only 66 years. He got a mortgage through a mortgage broker.  He has since extended the lease, paid the mortgage off and still lives there.  Bargain.

How much, approximately, is the flat worth now? And how much, approximately, did it take to extend the lease?

About £12k to extend the lease.  Flat worth about £85k-£90k.

ReadySteadyPop

I think the best advice for the OP is to look at the latest FTB government scheme or just save up a 10% deposit.

ReadySteadyPop

https://moneyweek.com/personal-finance/mortgages/rachel-reeves-permanent-95-percent-mortgage-guarantee-scheme

Wouldn`t it be easier to just let flats hit 60 - 100k and then people could afford to buy them without "help" designed to keep developers afloat (I don`t think it will work there was really low interest in the last similar scheme)