Time to get a mortgage... Help Please!

Tsigalkobot

Hi there, I am a prospective first-time buyer, but I havent got the slightest idea in what I am doing in the property market. I was just wondering what my options are if anyone could give a bit of advice...

Lets start with the 'good news'... My finances arent the best...
I am on an income of about £21,000 before tax, so take tax off and then take off 11% from this as pension contribution aswell. I usually pick up around £1100 once a calender month. Add to this I have a loan for my car, I am repaying around £270 a month on this, then I have my student loan of around £80 a month aswell, aswell as a phone bill of around £30. I have no savings at all, no deposit, and seem to go through any spare money like a plague of locusts.
PS I am in all likelihood going to have to buy on my own as my friends are worse off than I am. Lol.

I was just wondering what anyone thought about my best options for purchasing somewhere, how much they thought I could reasonably afford and what sort of terms I should be looking for etc etc.

Thanks in advance, Tsigalkobot.

lisyloo

My advice is don't buy at the moment.
House prices are high at the moment and there could be falls.

There is a graph on the website
https://www.housepricecrash.co.uk

This is quite a biased website but nevertheless it looks like the best outlook for prices is stable.

So you are better off savings up for a deposit.
Also you will have a number of costs when you buy a house.
Solicitors fees, surveys, stamp duty etc.

My advice is stay put and save up.

Fairdo_2

I would tactfully say that you are best waiting and saving up before you consider buying.

This is for a few reasons. One is, although you may be a bit light-hearted with your description, how are you going to be able to afford a mortgage with the current income and expenditure?

You say you have no savings and you go through your money like a plague of locusts. You need to build a more robust financial situation before you should consider taking on such a huge financial commitment.

A Lender will look at the summary you gave and their natural reaction would be that you are not putting any risk in the property yourself (No deposit), you are going to be tight on budget for a mortgage, if not in negative figures (therefore, if someone did take you on now, how would you cope if interest rates rose?), You would not be demonstrating financial maturity to give a lender confidence that you would stick with it. As lisyloo states, you would also need to find the money to pay for entry and legal costs.

I'm sorry to sound harsh, but a Lender would be likely to chew you up and spit you out if you went cap in hand in this situation.

If you are serious about getting on to the ladder, you need to begin to demonstrate a track record, so that a lender can see you as a suitable risk for their money.

I would work hard on starting to build up a deposit and enough to cover purchase costs. Meantime, ensure that you keep up to date on all of your credit commitments. That would all stand you in better stead when a lender or lenders look at your situation.

Good luck and be patient

DilbertJones

Yeah Patience is the key.

I started thinking seriously about buying a house end of 2003, started by clearing my two defaults, applying for credit cards, keeping up to date with everything, now I should be moving in by September...... Fingers Crossed

Tsigalkobot

Thanks for the advice guys.

If its of any further assistance, I am 25 years old and do not have any credit history problems. When I mentioned that I go through spare money like a plague of locusts I was half-kidding. I suppose I go through upwards of £150 a month in diesel as I live in Merseyside but work in Manchester. Hence if I were to move to Manchester I could be saving a lot of money on fuel, which could be diverted elsewhere.

Also, with regards to job-security etc etc I should be ok, I doubt I would have a problem actually *getting* the mortgage as I am a copper and in that line of work you seem to get the nod from a few companies, as they see it as a secure and respected career.

Dont know if any of this makes any difference, but thanks so far for your advice.

Ember999

Tsigalkobot wrote:

Thanks for the advice guys.

If its of any further assistance, I am 25 years old and do not have any credit history problems. When I mentioned that I go through spare money like a plague of locusts I was half-kidding. I suppose I go through upwards of £150 a month in diesel as I live in Merseyside but work in Manchester. Hence if I were to move to Manchester I could be saving a lot of money on fuel, which could be diverted elsewhere.

Also, with regards to job-security etc etc I should be ok, I doubt I would have a problem actually *getting* the mortgage as I am a copper and in that line of work you seem to get the nod from a few companies, as they see it as a secure and respected career.

Dont know if any of this makes any difference, but thanks so far for your advice.

No, I shouldn't imagine as a copper you would have any problem getting a mortgage, but do remember, mortgage companies will still only lend you a certain amount depending on your actual income rather than job security. You are taking a bit of a risk at the moment with prices being so high. In my opinion, they must fall at some stage. When house prices outstrip earning potential, as they do especially with 'key workers' then that to me spells trouble for the housing market as a whole.
My advice would be to wait a year and save a deposit up. In that year, you may find prices go down quite a lot! If they don't and I am wrong (which I may be) then at least you have a deposit to lighten the mortgage burden. At 25 you still have plenty of time before saddling yourself with a crippling mortage which it would be the way house prices are at the moment.

Fairdo_2

You mention that you are a member of esteemed law keeping organisation. As a police officer and a first time buyer, you should be entitled to a "Key Workers Home Start Initiative" which means that you could be in a position to get a substantial deposit loaned to you (interest free) to assist you with your first purchase.

There are conditions attached to this, but if you plan to remain in the force for the forseeable and know that you have to "buy them out" at some stage, this may be a very worthwile option for you.

meanmachine_2

£21K doesn't seem much for a copper.

In a rising market there is an argument for you buying what you can afford then trading up as your salary rises. A key worker initiative is, as mentioned, another option.

Are there not police houses anymore? Or have most of these been sold off?

You're still incredibly young. The ave age for a FTBer is 34. By my calculations you have nine years to enjoy a mortgage free existence and build up a hefty deposit.

glockdanny

meanmachine wrote:

£21K doesn't seem much for a copper.

In a rising market there is an argument for you buying what you can afford then trading up as your salary rises. A key worker initiative is, as mentioned, another option.

Are there not police houses anymore? Or have most of these been sold off?

You're still incredibly young. The ave age for a FTBer is 34. By my calculations you have nine years to enjoy a mortgage free existence and build up a hefty deposit.

MM - £21K is the basic national salary for a post-training police officer. It rises with yearly service increments to £31,095 for a constable (not including overtime, top of pay scale priority payments or specialism priority payments).

Police houses have not been given to police officers for some ten years now - there are still some lived in, but they are few and far-between. Yes, most have been sold off. Those without a police house were initially entitled to rent allowance or housing allowance, but then that itself was 'done away with' for new recruits, to free up funds. Realising they'd made a huge gaff, the Home Office brought back in area allowances around 4 years ago. These were supposed to reflect the cost of living in the area the officer is stationed in.....they still haven't got it quite right, but as an example, I get a £3,000pa allowance for working in the 'closer to London' section of the Thames Valley Police. The fact I could travel an extra 5 miles each way and earn an extra £3200pa at Heathrow is a different issue for another day

Anyway - my advice to Tsigal is to wait. Presumably, the biggest hurdle is being able to borrow enough. You need to consider the following:

Your pay will rise twice a year (guaranteed) for the next ten years.

You may find yourself earning decent overtime. 1-2 years' pay slips with your proof of overtime will be considered as regular income by any potential lender....therefore allowing you to borrow more.

Why not opt out of the pension scheme until you finish your probation? 11% is a hefty whack and at the end of your two years, your salary will be sufficient for you to opt in again. You have until 55 to retire. I don't know how old you are now, but assuming you'll have no less than 32 years' service at age 55, you can stay on for an extra couple of years at the end of your 30 (if you wish) to avoid any loss of your commutation. Remember, you can retire at any time between 25 and 30 (later if you stay on, maximum age 55).

The predictions and projections seem to be a slight fall in interest rates next month and a mid-term fall of house prices, so why not wait?

It all depends how desperately you want to buy your own place I suppose, but !!!!!!, do all you can to avoid renting. Unless it's a house share, it's just p*ssing money up the wall.

Hope this helps.