Potential FTB seriously confused. HELP!

Debt_Free_Chick

weekend_warrior wrote: »

(I’m currently paying £420inc. bills) where as my mortgage would only be £350.

Errrrr ..... PLUS BILLS

If you cannot afford to save paying £420 incl bills now, it looks highly doubtful that you'd be able to manage a mortgage of £350 plus bills (even shared with the other person).

To help you make a decision, you might want to do a budget assuming you buy the house. Do a budget for the house in total, then split the total cost 50/50.

I think you might have a shock :eek:

Jorgan_2

weekend_warrior wrote: »

Thanks for your posts so far guys.

The property requires is purely superficial i.e. new kitchen desperately required, new bathroom, flooring, a bit of plastering etc, but the property is structurally sound. I have been looking at the possibility of living in a house share and everywhere in my area is approx. £300 pcm plus bills (I’m currently paying £420inc. bills) where as my mortgage would only be £350. The way I’m looking at it (admittedly rather naively) is that paying £350 on my mortgage is preferable to paying £300 into a developers holiday fund.

How would you feel if you could get the same property for £300 a month in 12 months time, but you were still paying £350 a month?

Only you can decide what is best for you, its all about making informed decisions.

weekend_warrior_2

Debt_Free_Chick wrote: »

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Errrrr ..... PLUS BILLS

If you cannot afford to save paying £420 incl bills now, it looks highly doubtful that you'd be able to manage a mortgage of £350 plus bills (even shared with the other person).

To help you make a decision, you might want to do a budget assuming you buy the house. Do a budget for the house in total, then split the total cost 50/50.

I think you might have a shock :eek:

I have prepared a budget, reasearched the council tax band etc (plus allowed for a 4% increase :mad: ), house insurance, exaggerated utilities, tv license etc and I can afford to pay more than my current £420. My point was that I'll be able to save some money, but not the quarter of my salary that would be required for a 10% deposit which, as far as I know would be the point at which my mortgage would be effected. I had also thought of getting a tracker mortgage as the rates do look like falling?

Catblue

It sounds as if the idea to buy with a friend comes from your current housing situation (moving out of rented, can't stay at parents too long).

Would you have thought of buying a house with this friend if you were still renting quite happily?

Your plans sound a bit woolly to me, sorry. You may live there for a couple of years and then rent it out. Then again, you might sell and buy another, which you worryingly describe as being easier to sell than the one you are currently contemplating buying.

Where will you get the money to furnish this house? What if one of you wants to sell and the other doesn't? What if one of you loses his job? What if one of you gets a job at the other end of the country and HAS to sell? If all you are doing is superficial work to the property, then how much value will be added, anyway?

If you do rent the house out in a couple of years, who will manage repairs and maintenance to the property? Where will you both live during the time that the house is rented out? Could the 2 of you really afford to pay for 3 houses between you?

You are currently paying off previous debts. If you can't save for a deposit, then how can you be sure that you can meet the mortgage repayments? Remember that you'll have borrowed more than 100% of the current value of the property. You would be on a knife edge, and even a slight adjustment to house values and interest rates and you'd be in real bother.

Would your mortage payments be interest only? If so, you would only be renting off the bank anyway, and have no means to pay off the capital. Have you factored in mortgage and solicitors fees, and then estate agents fees if and when you sell?

Did you get into debt previously from being impulsive with money? Do not make the same mistake again. Take your time and think carefully about this.

Personally, I would be cautious and rent a room in someone's house as a lodger and try to clear my existing financial obligations. I'd try to save up at least £10K as a deposit.

Debt_Free_Chick

weekend_warrior wrote: »

I have prepared a budget, reasearched the council tax band etc (plus allowed for a 4% increase :mad: ), house insurance, exaggerated utilities, tv license etc and I can afford to pay more than my current £420. My point was that I'll be able to save some money, but not the quarter of my salary that would be required for a 10% deposit which, as far as I know would be the point at which my mortgage would be effected.

But you haven't saved anything so far ....? Sorry to be harsh, but if you've had surplus income, over your outgoings, you should have been saving that towards a house deposit. In addition to the deposit, you'll have a shed load of other expense.

Even a 5% deposit would make a difference - but if you're sharing the purchase, you actually only need a 2.5% deposit, assuming your friend pays half of it.

But save more, as you'll have other expenses - survey, solicitors bills, stuff to buy for an empty house (which we all too easily take for granted, when living in someone else's house).

With the noose going around the neck of lending at the moment, you will struggle to get a decent mortgage and 100% loans might well be even more difficult to come by.

weekend_warrior_2

Thanks again guys,

@Catblue: My friend and I have discussed moving in together for a while, but the issue of buying has only cropped up over the past few weeks and having to move soon has only accelerated the inevitable. This is also the reason I have not been saving for a deposit, I had been concentrating on trying to clear my debts and any additional monies were ploughed into the debts with the highest interest. Now saving for what would be effectively a 2.5% deposit is plausible within 12 months. I think I just hate renting, particularly as my landlord spends most of his time abroad on my buck (can't fault the guy though. Really good, helpful landlord and it was my decision to rent so I'm not knocking him just I now see where my hard earned cash goes!)

As for what would happen if one of us was to move etc. this would be something that would be formally agreed in writing etc with the help of some guys in the know. As I have mentioned, we are still in the really early stages of this and I'm more or less trying to understand how it would work if we were to go ahead or if it would be better to just scrap the idea now! My previous debts were from being impulsive, but I've been a good boy for a while and I've got a pretty good handle on my current expenditure so hopefully I won't fall into that trap again!

I agree that my intentions are woolly, but it's only because it's early days and I'm trying to find out how best to proceed from you guys with more experiance then me!

@Debt_Free_Chick: Don't worry about being harsh, I'm thick skinned so it's fine:p. The reason I haven't got a deposit is above^^. I have set aside some money to pay fees for the purchase, but there won't be much left afterwards! When my parents emigrate, I'll be getting some nice furniture from my parents when they emigrate and the property I'm in now was only part furnished so I have alot of things anyway!

Catblue

It sounds as if you are dealing sensibly with your debt. Some people in your position would be running to mummy and daddy for the deposit for a house, so hats off to you for wanting to stand on your own two feet.

If you are serious about buying a house, then absolutely you should do proper and extensive research about it. It will cost you nothing and you'll gain an understanding of the pros and cons.

Just make sure that you are always objective (difficult where houses are concerned), know all the numbers, and don't rush into anything.

Good luck. :beer:

dannyboycey

Phirefly wrote: »

Fair dues. I just get bored of the same old sage words on here all the time. I don't mean that comment personally though

I know what you mean. I seem to bore myself with stock responses to certain questions these days! However, I think the 'wait and see' blanket response applies to all but a few first time buyers in the current climate. I read an article in the Guardian a couple of weeks back saying that anyone even considering purchasing their first home now would be a fool to do so - harsh, but probably true.

It's also interesting to note how many people say wait and see what happens in the next few months or even weeks. Personally, I can can't see the market bottoming out for several years!! Sure there will be peaks and troughs of seemingly insignificant amounts along the way - e.g. 'house prices fall 0.3%' or 'prices rise 0.5%' - but this is exactly what happened in the last major downturn (not allowed to say cr*sh on here for some strange reason). I feel it's best to have a general understanding of what's going to happen rather than take a bury your head in the sand approach, hoping that things will miraculously blow over. I fear that February or March may see a small rise in prices, which will lead a lot of FTB's to think all is rosy again.

betti911

Hello weekend warrior,
I took out a mortgage whilst in debt in 2006. I had to completly change my lifestyle and have basically not had a life since. I've still not been able to move into the property I purchased on a full time basis. The property prices in the area I come from (Scotland) have gone up during this time (have had my house valued) so I suppose I have benefitted slightly from this but its been a long hard slog and there's no guarantee my house would actually sell at this moment in time. I also didn't get the best deal in a mortgage as I was in debt and most lenders take this into account. If I were to do things again then I'd have paid off any debt I've got into first before buying.

Also be careful about taking on a property with a friend.. have they got a good credit rating? What would happen if one of you wanted to sell and the other didn't? Have you thought of renting with this friend for a while 1st?

Why not go onto the debt free forum, do a statement of affairs and see where you can cut down costs. The posters there are really helpful and it might help you to get a better mortgage deal.

Good luck
Betti

ruggedtoast

Buying property with a friend is a horrible idea. I know a girl that did it and it was fine for a while until her friend got engaged and informed her that she was going to buy her out and her fiancee was moving in.

They had a number of different valuations, unsurprisingly her friend wanted to pay the lowest one. None of this took into any account the material investment she'd made in the place either.

If you cant afford to buy a place to live in then you cant afford to buy it. The days of putting down a 100% mortgage and having made a 30% profit in 12 months are over. This is and was the only point of ever buying with someone you werent related to.

And if youve credit problems and need a 100% LTV mortgage you'd have to go back to 2007 to find one.