First Time Buyer - Deposit, Rent and Savings info please!!

dmp1980

Hi - First post so please bear with me!!

My other half and I are looking to purchase our first house! Im a 27 year old consultant and my other half is a 21 year old student - in her second year.

My salary of £40k before bonus's is pretty good, but there are some other issues that need to be considered.

We have a £30k deposit for our new place and property is likely to be around £170 - £180k, requiring a c. £140-150k mortgage. As she will still be at university until June 09, we are wanting to rent the property for 12 months before we then move in.

In addition, in my younger days (ok up until about 12 months ago) I didnt appreciate the effect late payments for credit cards would potentially have on my credit history. Any major loans (ie £20k over 5 years) have been paid with no such instances, but of the three credit cards i have had, they all have had periods of late payments, including succesive months, if only a few days late. Ive never had a court action.

I currently have about £3.5k outstanding debt. I Also have c. £5k additional savings that will not be used for the deposit.

My question is - I have not been late on any payments in the last 11-12 months - how will my previous history effect my mortgage potential? Should I use the £5k to pay off my existing debt prior to applying (will this have any effect?).

I just need to find the best way to get a mortgage based on the above that will enable me to rent the property for 12months and cover costs. Expected rental is approx £650 per month.

If ive missed anything please let me know!!

Thanks

beecher

Why don't you just wait for a year and buy then? Not sure why you feel you have to buy now, and not move in til 2009. House prices are likely to be lower by next year so it'd make more sense to wait til then, pay off your outstanding debt and save money to cover the solicitors fees etc. If you wait til your partner is earning you'd have a lower salary multiple too.

As for your late payments, I imagine it would impact on your credit rating. Probably worth getting a hold of them and seeing.

dmp1980

We have a deal with somebody with a property that we love - it comes with 1.2 acres and planning to double the size of the property. We ideally want to secure now as primarily this is a longer term investment. The longer term is to look to develop the house starting in 18 months, and when complete - property (dependant on market conditions) has easy potential to double in value. If pushed we could move in straight away, and not rent it, but as it will rent easily as is - we would rather wait 12 months and commit to living in when out joint salary is nearer £70k.

I have a credit report - it has lots of 1's and a few 2's listed for for earlier history - but virtually nothing listed for last 16 months.

beecher

Well go to a broker and see what they say - I'd say if you have 2s listed in your report you might have problems getting a mortgage of more than 3.5 times salary, but I'm no expert.

beecher

Just to add, the rent's not going to cover your mortgage, let alone the other costs involved. A mortgage of £140,000 at 6% is £700/month interest only. £150,000 is £750. I don't think you'd get a BTL mortgage as the figures don't stack up.