1st timers. Please Help ...

carl_stef

We are currently renting a house and really want to get onto the property ladder, however all advise we have been given seems to contradict.

We have no debits at all and never have had.
combined earing of £25,700, full time employment, aged 20 (nearly 21)

wanting to buy property approx £115,000 - long term home.

1st option We have no deposit - so our first enquiry was for 100% morgage - advised max we could get was 75,000 with one advisor (far to low!!) and 100,000 with another (which we have since been told is over generous).

2nd option however we could get a short term loan for deposit from family and possibly get a secured loan at a later date to pay this back.
however told amount we an get only 88,000 (still not enough!)

3rd option - have a family member go as a Guarantor for for the difference between morgage offer and property value? this was suggested to us by one advisor so when tried to look into it in detail have been told no have to be young proffesional ie uni student etc.

Help can anyone advise you what do? we just need straight answers which we havent recieved!!!
Many thanks

Joe_Bloggs

There are so many first time buyers in the same situation. You are so young, you have not reached your earnings potential and you have not given yourselves time to save for a deposit. Save £6K (for 5% equity and cheaper interest rate offers). Earn a few £K more each through gaining qualifications /experience and try again later. Look into budgeting as to how you can save. You can't trick a mortgage lender by getting a loan for a deposit !.
J_B.

zag2me

carl_stef wrote:

3rd option - have a family member go as a Guarantor for for the difference between morgage offer and property value? this was suggested to us by one advisor so when tried to look into it in detail have been told no have to be young proffesional ie uni student etc.

If you can get someone to guarantor the mortgage, I didnt think you had to be a student or anything. I investigated this possibility when I was trying to buy and just had a normal job, unfortuantly my mum was about to retire and couldnt garantee to cover my payments for the term.

YorkshireBoy

Done a quick search on https://www.moneyfacts.co.uk with your details and it returned...

"Sorry, there are no products available that match your search criteria"

The reason for this, and you're not going to like this (but I'm an honest guy!), is that you simply can't afford it!

Lenders use salary multiples to ensure that you are "comfortable" with the repayments. They also don't (really) like giving 100% mortgages because there is no "slack" in the system if you run into difficulties and cannot meet the repayments, and this is why they charge a higher rate to cover the risk involved. This is a particularly important point at the moment with "falling" house prices and the resultant negative equity that could ensue, meaning that even if they have to repossess your home, they would be unlikely to fully recover the debt.

By your own admission, you have no debt - and this is commendable for today's younger generation. However, you also say that you have no deposit - which would indicate that you "spend what you earn".

Have you asked yourselves...

(a) where is the extra money for additional insurances, property repairs, etc coming from?

(b) What if one of you stops working for any reason?

(c) what if there is a sustained upward trend in interest rates, say to 6%?

(d) can we really afford to pay £700+ a month mortgage? (and this is including an initial 'x' years discount - it will rise further if you don't/can't switch at the end of the introductory period).

Whilst I admire your enthusiasm and determination to get on the property ladder, I would suggest that you first concentrate on saving the difference between your rent and what the mortgage would cost. You would then get a feel for how comfortable you are with these figures.

Good luck, and don't overstretch yourselves.

Rikki

Imagine what life would be like if you had a house and mortgage.

At least 2/3 of your monthly income or more will be tied up in the house. Mortgage, council tax, insurance (building & contents), water rates, gas, electric and home phone.
Whats left is for car insurance, car tax, mot, petrol, tv licence and food. Maybe new clothes occasionally. If there is anything left you can have a social life, well a night out once a month or just a bottle of wine and a hire a dvd for the night. Its frightening. :eek:
I lived like this for the first year of my mortgage and it was difficult, sometimes it doesn't always get much easier.

Maybe you could put 2/3 or a 1/3 of you present monthly incomes into a savings accout. It would give you both an idea of what sort of money you would have to live on and you would be saving money towards a deposit for a house. Just an idea.

herbiesjp

If you are dead set with buying a property, based on your income you could proably look at around £105k.

However I think the guarantor mortgage might be a better option - you do not have to classed as a professional or student to apply for one these.

However, affordability will be paramount in this situation, and I can only stress, as those before me have done that it is important not to over stretch yourself

meanmachine_2

Enjoy your lives, try to save, and then look again in 5 years' time.

Open up a high interest account specifically for saving a house deposit, keep an eye on the market, and provided it remains subdued, you should be able to make some head way.

21 is very young to be tied to 1) a mortgage and 2) a partner!

Oops, did I say that?!

CarlaMarie_3

I would do some serious budgeting before going any further with this. My partner and I bought a house a year ago and our joint income was then pretty much as yours is now. Our house was £85K and it is hard enough paying the mortgage on that with the income we have! I think £115 is way overstretching yourselves and you could end up just working to pay bills and have no social lives at all. And that's no fun!