buying without a deposit...please help!

nelly_2

theGrinch wrote:

you could consider a mortgage greater than 100% if you have reason to believe your income will rise i.e. graduate professional, look for developer schemes for FTBs, saving a deposit, borrowing, clubbing together with meanmachine even!

I knew someone in a similar position. he was going to part own with a friend but in the end took a new builder scheme with stamp duty, legals, F&Fs, survey and deposit paid.

I dont think telling some one too stretch that far is sound advice an a money saving website, in fact I dont think its a good idea full stop.


"builder scheme with stamp duty, legals, F&Fs, survey and deposit paid" ar'nt they just shoved on the price of the house in the first place.

meanmachine_2

These property !!!!!! supplements are full of new build incentives.

If they're such a great buy, and a real bargain, why the need for incentives?

Surely, given the oft-repeated mantra that Britain has a chronic housing shortage, people should be queueing up for these shoeboxes.

Strange that they're not.

Rather than the builder paying my 5% deposit, I'd rather they knocked that off the asking price, and allowed me to have a smaller mortgage.

Joe_Bloggs

@dboswell
I won't bother quoting sections of your posts as it is too much effort. You can save money on this site and you can channel the savings to any of your goals. You say you are 'currently in marketing'. Are you considering a career change ? Are you fed up with where you live ? You don't mention your debt situation, if any. What do your credit reports say ? You don't have to answer any of these questions but ask them of yourself.

If you 'own' a leasehold property then there are even more restrictions such as floor carpeting, pets, noise, building alterations, replacing windows, aerials and satellite dishes etc.
J_B.

theGrinch

I was actually answering the OP.

nelly wrote:

I dont think telling some one too stretch that far is sound advice an a money saving website, in fact I dont think its a good idea full stop.

no one is "telling" anyone anything. in answer to the OP I cited a fact and added a further note about income. While you may not like it, maybe you should take your dislike up with the responsible institutions that make their money by offering such products i.e. scot w and ME

Further, Im sure the OP is mature enough to make their own decisions.

nelly wrote:

"builder scheme with stamp duty, legals, F&Fs, survey and deposit paid" ar'nt they just shoved on the price of the house in the first place.

yes in some cases they may be. but if you fully assess I doubt it is as black and white or clearcut as that. very few things in life are. Its careless to generalise without concrete evidence so there may well be motivated sellers (developers) out there that need funds....it does happen and I have seen them as I have seen overpriced developments.

The OP should do their due diligence on the price. If its overpriced Im sure it wont sell like the ones I have seen. Meanwhile if its priced right and you can get the extras like stamp duty, legals, F&Fs, survey and deposit paid...sounds like a good moneysaving idea. I split stamp duty with one seller and saved £5k!

Ian_W

dboswell wrote: Are there any mortgages out there for people with insufficient deposit or are there other ways that I can purchase without a deposit?

First off let me say that I agree with a lot of the sentiments expressed cautioning you against buying in this manner, but it's your decision whether I think it's right or not. Don't agree with the aggresiveness of some of the posters who should be on dowhatitellyouoryou'reatw*t.com or iknowbest.co.uk. It's your life, your decision, your mistake if that's what it turns out to be and you pay for it. So long as you understand that I'll try to answer your question.

As theGrinch said a lot of developers are offering all sorts of incentives on new builds but as nelly points out some of these are overpriced to pay for them. If you don't want new then many lenders will offer 100% mortgages [some will offer more, but I'd steer clear of them if you can cos you'll pay through the nose], but these come with a higher interest rate cos they're a bigger risk for the lender. Some best buys are HERE on moneyfacts. Best I found, not on that list, was with Scot Widows Bank at 5.09% fixed for 26 months with no extended ties ins. It will cost you £425 per £100k borrowed per month interest only.

Your biggest problem could be your income. All lenders consider what you earn against what you want to borrow but they use different methods. They may consider some of the income you hope to get from having a lodger but I doubt they'll consider it all. Some are more "generous" than others, Northern Rock for example, but do look at the product carefully - often they're designed to start low by then tie you in for a long period on uncompetitive interest rates. With any 100% mortgage you should look at the rates after any intro deal has finished because if house prices don't rise you'll pretty much be stuck with the same lender until they do.

Don't forget you will need some cash for legals & poss stamp duty [£1k+ depending on purchase price] and to furnish your new property. Running costs will be similar to private rented except you'll be responsible of building insurance [£200?pa] and any maintainence or repairs that need doing.

Best place to start looking at mortgages is on the links from that section of this site. Put your details & property details thro' moneynet, moneyfacts, moneysupermarket and see what results you come up with.

BoL.

Dr_Tom

meanmachine wrote:

Rather than the builder paying my 5% deposit, I'd rather they knocked that off the asking price, and allowed me to have a smaller mortgage.

Surely the net effect of these is identical?

I had the option of either of these - and in fact the 5% deposit was beneficial - as it meant as I was borrowing with a lower LTV and hence benefit from lower monthly repayments. The only reason I can see for going the other way is if the 5% discount would take you below the stamp duty threshold.

theGrinch

personally, a 85% LTV is plenty and ideally a 75% LTV should be looked at if borrowing. Anything over 85% only works if a) you intend to hold onto your property for a good few years b) you can afford the interest payments if rates doubled.

as for 100% plus mortgages the dangers should be obvious esp if you intend on borrowing hundreds or thousands.

also dont ignore shared ownership schemes.

prudence is the best course.

Scott

Yeah, I'd avoid buying in your position right now, as you're in the perfect position to save a nice deposit while waiting for prices to recede.

This is exactly the position my wife and I find ourselves in. I'd rather "waste" my rent money for a few years than find myself with a mortgage that far outweighs the value of my home in a few years, leaving us unable to climb the ladder.

At 1997 prices, I could have bought my parents old Victorian flat on my wages right now, my wife's would have made it an easy score. But currently it's around 3 times what I could borrow. That can't last.

madfrenchgirl

I agree with not getting a 100% mortgage or getting into the new build schemes. I cannot talk for certain as I only know my area (notice the caution warning here), but the new build scheme next door is just overpriced for what it is.

BF and I have given ourselves about 1 to 2 years to buy a house in Southampton. We could technically buy something right now as my little savings could be paying for stamp duty and other fees, so it would mean getting a 100% clean mortgage. But when I went on charcolonline.com (which I recommend to the OP), I decided never to take a 100% mortgage. I refused to fee the bank so much money, and we both keep in mind that the house (if we evr manage to buy one ) will belong to the bank until the mortgage is cleared off.

Apparently, the OP is in a sort of same situation. At the end of the day, it depends on how good you are at money, how much you are earning, etc... Until recently, I thought we could buy a 3 bedroom for 125K in Southampton, but we had a drive round the area where those houses were and we agreed to stretch the budget to maybe 135k to get something in an area that is not chav ex-council estate where kids are playing with abandoned cars.

My point is, it all depends on how much you want to put in, how bad you wnat it right now, and what location you want to be in. We might all be able to help you if you post more info.

nelly_2

Dr_Tom wrote:

Surely the net effect of these is identical?

.

If you pay your own deposit out of your savings then you wont incure the massive interest that a mortgage adds over the 25 years.