1st time buyers advice please!

h500m

Hi!
My boyfriend and i will soon be moving to Edinburgh because he is going to start work as a firefighter. We will be buying our first house. We would like a property at roughly 225k. My boyfriend has no debts and the only debt i have is a student loan which i am currently not paying anything towards as im below the threshold. We will have a deposit of roughly 50k. My boyfriend will be on about 20k and i will be earning roughly 17k. We will also both be doing part time jobs but im not sure how much we will earn for these, id guess at roughly 7k between us. My question is do you think we would be able to get a mortgage to buy a property for 225k? (well, 175k with the deposit off!)
Thanks in advance for your help!!

mr_mortgage

You might find yourself having difficulty obtaining that - if you go for the conservative 3-3.5x multiplier for your joint incomes you're looking at something around 100-120k. As you can imagine, banks don't like rough estimates for any extra income, and as it's part time I'm not certain that it will amount to a substantial increase in what they would be prepared to lend.

However, you have a sizeable deposit, which will be in your favour - and given you have little outstanding debt, you may find a bank which offers more on the affordability basis.

Would you have parents who don't have a mortgage and would be prepared to act as a guarantor?

I do know Direct Line often tend to offer more to people with your circumstances - I believe they still internally go on a pure affordability basis, rather than having to come in under a specific multiplier. Might be worth giving them a call to see what they would be prepared to offer in principle.

I hope this helps, a bit!

Mr M.

h500m

Thanks Mr M!

Thats interesting to know about Direct Line. I will bear them in mind when we get over to Edinburgh.

My parents are just finishing off paying their mortgage and then will be signing the house over to me although they will still be living in it! So they wouldn't be able to be guanantor.

We will just keep saving and make the deposit as large as possible and then go down the affordability route!

Thans again for your help!

mr_mortgage

Hmm, you might want to think about your capital gains tax situation if you are going to be owning two homes ...

_Andy_

If you're scoring is good you might well find Abbey would be able to help.

Mr_helpful

I think a good broker should just about get you there. Choice might be a little limited as far as numbers of lenders are concerned

h500m

What does capital gain tax situation mean? It doesn't sound like something i'm going to like..!!!

Thanks for the advice about Abbey, ill get in touch with them as well!

h500m

OOh, also, do firefighters get offered higher mortgages seeing as they are professionals?

mr_mortgage

h500m wrote: »

What does capital gain tax situation mean? It doesn't sound like something i'm going to like..!!!

Thanks for the advice about Abbey, ill get in touch with them as well!

No, you're probably not going to like it! (who does like tax?!)

Your primary residence is exempt from CGT - i.e. when you sell it and make a profit, you get to keep all of the money.

When it's a second property that you own, it can under many circumstances be liable for CGT, i.e. you pay tax on the profit.

There are ways and means to avoid CGT in some circumstances, so if you are planning on at any point selling one of the two homes in your name it's something you should plan for. Various methods involve keeping properties in different people's names, setting up trusts etc. etc. (all depends on your individual situation).

The Times has a good guide to CGT here.

Mr M.

h500m

I won't be selling either property for many years yet. (Well, i've still got to get both properties in the first place!!) But thanks for informing me, I wasn't aware that you'd have to pay tax on the profit of your second home. Guess i should've realised - the tax man doesn't like anyone to make too much profit without getting his hands on some of it!

Mr_helpful

h500m wrote: »

I won't be selling either property for many years yet. (Well, i've still got to get both properties in the first place!!) But thanks for informing me, I wasn't aware that you'd have to pay tax on the profit of your second home. Guess i should've realised - the tax man doesn't like anyone to make too much profit without getting his hands on some of it!

I shouldnt worry about it as it is easy enough to avoid.