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First time home buyer help

woz Avatar
8y, 11m agoPosted 8 years, 11 months ago
Me and my partner are looking to buy our first home and was just wondering whether anyone can offer any friendly advice?

Between us our income is £40,000 and we have been told we could potentially have a morgage in the region of £150-180,000.

Now, we know nothing about this and we are going to look at some new homes tomorrow to see what we could potentially have. We have a £5,000 deposit which is better than nothing but ideally we would like a house but have not outruled an appartment.

Can anyone offer any advice? Anything we should watch out for? Anything that could benefit us that they dont advertise too much?

Many thanks in advance.

Woz
woz Avatar
8y, 11m agoPosted 8 years, 11 months ago
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#1
With such a small deposit (sorry - its not an insult) - some building societies have a compulsory insurance - I forget what you call it - but could potentially add thousands to your loan (its to do with having a small deposit - they then class you as a bigger risk - you have to pay this insurance - but it only benefits the building society - and not yourself.....)

I don't think all building societies have this though - so thats one thing to look out for

also its cheaper to arrange your own insurance for building and contents and again as part of some mortgages - the banks/building societies - have compulsory cover through them as part of the mortgaga deal

if you've never had a home of your own before - rented or otherwise - don't forget - water rates - with new properties - these will be metered - old properties generally won't be, council tax - my son bought a house with a colleague - the only way they could get on the property ladder - £125,000 mortgage between them - to run the home costs them £700 a month each (includes morgage, bills and food )

Good Luck - I hope somebody else can offer help

PS -Apartments - usually leasehold - how much are maintenace charges and ground rent - how long is the lease - these are important questions - depending on where you live - some could be negligible - some astronomical
#2
How lovely your first home, congrats...However ....you did want help....sorry....
Have you allowed for stamp duty etc.. and solicitors fees in you estimation of your costs? It would eat your deposit and could be more so.
What situation are you in now? If you are supporting a privately rented house at present simular to what you would buy then costs should not change too much, but if you are not you will have to take into consideration living costs of having a home, the worse thing darn council tax and other utilities
Is the cost per month of a mortgage that high still plausible if only one of you are working? You never know what could happen, pregnancy, redundancy, illness, separation.
I personally think that that amount of % mortgage for a home is worrying, but luckily I got on the ladder when things were sooo much cheaper, I really don't know how else first time buyers get on the ladder but over mortgage these days.
I wish you luck and hope that all goes well....just make sure you do your sums and have your eyes wide open. Developers like first time buyers so barter with them. x
#3
Look in your local paper to see what houses are for sale in your region to get a better idea. Also my parents visited a company that searches every mortage and loan lender to find you the cheapest/best one for ur needs (a bit like moneysupermarket.com), which saved us thousands of pounds. BUT we had to pay £400 to the company for their service but it was well worth it. We only found them as the estate agents owners was also the owner of this company aswell, but ask estate agents if they know anyone who offers this service.

Go for a fixed mortgage if u can manage to pay it so that you wont get stung hard if the interest rate increases, but economists have said that in 2008 iit is liekly that there will be atlreast 3 interest rate cuts so u will also be stung if u got a fixed rate mortgage, but the interest rate decreases.
#4
Thank you for the fast responses!!

We are both living with parents at the moment and its just time to go. Looking at all the options and seeing some of the properties it has got us wanting a home faster.

I'll see what some of the new homes will offer us tomorrow and if I get chance i'll post back,
#5
Eeeek should you not try renting together first? So you get use to paying all of your monthly bills? And to see if you can stand living with each other? :lol:
#6
We were students and lived together until we had to go back and stay with parents. We do not want to rent as we'd rather save the deposit.
#7
Might be better renting for a year or so as house prices are dropping at the moment. Who knows how far they'll drop (if at all), ie if they drop 5% then you buy the house it'll be about £10,000 cheaper.

Renting also gives you a chance to see what it's like to live together. I know you lived together as students but it's a very different thing living together as a working couple without loads of students about.

No offence but you're going to be paying way over the odds for that ltv ratio. Is there any way you can raise the money via a different means? ie if your parents added £50k onto their mortgage then it'd be far cheaper as you'd get a better mortgage because of the lower ltv.
#8
If you do go ahead and buy then borrow only what you can afford to repay - it's sounds a silly thing to say, but people get caught up in the excitement, borrow almost up to their maximum, then when costs go up they can't afford the repayments.

Stick to a comfortable monthly payment level (i.e. keep plenty in reserve!), including all known bills. That way, when things go up, or you get an unexpected bill, you'll still be OK.:thumbsup:
#9
Putting it bluntly, you do not have enough deposit, wait until you can afford to put down more, house prices are stable at the moment anyway, and may well fall, you could end up in the negative equity misery that others fell in to in the eighties.

Sorry if that isn't what you want to hear, but it is a realistic opinion.
banned#10
Expect to pay around £1300 per month in mortgage payments alone on 180K. Then add a further £300 per month for bills.
#11
Must admit I agree with Inactive here - you should ideally be saving a minimum of £1500 a month between you - so in 12 months you will have a further £18,000 as deposit - if you cannot afford to save this amount - then you can't afford to buy a house for that amount of money

csiman - I don't think that £300 a month for bills is enough
banned#12
Me and the girlfriend bought our house in November, we had a joint income of £48k no deposit, our first house fell through costing us about £1,000 but nothing in real terms as house we settled for was £1,000 less (okay house prices are falling now so yeah it was a loss). We paid £174,000 for it and it took 9 months from looking for a house to moving in. It's a 2 bed mid terrace 1930's. It was actually cheaper to get a mortgage with no deposit than a small deposit. Besides you'll want to use that for solictor fees, mortgage set up fees (can be £200 to £3,000 - depending on type). Thanks to family help and our own saving we've got a £10k buffer capital in our accounts if things go wrong. Since we've moved in mortgage rates of dropped once but they went up 3 times in the 9 months we were trying to move in. Average age for first mortgage is 35, so we are over 11-12yrs below that average.

Mortage is £1,045 per month on £174k over 30 years
Haven't worked out bills yet but the mortage company makes you draw up a budget plan before they even consider you. I had rented for 2.5yrs prior with some friends to moving in with girlfriend. and I did all the bills so knew how much it was going to cost.
#13
lumoruk
It was actually cheaper to get a mortgage with no deposit than a small deposit.



I guess you must have been lucky but this is certainly not the norm! Try to borrow the deposit from parents to keep your rate as low as possible. Otherwise you'll be paying the top 20% for example at a higher rate.
#14
ILIKEBARGAINSME
Must admit I agree with Inactive here - you should ideally be saving a minimum of £1500 a month between you - so in 12 months you will have a further £18,000 as deposit - if you cannot afford to save this amount - then you can't afford to buy a house for that amount of money

csiman - I don't think that £300 a month for bills is enough


Agreed, usually wouldn't work as your house would have probably increased by that amount in the year anyway so you wouldn't really be any better off (other than having a deposit). As house prices are likely not to increase for a while then the above is a very good idea. You can still search for properties etc as it'll take a while to sort it all out anyway. If you're living rent free at home then you're laughing really as if you put your minds to it you can save alot of money very quickly whereas most people renting can't afford to save anything.
#15
I'd suggest speaking to a financial advisor (the type that don't charge and get their comission from the mortgage lender).

They can get some quite good rates and can also look into exactly what you can afford after other outgoings (bills, loans etc).

If you're around the Sheffield area, I can give you the guys number who helped us with a £119,000 mortgage whilst we were collectively earning £25,000 (at a fixed rate of 5.9% for 5 years).
#16
300 for bills OMG I wish!
MY council Tax,Electric and Phone each month is 300!! LOL

You need a realistic view with REAL expenditure.
Ive never been as skint since I bought my house!

And house prices are dropping. 2.5% according to Halifax in the last 6 weeks alone!
banned#17
Tricky thing though this month, in my area house prices are said to have dropped an average of 3.8%, however many 2 bed houses were marketed before their 14th of December HIPS deadline. 2 bed houses are cheaper anyway, so that would bring an average down and that's before the normal drop over the winter months.
[admin]#18
Our bills are around £450 a month (£156 council tax, £45 phone/broadband, £40 x 2 mobiles, £70 dual fuel, £28 house ins, £34 x 2 life insurance) (plus we pay two sets of car insurance & road tax.. dunno if you drive though).. we've got quite a big bit of equity in our house, so our mortgage payment isn't too bad-

it's definitely worth making yourselves a list of everything you'll spend each month. Think about if you can realistically live on what's left over after bills and mortgage.

It could take six months or so to complete on somewhere so you've plenty of time to save every penny you can. We try to pay big chunks off our mortgage as and when we can afford to and I'd recommend you opting for a mortgage that allows you to do that. It'll cut down your loan hugely and mean you'll have loads more equity in your house for when you buy your next home :)
Try looking on some of the comparison sites for loan rates- don't be tempted by big cashback deals as they NEVER give you money for nothing, you can guarantee they'll be taking it back off you somewhere along the way. Try and save as much deposit as you possibly can- for every pound you borrow on your mortgage you're more than likely going to be paying your lender twice the amount back- every thousand pounds you can put down will really make a difference to a) your repayments and b) your final payback amount.
Good Luck!
#19
I would wait for 12 months and see how the housing market goes. my other half and I are renting at the moment, and were watching the housing market closely.
banned#20
i agree with what most have said, and have not seen the upkeep of this house mentioned in budgeting. Please, please, please remember that the house over time needs upkeeping as well as the monthly bills, sometimes people buy and really end up with a noose around their neck, so please make sure you can afford to repay the mortgage, monthly bills (electric, gas, water, council tax, phone, food, to clothe yourselves, to provide and furnish your new home etc, etc) and most of all have enough left over to keep your home in a habitable condition, good luck :thumbsup:
banned#21
Get the shortest repayment term you can afford. £180K over 30 years would mean interest of around £205K whereas over 20 years would be around £130K! Over 10 years and you only pay £60K interest. They try to get you to take as long a term as possible as they get more interest and advisors get more commission! see calculator here:- http://money.guardian.co.uk/calculator/form/0,,603156,00.html
#22
Shop around for best deal with all the major banks / building societies, some have first time buyer discounts, go for fixed rate mortgage, as you always know what you are paying out. It is a very difficult time to buy because of the Northern Rock problems and the credit crunch, banks are very reluctant to lend to one another, so even though the interest rate is falling and set to fall even further, they aren't dropping the mortgage rate, infact they are increasing the arrangement fees for setting up the mortgages, so add the arrangement fee to the mortgage monthly payments to work out what you are really paying, it may be better to pay a higher arrangement fee to get a lower interest rate, don't forget valuation fees, survey fees, solicitors, searches ect, try to complete the sale as close to the end of the month as possible to keep the initial interest payments low, Home Information packs (HIPS) have been made compulsary on all properties I heard recently, so that should help to tell you how energy efficient a house is, make sure you keep chasing your solicitor to complete the sale, because they do so many sales at one time, (it took my solicitor 3 months to complete and there was no chain either at end, only by complaining to the estate agent did I get things moving again), phone around and get plenty of quotes from solicitors for conveyancing (in the yellow pages under conveyancing) try to get a fixed price deal, so no matter what happens you only pay that price, beware of free surveys with mortgages as mine wasn't worth the paper it was printed on and would of cost £420, also if you take the house insurance with the mortgage and pay monthly they put the total on top of your mortgage and charge you at the interest rate of your mortgage until the end of the year, (something they don't tell you) if you pay in one lump sum you don't pay that interest (mine was £40) and then the might give you a discount for paying in one lump (mine was £17) not bad on a £200 premium, if any work needs doing on the property you want to get quotes from builder's and use it as a bargaining chip with the owners, good luck with the house purchase, it is quite daunting when you start the process but I hope these tips help.
banned#23
Superhands;1394681
Shop around for best deal with all the major banks / building societies, some have first time buyer discounts, go for fixed rate mortgage, as you always know what you are paying out. It is a very difficult time to buy because of the Northern Rock problems and the credit crunch, banks are very reluctant to lend to one another, so even though the interest rate is falling and set to fall even further, they aren't dropping the mortgage rate, infact they are increasing the arrangement fees for setting up the mortgages, so add the arrangement fee to the mortgage monthly payments to work out what you are really paying, it may be better to pay a higher arrangement fee to get a lower interest rate, don't forget valuation fees, survey fees, solicitors, searches ect, try to complete the sale as close to the end of the month as possible to keep the initial interest payments low, Home Information packs (HIPS) have been made compulsary on all properties I heard recently, so that should help to tell you how energy efficient a house is, make sure you keep chasing your solicitor to complete the sale, because they do so many sales at one time, (it took my solicitor 3 months to complete and there was no chain either at end, only by complaining to the estate agent did I get things moving again), phone around and get plenty of quotes from solicitors for conveyancing (in the yellow pages under conveyancing) try to get a fixed price deal, so no matter what happens you only pay that price, beware of free surveys with mortgages as mine wasn't worth the paper it was printed on and would of cost £420, also if you take the house insurance with the mortgage and pay monthly they put the total on top of your mortgage and charge you at the interest rate of your mortgage until the end of the year, (something they don't tell you) if you pay in one lump sum you don't pay that interest (mine was £40) and then the might give you a discount for paying in one lump (mine was £17) not bad on a £200 premium, if any work needs doing on the property you want to get quotes from builder's and use it as a bargaining chip with the owners, good luck with the house purchase, it is quite daunting when you start the process but I hope these tips help.


LOL - quite possibly the longest sentence in history. Has your full stop key broken?
#24
Also, how long have you and your partner been together? Buying a house with someone is such a huge step.
#25
Use this budget calculator from MSE http://www.moneysavingexpert.com/banking/Budget-planning

It's simple enough to use, and will give you a real insight into what you will actually spend.
I don't know your circumstances, but I would say that you would struggle to pay a mortgage on £180K with a joint income of £40K.

Take home pay after tax = £2,600
Mortgage = £1,100
Electric = £25
Gas = £40
Council Tax = £115
Home Ins = £25
Water rates = £30
TV Licence = £10
Landline = £20
Broadband = £15
Mobile = £50

Leaves you with £1,170

Out of that you have to pay for
Household maintenance
A Butler
PMI
Pet Insurance
Income protection
Travel Insurance
Home cover
Eating / Drinking out
Food Shopping
HUKD impulsive purchases that you don’t need
Ciggies
Loans
Car Loan
Car Ins
Fuel
Breakdown cover
Car repairs
Credit Card repayments
Any savings!
Xmas prezzies
Clothes
Makeup
Dentist
Haircuts [FONT="]
Etc….[/FONT]
#26
GMC1001
...HUKD impulsive purchases that you don’t need ….


:giggle: :giggle:

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