Mortgage advice - first time buyer

[Syla5]

In both cases then they will be using a localised average household expenditure. Perfectly acceptable to use, but factored in none the less.

Affordability is part of all mortgage application processes, being on that side of the industry I can assure you of this.

 

[Skillmister]

In both cases then they will be using a localised average household expenditure. Perfectly acceptable to use, but factored in none the less.

Affordability is part of all mortgage application processes, being on that side of the industry I can assure you of this.

That doesn't really count though does it I'm sure there are 100 other things that factor into the big calculation machine that no one can either change or even have much relevance in peoples day to day lives but will still affect "affordability". I had to get a 30 year mortgage instead of 25 for "affordability" yet I could easily overpay the 25 year amount if I wanted but put it into savings instead.

 

[Syla5]

The Halifax mortgage calculator doesn't mention household bills in their monthly commitments section. If it was that important you'd think it would? Don't recall my mortgage advisor asking about bills either.

Household bills information ie gas, electric, water, council tax, is all obtain by the lenders independently and factored in. Surprisingly first time buys would have £0 as a valid figure on applications all the time, as they don't own a house yet so don't have to pay those bills yet, but they do need to be factored in.

Other commitments which I should have been more specific with my comment when I said that it didn't look like they were included are things like credit cards, loans, finance, car insurance, fuel, food etc
All of these things that are effectively choices but cant really live without in this day and age so are a must to factor in.

That doesn't really count though does it I'm sure there are 100 other things that factor into the big calculation machine that no one can either change or even have much relevance in peoples day to day lives but will still affect "affordability". I had to get a 30 year mortgage instead of 25 for "affordability" yet I could easily overpay the 25 year amount if I wanted but put it into savings instead.

Being able to pay, and being accessed as being able to pay are two different things. You have to be able to pay at all times and under all stress testing that the mortgage application goes through. It was likely in your case that under stress testing you wouldn't have been able to keep to the payment schedule of a 25 year mortgage (according to the modelling not your personal circumstances).

This was the case for my wife and I with out first home, and our second home, and that was even before rigorous stress testing we have today. However in both cases we overpaid significantly and 10 years in to having what was originally a stretched 40 year mortgage, we now only have 14 years to pay, and that's with a healthy chunk of additional borrowing for home improvements this year.

 

[Delvis]

Throughout this thread whenever someone mentions help to buy you say you already have a help to buy isa.. They are two totally different things.

Help to buy is the government assisted equity loan scheme where you buy a new build house putting up 5% deposit (plus fees), the government contributes 20% as a 5 year interest free loan and you get a mortgage for the other 75%.

Personally I don't agree with it in most situations as it gets people into more expensive houses they wouldn't otherwise be able to afford on the assumption that within the next 5 years their circumstances will change enough that they can repay the equity loan (either through savings, increased salaries leading to ability to borrow more or increased property prices) when in reality if circumstances don't change enough in 5 years time they will be left paying another £x amount in interest on top of their normal mortgage.

For some people it does seem beneficial because at least it can get them on the ladder and start paying towards equity rather than rent. It's just the majority I've dealt with have ended up going from looking at 150-180k houses to buying a 250k new build because their deposit goes further.

Haha sorry, I'm aware of what it is my head's just not with it atm, got fever.

Thank you for clarifying though, think I know people that have done it, as I've read it can be a bit of a pit as you need to save money to clear the loan,so seems daft...I guess it's good if you have the income to support it but not the time save for the deposit.

@Delvis I can't be bothered editing your multi quote above on my phone but I borrowed 91k on a 19.5k salary with a 16.5k deposit (so I was just under 85% LTV which brought the rate and thus payments down). Payments are 335/m.

92.5k was the max I could borrow on that salary.


Having a second income makes a huge difference... If I'd had a partner on 12k we'd have been able to borrow 150k!

Don't blame you! Cheers though, gives me an idea, I know houses up your end are cheaper,but still.

 

[Syla5]

Thank you for clarifying though, think I know people that have done it, as I've read it can be a bit of a pit as you need to save money to clear the loan,so seems daft...I guess it's good if you have the income to support it but not the time save for the deposit.

There is a lot more to it then this. You don't need to save to pay it off either, the rates are actually not that bad, and if you get in to a situation where you house value decreases you could find your way to paying back less then you borrowed as it is an asset % scheme not a fixed amount.

 

[Skillmister]

You don't need to save to pay it off either

What do you suggest people do instead of save to pay it off?

 

[Syla5]

What do you suggest people do instead of save to pay it off?

I didn't say they didn't need to pay it off, I said they didn't need to save with the specific focus to paying it off ASAP.

The first point to make on it is not paying it off after the initial period is not the end of the world. The interest rates are not that bad for the money being borrowed.

A second would be if you get the initial mortgage etc and still have debts, then first focus should be on clearing these, credit cards, loans, car finance etc.

Next up its options for paying off the HtB loan. You have overpaying your mortgage rather then saving, with the intention to borrow the additional money at the time of remortgaging. This would be my preferred suggestion as invariable at the moment reducing capital will save more on interest payments then money in a savings account would earn.

 

[Delvis]

Well, I should be getting paid soon which will be my first full month's pay packet since changing jobs, so I'll know how much money I'll have to play with in terms of saving, paying off the credit card and putting towards clearing the wife's overdraft

 

[Psycho Sonny]

Well, I should be getting paid soon which will be my first full month's pay packet since changing jobs, so I'll know how much money I'll have to play with in terms of saving, paying off the credit card and putting towards clearing the wife's overdraft

Regardless I think a £240K home in your circumstances regardless of how much you can save will be out of reach.

Saving is great but need to be realistic about what you can get in terms of a mortgage. Also borrowing the absolute maximum over 30 or 35 years isn't a good idea either. on £200K you would end up paying £100K in interest. which means you would need to sell your £240K house for £341K to make a profit. but if your house has risen by that much then whatever you are buying next has too.

buy smaller - overpay mortgage - get more equity - move up ladder

if that is what your goal is. your real issue here is you are making okay money but your wife earns less than half of what you do and you aren't exactly a high earner. even an admin job would pay £18K a year starting. there is no point in you saving everything you can when you could save a lot more simply by your wife getting a job.

 

[Syla5]

Shared ownership might be your only viable option, have you looked in to it @Delvis

 

[Pudney]

Saving is great but need to be realistic about what you can get in terms of a mortgage. Also borrowing the absolute maximum over 30 or 35 years isn't a good idea either. on £200K you would end up paying £100K in interest. which means you would need to sell your £240K house for £341K to make a profit. but if your house has risen by that much then whatever you are buying next has too.

Whether this is correct or not is highly fact sensitive. As an example, when we bought our first house (about 5 years ago) we spent £250k with a 5% deposit, i.e. £12.5k, over a 35 year term. But this was because we knew our earnings would rise and were confident that we were in an area with strong property growth. 2 years later when our fixed deal was up we remortgaged with enough equity to get an 75% LTV mortgage as well as having more than enough earnings to drop the mortgage term down to 20 years, and could've reduced that further. Happily we didn't as my other half was out of work for longish period and that made mortgage payments much more manageable on my sole earnings.

 

[Delvis]

Regardless I think a £240K home in your circumstances regardless of how much you can save will be out of reach.

Saving is great but need to be realistic about what you can get in terms of a mortgage. Also borrowing the absolute maximum over 30 or 35 years isn't a good idea either. on £200K you would end up paying £100K in interest. which means you would need to sell your £240K house for £341K to make a profit. but if your house has risen by that much then whatever you are buying next has too.

buy smaller - overpay mortgage - get more equity - move up ladder

if that is what your goal is. your real issue here is you are making okay money but your wife earns less than half of what you do and you aren't exactly a high earner. even an admin job would pay £18K a year starting. there is no point in you saving everything you can when you could save a lot more simply by your wife getting a job.

She has a job, not everyone wants to sit behind a desk doing what they hate.

Sadly, because of the climate and how her field is relatively new still,things are slow to build up. Throwing away a degree in a field you love isn't an option atm.

I see your point, it would be easier if we was both on 30k, but the fact is we aren't, and I've only just reached 30k myself and I'm 33.

Shared ownership might be your only viable option, have you looked in to it @Delvis

Not entirely no, but it's an option we'll probably need to go down

 

[Psycho Sonny]

She has a job, not everyone wants to sit behind a desk doing what they hate.

Sadly, because of the climate and how her field is relatively new still,things are slow to build up. Throwing away a degree in a field you love isn't an option atm.

I see your point, it would be easier if we was both on 30k, but the fact is we aren't, and I've only just reached 30k myself and I'm 33.



Not entirely no, but it's an option we'll probably need to go down

i get that but if the option was do something you love and live in poverty and a dump or do something you hate and live well and in a nice house i know what i would choose.

plus she can always do what she loves as a side job. what is it that she does? my mate has a degree in something like chemistry and yet he is a data analyst. i know plenty others that do. so spill the beans what is her degree in?

 

[Delvis]

i get that but if the option was do something you love and live in poverty and a dump or do something you hate and live well and in a nice house i know what i would choose.

plus she can always do what she loves as a side job. what is it that she does? my mate has a degree in something like chemistry and yet he is a data analyst. i know plenty others that do. so spill the beans what is her degree in?

Well yes, I know a few people with degrees yet their job is completely different

This degree was in Veterinary Physiotherapy, she has two others but this is latest is job specific, rather than say something like a Geography degree or whatever.

Personally as long as we don't live in the slums and the house isn't falling apart were pretty easy

There's a town a few miles out from us where we've rented before,houses are cheaper that way, some two beds currently listed are sub 190k, which is obcioobvia bit more doable

 

[Psycho Sonny]

Well yes, I know a few people with degrees yet their job is completely different

This degree was in Veterinary Physiotherapy, she has two others but this is latest is job specific, rather than say something like a Geography degree or whatever.

Personally as long as we don't live in the slums and the house isn't falling apart were pretty easy

There's a town a few miles out from us where we've rented before,houses are cheaper that way, some two beds currently listed are sub 190k, which is obcioobvia bit more doable

can she drive?

if so get a van and get her to start up a dog walking service. she can do both around her own job. you would be amazed at the number of idiots out there who get dogs then pay someone to walk them for them.

she can then plug her physio service to dog walking customers and plug her dog walking service to physio customers. win/win

 

[Delvis]

can she drive?

if so get a van and get her to start up a dog walking service. she can do both around her own job. you would be amazed at the number of idiots out there who get dogs then pay someone to walk them for them.

she can then plug her physio service to dog walking customers and plug her dog walking service to physio customers. win/win

Funnily enough that's what she does.

The last few weeks are a bit tighter as I said earlier, people are starting to work from home now, or retiring etc so need less and less dog walking, which obviously means less money.

 

[Psycho Sonny]

Funnily enough that's what she does.

The last few weeks are a bit tighter as I said earlier, people are starting to work from home now, or retiring etc so need less and less dog walking, which obviously means less money.

well try and plug the physio side of things. send emails or meet with vet's maybe? ideally she needs to boost her income especially if he has no benefits, pension, insurance in place.

like a lot of people may not earn much in their job but their overall package is really good in terms of flexibility, working from home, holidays, sick pay, pension, etc. that is a hidden boost to their overall income package.

 

[Delvis]

well try and plug the physio side of things. send emails or meet with vet's maybe? ideally she needs to boost her income especially if he has no benefits, pension, insurance in place.

like a lot of people may not earn much in their job but their overall package is really good in terms of flexibility, working from home, holidays, sick pay, pension, etc. that is a hidden boost to their overall income package.

Yeah, she's in with a local hydrotherpist, so gets refferals there, as well as the local vets. Also visit other vets obviously, just needs to keep plugging away

The vet physio world is still new, so getting vets on board is part of the battle as they've only been used to hydrotherapist for the last bazillion years.

We also had stands at a few county shows last year too.

 

[Saytan]

you need to take the short-term hit of clearing and closing your wife's overdraft ASAP. The quicker it's cleared, the quicker it stops appearing on the "last x months" of bank statements you'll both need to supply at some point.

 

[Delvis]

you need to take the short-term hit of clearing and closing your wife's overdraft ASAP. The quicker it's cleared, the quicker it stops appearing on the "last x months" of bank statements you'll both need to supply at some point.

Very true

She's managed to save a bit of money up so will be putting that into the account to clear some, I'm getting paid more now also so will hopefully be able to assist soon enough.