How can we buy a house? Please tell us your experiences of buying your first home............

[LoveMyGirls]

Dh really wants us to get on the property ladder as we will both be 30 this year, we have 2 dd's who will be 12 and 6 this year. We have wasted 40k on rent so far in the time we have been together and we would like to have our own home but we're a bit stuck.

Dh earns 28k and I'm SE and can earn between 8-12k per year but before expenses it's more like 18k if that makes any difference. (how do you go about self certifying anyway? as a side question)
BUT
We owe 9k on a bank loan due to end in 2014, we are paying that off at £260 per month and also owe just under 2k on credit cards due to be paid off by May at the latest, hopefully earlier, currently paying it off at £370 per month.

Once credit cards are paid we are going to start saving like mad and hope to get a deposit together.

We are looking into the shared ownership scheme and also the deals where you only need a 70% mortgage but I'm really unsure about it tbh, would we be better off waiting until our loan is paid off and we have a deposit or will the house prices have gone up to more than we can afford by then and is homebuy our only option?

I'm really confused! We have a financial advisor coming round next week to talk to us.

Any advice, stories, experiences would be most welcome!

[TrillianAstra]

Lurking to see what advice you get :)

[expatinscotland]

How is rent a waste? Shelter is an essential, the way food and petrol are. Do you consider those a waste as well?

Viewing renting as purely a waste is part of what caused the bubble to become so big and dangerous.

You're £11000 in unsecured debt. Work on getting rid of that first before interest rates spike up.

Then perhaps look at buying a flat you can let out and hopefully flog on once the market goes up in order to have a deposit.

[LoveMyGirls]

I've seen my dream home which has prompted the question but deep down even though I have a good feeling about it and would be perfect etc I KNOW the sensible and realistic thing is that we can't buy it, even if we could buy it we would make ourselves stretched I think and as I'm SE and things can be up and down it's too risky.........still doesn't stop me dreaming, shame as it's really close to dd1's school which we hope to send dd2 to as well but where we currently live I doubt very much she will get in, dd1 got in by pure luck!

What position are you in Trill? It's so hard isn't it?

[emsyj]

I'm not an expert but you are shelling out a lot each month to repay your debts, so once they are paid off you can save that amount and you'll have a deposit in no time. I would personally wait til you have repaid your credit card, then put the repayment amount in savings each month, then do the same when your loan is repaid.

In your area, what sort of price would you need to pay to get the sort of flat/house you want?

We bought our first house in the good ole days when you needed hardly any deposit, so that wasn't an issue for us. We did save up our deposit for the house we live in now by living on one salary and saving the other, but we didn't have two children so that might not be very realistic for you!

[londonmackem]

I had a shared ownership flat which I think would be a good move for you if you intend to stay there long term.
I moved after 3 years and had to pay all of the housing association's legal costs and for the property to be valued (by a valuer they stipulate). In the experience of all the flats if you want to buy a greater percentage they over-price the property if you want to sell they undervalue.
People I lived with bought their flat outright and now can't sell as it is a private flat in a housing association block.
Good if you have no other option (as a single person I didn't) and really enjoyed living there. However, as many are now rented out privately(because they don't sell) they are as well cared for as when they were all (part-share) owner-occupied).
Proceed with caution!
Also, I only ever came in to contact with one person at the housing association who had a clue what day it was(only my experience - not tarring all HA workers with the same brush) but in my experience they were muppets!
My flat was in West London btw

[LadyBiscuit]

I would buy now or as soon as you feel able because I don't think property prices are going to drop much more. You could probably wait until next year but if things start moving, move fast.

Property is a weird thing - if you can afford to invest, on the whole it'll make you money and it's just a bit random how much it will.

[jeanjeannie]

Couldn't possibly begin to say - everyone I know who is trying to, or has got a mortgage in the last 6 months has had to jump hoops and stump up huge amounts for a deposit. One friend had to find 30% of the value of the house and only got 3x her salary - and she's on about 80k (plus) but I've no idea if there were other factors such as debt or issues with the house.

As far as I know self cert mortgages have gone...and being self employed is a real hurdle to jump.

Think you're just going to have to see the advisor and see. I do agree with expat though. I don't see it as a waste (and they certainly don't in Europe) as you've got to live somewhere. What is a waste - or simply mad is doing what some of my family have done - got mortgages to the value of six (and more) times their salarys only to see the value drop and interest rates about to rise.

[LoveMyGirls]

You need to own 40% before you can rent it out so not sure how we'd ever get to do that expat? One of my friends currently has a flat waiting to rent out after trying to sell if for over a year and has told me about how complex it can be.

Yes sensibly I know we need to pay our debts off first but just wondering if anyone has brought a house whilst owing money to a bank?

We think renting has been fantastic and we have been very very lucky because we live in housing association BUT I feel we have been here long enough and as HA is meant for people who are in need we need to think about how we are going to move on. Other minor reasons include wanting to move nearer to dd1's school, wanting to have a house we can make our own improvements/ stamp on at the moment everything we do needs to be put back to standard when we leave even minor things such as dimmer switches, toilet seats, paving slabs in the garden etc which is fairly restricting.

[suzikettles]

And remember that for the first few years of a repayment mortage almost all your monthly payments go on interest, so unless house prices rise, once you factor in moving fees, maintenance costs it isn't much different than renting - more security yes, but the bank owns it in reality.

[LoveMyGirls]

I don't think we would be allowed to buy a flat and rent it out whilst living in HA either tbh?

[lalalonglegs]

I don't want to be depressing but I don't think you would be considered for a mortgage with those debts at the moment. I would concentrate all my energies on getting those paid off.

In order for you to qualify for a mortgage, you will need three years' worth of accounts (so three signed off self-assessment forms from the Inland Revenue, for example). Guidelines are 2.5-3 x joint income so around #100-120k is the sort of mortgage size you could be looking at.

To be honest, I wouldn't be keen on having a financial adviser come to my home: the ones who do this can be very high pressure. You might want to look into getting an idea of what you can borrow from one of the phone mortgage brokers (London and Country are very good) or you could go along to one of the shared ownership open days that most local authorities hold to find out if you qualify and what you could get in terms of a mortgage.

HTH

[MainlyMaynie]

I don't think it's impossible to get a mortgage while you have debt but a) you will need a deposit and b) your monthly debt repayments are likely to significantly reduce the amount you can borrow. In your case I think it would take you down below the amount where you could buy a house in most areas. Personally I don't think house prices overall will rise for years, but that can be very local.

[awubble]

You should try posting all of this on the MSE forums. They have some good debt and lending advice there.

If you do have a look there, have a search for part owned properties. There can be some real difficulties with them.

[mitfordsisters]

Hi Lovemygirls, here's my two pennorth as we have been trying to buy since November but are giving it a rest for a few months now, as we've missed out on a couple of places and I need a break before trying again.

Talk to a mortgage broker - they give free advice and are generally lovely and helpful

Clear your debts as it will impact on how much you can borrow and whether the bank will lend

Once you have done that, save hard - you will need a 10% deposit

You are only 30 - we are first time buyers aged 36 and 47, so don't feel pressured to buy

The bank went through our accounts incredibly closely and turned us down on basis that we use an (authorised) overdraft all the time! They are very picky with FTBs at the moment.

[LoveMyGirls]

Having thought about it alot and slept on it we have decided to go ahead with seeing the FA next week but that as we thought getting rid of our debts and savings is our priority.

Thanks for all of your advice and help. I am very wary about the shared ownership scheme, I have read about it on MSE. We have been looking at houses to buy as normal and I think saving a deposit and doing it that way will be our best bet, I know it will take longer but we are very fortunate in that we like where we live for now, it's only our ages and the fact we think we should try to move to let another family have the opportuinty we have been lucky enough to have.

[mizu]

I would say pay debts off first and save, save, save. I am nearly 38 and we have never been able to buy but have been putting money into a savings account for a while and we hope to buy in a few years.

We were going to do a gov scheme for key workers two years ago but the money ran out and the funding wasn't renewed in this area. Glad we didn't do it now.

We are now happy to rent for a while longer, like expat said, it is a roof over your head and the more money you can save the better deal you will get.

[ginmakesitallok]

Not meaning to sound smug - but this makes me so glad DP and I bought our first flat back when it was really easy to get a mortgage (lost a bit of money on it though) then bought our first house just before prices went sky high (and made about £70k on it in 5 years) which gave us a deposit for our current house. If we were starting now, even though we both have good salaries) there is no way we could afford our house.

If you are happy living where you are living then I'd get your debts sorted, save like crazy for a deposit and then buy in a couple of years. I'll admit I don't really understand the obsession with owning - my Mums rented all her life

[mitfordsisters]

You do sound smug though

[AppleAndBlackberry]

Can you redirect the £370 a month to your 9k loan once you have paid off the credit cards and aim to pay it off before 2014? Agree with the people who said it's better to be debt free first, I think you would find it difficult to get a mortgage at the moment.

[DuplicitousBitch]

we bought our first place when i was still paying off student loans. It was easier then. we got an 105% mortgage which isn't going to happen now. we were similar ages to you. flat was was minuscule but we were v. happy.

[LIZS]

Agree with others address your current level of debt first then save the balance into a specific account for a deposit as you pay it off. Don't forget that not only would you have to pay full mortgage, ct, buildings and contents insurance and utilities but also all the maintenance costs which presumably are included in your rent atm. Then there are the costs of buying - solicitor, arrangement fees, searches, removals, stamp duty - which need to be settled at the time. You may struggle to even get a mortgage approval until the captial on the loan is reduced.

[LoveMyGirls]

I don't think we can pay the loan off a bit extra each month, I think if we want to pay it off earlier it has to be a lump sum, so we could save for that and once that is paid we could start saving for a deposit whilst being debtfree, that would be an incredible feeling! We've been in debt for so long, to be debtfree would be amazing!

I also want to change my job before we move house so I need to give that some thought, because I have no idea what else I could work as tbh.

[LoveMyGirls]

Lightbulb! (sometimes it is shocking how silly I can be!) If we take out a loan to cover the loan we already have but make the monthly payments higher we can pay off the loan in 2yrs rather than nearly 4! Which means we will HAVE to pay it every month and then we will be debtfree by June 2013, I could change my job so I will be employed rather than SE so I will have a steady income in order to pay the mortgage so could probably buy a house sometime in 2014!

[LIZS]

Can't imagien how taking a new loan out to pay off another can be cost effective . Aren't you better renegotiating terms on the existing one or servicing the payments and putting rest aside to pay it off early in a lump sum. At this level of debt you are probably just paying interest not capital atm. What I meant was that once you had paid off one debt/cc, pay that same amount into a specific interest bearing account instead otherwise you'll find it just disappears.

[LoveMyGirls]

I think if we take out a loan once credit cards are paid off and while the interet rates are lower then we could pay more than we currently pay on the loan but less than it's costing us now (currently paying £630 per month on debt repayment) it means we will be paying out approx £400 on paying the back the loan over 2 yrs instead of paying it off over nearly 4yrs.

At the moment we will be debt free by September 2014, if we sort out another loan we will be debt free by June 2013 iyswim? I'm not very good at explaining these things.

The problem with paying it off with a lump sum means that if something happens and we need money say to fix the car or something then we will use some of the lump sum and it will takes ages to pay it off whereas if we set it up differently where we have to pay £400 a month then it will definately be paid off by June 2013.