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First time buyer mortgage on low income?(10 Posts)
I'm in the early stages of looking at a mortgage. I'm quite naive about anything like this though so would appreciate some advice from you knowledgable lot
I'm 23 and I currently earn about £10,800 a year. I have student debts of around 12k (scottish system so just living costs I think) but no other debts. DP is paying off tax debts in the next month or two. Then he's debt free. DP earns around 12k.
We live very cheaply and our joint outgoings would probably be about £900 per month maximum.
I have 3k in savings and I'm confident we could save at least 15k over the next 3 years as we live at home with my parents just now.We'd hope to use the help to buy ISA from Autumn this year to get the governemnt to contribute at least 3k to the deposit pot.
So basically in a few years time we would hope to have at least a 20k deposit. I don't think our earnings will rise by much so we'd probably be on about 22k per year.
Ideally we'd like to either buy land (for a "tiny house") or a property of around 60-80k.
How likely is it we could get a mortgage?
I'm 23 too and literally in process of buying a house! My partner comes from a foreign country and has still not got his permanent residency therefore his income is not taken into account. The house is £83000, my deposit is £13000 and my mortgage has gone through
I think you'll be just fine, stay positive and always plan ahead.
The downside is that they have made it alot more difficult to get a mortgage and you have to have long meetings at the bank before they decide whether you will be able to maintain your repayments.
If you need any more advice, feel free to ask me
And just to add i'v got student debts too.. weren't a major issue!
That's good to know, thanks for replying. I was getting myself into a bit of state thinking it was hopeless even saving with such a low income. The long interview etc will be a pain but worth it to own our own place!
May I ask which bank you went to?
Keep your outgoings low, save and you should be ok.
Our mortgage advisor was impressed at our mobile bills being so low, he said it wasn't unusual for a couple to each have a phone bill of £45-50 a month.
Ours was £7 each
Always go to an independent financial advisor who isn't tied to one company for mortgage advice. Never just go to your bank as they will just sell you their products.
Getting 3x combined income with a big deposit will be fine.
Do a credit check now to see how your rating is. There are things you can do in the meantime to improve your score which will give you a better rate when you do apply:
Get on the electoral role
Have a credit card you pay off every month (sounds odd but it shows you can manage a debt)
Have an overdraft current account but never go over the limit
Have a landline phone in your name
Have a contract mobile in your name
Go onto money saving expert if you want more advice.
Best advice I ever heard was to calculate your expected monthly mortgage payments at 10% then add a third. Save that amount, minus rent/housekeeping, EVERY SINGLE MONTH and do not touch it. If you can save more, even better.
If you can do this for 3-5 years then you should be confident in your ability to pay your mortgage. Plus you will have a great deposit don't forget to keep some back for legal expenses etc.
Also think ahead to big life plans. Will you be starting a family? Will one parent take extra unpaid time off? If so, you want to make sure you have enough savings to cover the mortgage, or make sure the mortgage and expenses can be covered by one wage.
Also have a play about with a calculator where you work out how much you pay for a mortgage over the lifetime of a loan. You might decide to forgo holidays and take on extra overtime to increase your savings /deposit so your loan to value ratio is higher.
Thanks for the tips. I had tried Money Saving Expert but I hadn't found anything about being accepted on a low income, excellent site though. Three years seems like ages away but I had better get a move on and check my credit rating etc. I'm hoping the regular saving for a deposit will show responsibility as well. Will have to probably get a credit card at some point too.
Yes go for it. I was 22 when we bought and it paid off later even though it was a huge cost at the time.
Also if you can borrow enough without waiting for the 3 years go for it too.
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