To wonder if I’ll get a mortgage?

[firsttimebuyer7]

Posting for traffic!

Just looking to see if anyone else has been in the same position as me and can offer any advice. I’ll be speaking to a mortgage advisor at some point during the next few weeks anyway but it’s always good to hear other people’s experience.

I’m 25, single and currently rent a 2 bed flat and have been here for the last 4 years, however it's always been my goal to get on the property ladder and I’ve been putting money away every month for the last few years and also saving birthday/Christmas money as well. I have roughly around 4K in savings which I appreciate isn’t a lot. I earn 20k a year (well 17-18k after tax/NI plus mileage expenses).

I have seen a 2 bed flat just down the road from where I live for sale, on a new estate. Asking price is £125,000 but I’m sure we would haggle (my mums words, not mine 😆). Question is, do you think I would get a mortgage given my financial situation/circumstances?. I know it all depends on earnings and the value of the property etc but would love to hear your views. I’ve also been looking at many of the different schemes which help first time buyers. Thank you 😊

At that price a 5% deposit is £6,250, plus you'd need to pay for a conveyancer (say £1,000) and that would mean a mortgage of £118,750. A quarter of that is just under £30,000 which is the income that mortgage people would be looking for for that sort of mortgage. I think you'd probably need to save for a bit longer to increase your deposit and then look at properties under £100k

I think you will need at least 5% but probably 10% deposit and can only borrow 4 ish times income so 80k if you earn 20k or tops 5x.

You will also need buying expenses.

Could you live with your parents for a year and save £600 - 1k a month. Aim to vuy in a year. Prices may have fallen a bit by then too.

A new build flat could be one of the worst hit properties in a recession so you coukd end up with a flat in negative equity. Watch out for lease holds and ground rent conditions in new build properties. Make sure you understand the length of the lease and how the ground rent increases and what impact this will have.

Thanks for your reply @Angeldust747 . I thought that might be the case and probably need to save a bit more money first. It's extremely difficult because I live in quite a small village so properties don't come up very often 👎🏻

Is there a help to buy scheme where gov help with deposit? I don't know but worth a Google to see if help to get on property ladder x

I got mortgage offer up to 90k on similar wages and had 4 as deposit so I don't think you will get what you want.

As pps said it's 4.5, max 5x your income.

I'd say you might be a bit tight on both the deposit and the wage requirement. Mortgages are strict at the moment so I'm not sure its even possible to get a 95% one currently. Its so tough to get on the property ladder, is there anyway you could save a bit more? Would moving back home be an option just for a few months?

I would say you would be looking at qualifying for a mortgage of max £90000 on your current earnings, have a look at the online calculators. Otherwise look at help to buy schemes, there are lots of options that help first time buyers.

Its doubtful you will get the mortgage you need
You will probably need a 10% deposit plus solicitors and arrangement fees
Save very hard

I think you will struggle. Got mortgage end of last year. I earn 20.5k and max I could get was 98k. House I brought was 135k so put down 37k as despoit. Mortgage is just under 400 per month.

Thanks everyone! I did think I would struggle due to my earnings and small deposit. It's so hard now isn't it, I try and save as much as I can every month but after rent and other bills I don't have a lot left over to put away. I always rely on birthday/Christmas money every year to bump it up a bit.

Unfortunately I don't think I can go back home now. I've been gone 4 years and they've changed my room into a library/gym now. My mum and I also didn't get on very well when we lived together and it's actually one of the reasons why I moved out in the first place. (We get on much better now we're not under the same roof). I'm sure she would have me back but I'd rather not put that kind of stress on her.

I did look into getting a room mate to split the bills (with my landlords permission) but I don't know anyone who would be interested.

I think I will just have to try and save as much as I can over the next couple of years...

Maybe you could look rather at 1 bed flats when they come up. That could be affordable

I would say if you really want to get on the property ladder either move to a 1 bed or studio to be able to save more or if feasible and you have a healthy dynamic move back in with your parents.

Also, you may need to then buy a 1 bed or studio if your salary doesn’t increase over the next few years.

New builds often seem overpriced to me these days. You could look at older/cheaper properties in your area. Whereabouts are you?

With Help to Buy you may well find it's possible. You'd be required to find a 5% deposit I.e. £6,250 and Help to Buy would make your deposit up to 25% effectively, with them owning a 20% share. You'd then need a mortgage for the remaining 75% ie £93,750, which is still reasonably high on an income of £20k but not impossible, some lenders will consider lending at 4-5 times income still. Speak to a mortgage broker before writing the idea off.

DD could have written this. She is same age and exactly same wage. She was been offered a mortgage of £90000 fixed for 3 years at 1.5%. Currently she has £20000 deposit and £10000 for everything else.
She wants to be able to live so currently looking at flats of less than £110 000.
I think is is doable — just

I think it's worth a shot OP.

Contact a mortgage broker and they will help you out.

I'm in North Wales, in a small village but it's quite an expensive area. I've grown up here so I would ideally like to stay here to be close to family and friends, but I appreciate I might have to compromise to get what I want. A lot of the surrounding areas are expensive though so I'm not sure what difference it would make if I moved anyway.

I'm lucky that my rent is fairly cheap (daft I know since I've just said that the area is expensive) but it was just pure luck. My landlord is a childhood friend of my mums and he reduced the rent for me. I pay £450 a month but it should be at least £550. It's an ex council flat so absolutely massive inside but very old and it does have a lot of problems. 1 bed flats are pretty much the same price or more so I don't think I would save any money if I moved now.

The flat that I'm looking at is definitely overpriced. Don't get me wrong it's lovely inside and is in such a nice area but the other flats on the same estate sold for £100,000-110,000 recently so the price has definitely increased in the last year or two. I'm also pretty sure that the flat is empty (had a look through the window) and I don't think anyone has ever lived in it. It's been on the market for quite a while now so I'm not sure if the owners are eager to sell and would take a lower price.

I’ve just remortgaged. 2 years ago we bought at 95% as we could only afford a 5% deposit. I’ve been told by a broker this week that they will not lend more than 89% even for a remortgage, a new mortgage you’d need around 15% deposit upfront.

There are also a lot of extra costs for buying a property. Around £800-£1000 for solicitor and searches. Fees for taking out the mortgage (we paid £250). I don’t know if you’d have a survey on a new build but that can be up to £1000 too. Also when you buy the property there are things you need to account for like repairs, furniture, moving costs (a lot of repairs should be covered in a new build thankfully).

I’m sorry to be the bearer of bad news, there is no wonder we are known as Generation Rent.

I'm a broker (on mat leave at the moment) and think you will struggle at the moment. 90% mortgages are thin on the ground at the moment, let alone 95% mortgages. And people are right in saying the max you are likely to be offered is 4.5x your income.

I'd recommend saving some more and trying again in a couple of years.

By way of encouragement the average age of a first time buyer in the UK is 33, so even if you can't buy for another few years you'd be ahead of the curve.

At the moment, most banks have pulled 10% deposits and require 15-20% due to Covid 19 market instability. This may or may not change again, depending on the economic outlook.

Thanks everyone for all your honest answers and advice, I really appreciate it. 😊

It's very depressing @TheDoctorDances , I honestly feel like I'm throwing money down the toilet every month when I pay my rent 🙁

Thank you @RenegadeMrs it's good to hear from someone who works in that area.

I will definitely carry on saving every month as much as I can. I've also cut down on a lot of luxuries over the last few months as well and I always try and make a quick buck when I can (selling clothes etc). I'm sure I'll get there eventually (probably in 20 years time 🤣)

Is your mum in a position to help you out with the deposit? Even if it's a loan, if it could help you get km the ladder for a 2 bed you could rent one room out to a lodger?

If your current flat has 2 bedroom and the landlord allows you to rent out the other room you don't have to know someone, you could advertise. Easier to lay ground rules with a stranger anyway.

It is difficult, maybe when your mum realises how difficult she might be inclined to help (if she can afford, I know she doesn't have to but I'm not one who thinks children automatically need to fend for themselves once they turn 18).

@ASandwichNamedKevin my mum isn't in a position to help unfortunately, she's a carer so is on a low income herself. My stepdad on the other hand has a good job and a good amount of savings (I believe). He also owns another home which he currently rents out but I think he is looking to sell that in a couple years time. He has borrowed me money on a few occasions over the last few years (for unexpected bills/car emergency etc). He hasn't borrowed me huge amounts though, nothing on this scale at least so I'm not sure how cheeky it would be to ask especially since I'm not his biological child Although we do get on great and he always helps me when he can, I'd just feel quite rude asking especially since he has own kids to help with things like this.

Unfortunately my real dad is not in the picture which is a shame as he's loaded 🤣 (stays rich because he doesn't give any of his kids any money 😆)

If your parents loan you money, you won’t be able to use it as a deposit if you declare it as a loan. Because you’ve not saved it up yourself. Highly unfair in my opinion but I can understand why.

look at 10% deposit OP, and i would absolutely reccomend not buying a new build if you can.
I get it is helpful with help to buy schemes, as some do help with deposit contributions, but their prices are hugely inflated.

good luck OP, its a tough time!