To think my sister is being naive for thinking she will get a mortgage as soon as she leaves uni

[thefantasticfour4]

My sister is 20 and due to graduate uni next year. She is absolutely adamant that she will be able to get a mortgage as soon as she graduates. This is based on her apparently doing some research into some new scheme where you can get a mortgage without paying a deposit (haven't actually looked into this myself so have no idea about it). She says that she will qualify for this as one of the requirements is that you privately rent for 3 years, and she has been paying for her uni accommodation (actually, she pays for a fraction of her accommodation and my parents cover the rest). Apart from this, my sister has never paid a bill in her life so has virtually no credit history.

I've told her she's a bit naive if she thinks she'll be able to get a mortgage as soon as she leaves uni. After I left uni, it was years before I even qualified for my mortgage. She's now completely flown off the handle and said I'm not supportive of her being ambitious and having goals. So am I being a bit harsh in thinking this is a completely ridiculous and unrealistic goal?

I think I would approach this as a learning opportunity with her rather than just telling her there's no way she can get a mortgage. Just look into it with her and find out together.

It would be unsupportive to just sneer and say there's no chance when actually you're not 100% sure.

(Also a learning opportunity for you - don't say something with such certainty when actually you are not certain! - From reading this thread, there's every chance she could get a 100% mortgage shortly after graduating).

This. She will need to prove affordability. This involves a track record of earnings and paying all her bills and rent. I sincerely doubt that lenders will consider her student rental and bills which are subsidised by your DPs as evidence of affordability.

So I agree that she is being a little optimistic that it will as straightforward as she thinks. Nothing wrong with sentiment and ambition though.

This.

Sorry op but yhis thread turned somewhat hilarious

That's daft. No-one wants to get their hopes up for something that might not be possible, they want to get their hopes up fo things that are realistically within their reach. Who wants to waste valuable time planning to buy a house when realistically it's not going to happen foreseeably? Much better to use that time on a longer term but viable plan.

It's not your job to be right, or to find out what the actual facts are. If she needs facts she can talk to professionals at the lenders who she deals with, and they can be the bad guys if her assumptions are wrong.

You can (a) be a source of encouragement, be admiring of how mature and capable she is being. (b) if you have concerns, phrase them as questions. e.g. I wonder whether these kinds of deals are charging a lot more interest and so are a lot more difficult to actually pay off? It would be good to find out how many years of paying this mortgage will it take before you've paid off 5% and so can renew to a more normal mortgage, assuming property prices are stable for a while? What will the monthly payments be after the initial fixed-rate deal is over if the Bank of England rate has gone up by another 2% by then? What will happen if prices drop and you can't get a new deal at the end of the fixed rate period because you have negative equity? Can you trust this broker? If this deal is so much better than you could get at a high street bank there may be a catch?

-- but don't ask all these questions all at once or they will seem badgering. Ask them occasionally but persistently, only ever sandwiched between expressions of support and love and encouragement, but very much expecting her to find out the answers to the question you asked last week and not letting it drop.

If house prices are spiralling up and up then your sister may be being quite sensible. Back in the 90s a guy I was at uni with was totally focused on getting a mortgage asap and was able to buy within a year after graduation (got a job but lived with parents and saved 90% of salary). Meanwhile I was working in a very similar job in a graduate trainee scheme, but was renting and saved more slowly. House prices rose so much in the time it took me to scrape together a deposit that I was tens of thousands worse-off than if I had been as single-minded.

If house prices are stagnant or fall, it will be the people on 100% mortgages that are in deep trouble. However it is not your job to be the bearer of that news. Let her find it out from reputable source of financial information.

“haven't actually looked into this myself so have no idea about it”

Well that’s your own words answering your AIBU in your first post 🤷🏻‍♀️

Yes, that's one viewpoint. And op is probably like that too. Dealing with disappointment can be difficult for some people and dealing with other people's disappointment even more so.

Other people have a different way of seeing it. If we only try to achieve what we think is possible, we are limiting ourselves. Look at the three minute mile barrier. Noone could run that fast because they thought it was impossible. Once one person broke that barrier, it was repeatedly broken time after time. Seeing it was possible made people able to achieve it. But someone had to imagine the impossible first and do it. Not all humans look at life the same, that's why we do so well as a species.

There's no harm in her having a hope. It's not a particularly exciting or dangerous hope. It's really mundane in a way for a person only just in their 20s to have. If/when she finds out from a mortgage broker that she can't afford it right now, she can start planning for how to achieve it, maxing out lifetime isas, asking parents to be on a guarantor mortgage, other solutions.

But why is op on this thread? She could have googled mortgages if she really wanted to help. Perhaps she has a habit of putting her sister down and likes getting others to join her in the 'silly sister' routine.

Generally, they want to see how you are managing on your current income.

I've just recently been approved for a mortgage (not 100%) and had to show I was in permanent employment, show 2 years P60, 3 months pay slips, 3 months bank statement and so on.

It also depends on your credit rating - I have a credit card which I've been paying off in full each month for a few years - this helps show you can manage credit.

I don't think she will be able to get a mortgage until at least 6 months in to her first job. And the salary of that will dictate how much she can borrow.

There are some specialist lenders which will lend to people in certain professions when they get their first professional job but they won't also do 100% mortgages.

Does she understand the risks involved with a 100% mortgage. Could she pay all the fees needed to buy a house?

Lots of people saying this was possible in the 90s but things have changed since then.

I know first time buyers who've been completely rejected for 90% mortgages recently.

Or else the amount they can borrow is too small to buy a house.

Without a job offer, she's very unlikely to pass an affordability check.

So sound like a unsupportive, patronising, slightly green eyed older person?

Yeh, that's definitely the best approach 🙄

Banks are hardly going to give 100% mortgages to students in house shares whose parents and students loans have been paying the rent and bills.

I don't understand why you are arguing.
She'll either get one or won't when she goes to discuss it at the bank. If she doesn't, they'll let her know what she needs. No harm done.

You're not being mean, just realistic. Think all you can do is let her find out for herself the hard way. In the meantime just tell her you hope she's right and it all works out for her.

The availability of 100% is largely irrelevant. What matters is her salary vs the house prices in the area she wants to live. She must know that low house price areas = low salaries and high salary areas = high house prices.

If she can get a reasonable paying job in an area where a small house is £80k, then she won't really need a 100% mortgage as saving for a deposit would be achievable in a short space of time.

Even if she manages to bag a £100k graduate job in London AND was eligible for a 100% mortgage, she'd be looking at a small grotty flat in a grotty area.

My sister used to say something similar and I just said oh that's good you need to speak to the bank about that. She never mentioned it again.

Maybe it hasn't been marketed that well if a student who doesn't actually pay rent and bills out of their own earnings thinks that this will make them eligible

Renting whilst at uni won't count. She might be able to get one fairly soon if she has a decent graduate job and meets the lending criteria, but only once the lender is satisfied it's ongoing. They are very careful these days.

What does that mean? Pinning her hopes on something that might not happen. She’s not expecting to win Euromillions. Just wanting to get a mortgage as a graduate. It’s not exactly reaching for the sky and perfectly within her gift. Do you always bring people down who have aspirations?

It's not going to happen though is it?

Huh? I bet people take you seriously. Not.

@Swrigh1234 No, actually. I've supported my sister throughout her whole life. But as many posters have pointed out, my sister would not be approved for a mortgage in her current position, so what should I do, lie to her? Say "oh don't worry about the fact you've never paid any bills or have no credit history and no job, you'll still get accepted for a mortgage!' I've advised her on what she can do to be approved for a mortgage and I don't think that's being mean or crushing someone's aspirations.

Has she got any job at all or just relying on student loan and parents