How does a first time mortgage work

[adviceonmortgages]

I have a mortgage free property that was gifted me. I've never had a mortgage before so am a first time buyer. How do I go about getting a mortgage and selling the current property? Would I be able to use some money of the house sale as a deposit for a new house/mortgage ? All this is new to me don't know how it works !

Very simply...

You can usually get a mortgage for around 4.5x your joint salary and for up to 90% of the property value.

If the house is worth £500k you could mortgage up to £450k but to do so you'd need a joint income of £100k. If you used £150k of your property sale toward the purchase you'd need to mortgage £350k so a joint salary closer to £77k.

Mortgage repayments on a £350k 25 year repayment mortgage will be at least £1600 a month. Are you ready for that leap after living mortgage free? I ask because the fact you want to use as little of the sale proceeds as possible suggests you don't have other cash savings?

It's not about the first time buyer schemes etc I understand they wouldn't be applicable with our current circumstances, I just genuinely thought I'd still be considered as one as I've never had a mortgage in my name. ^^ I would be willing to put the 200k in now. I didn't realise before how much a deposit I would need.
My partners family member is an estate agent so will talk to him first and see what he thinks then of course a financial advisor. We'll sort it out. Thanks again everyone 👍🏻

@adviceonmortgages

It's not about the first time buyer schemes etc I understand they wouldn't be applicable with our current circumstances, I just genuinely thought I'd still be considered as one as I've never had a mortgage in my name. ^^ I would be willing to put the 200k in now. I didn't realise before how much a deposit I would need. My partners family member is an estate agent so will talk to him first and see what he thinks then of course a financial advisor. We'll sort it out. Thanks again everyone 👍🏻

But what would being considered a full time buyer do for you if you aren’t hoping to benefit from the schemes? If you don’t want to use the schemes, it’s irrelevant what they consider you to be.

What were you planning to do with the other £160k if you sold your house for £200k but didn’t use it all as a deposit?

@MyBottleOfRibena

What were you planning to do with the other £160k if you sold your house for £200k but didn’t use it all as a deposit?

No idea really it just would've been nice to have some left over to keep in savings. But I now realise it's not possible

No idea really it just would've been nice to have some left over to keep in savings. But I now realise it's not possible

Op, I mean this kindly, but you do really need to take some financial advice. Forget your EA family member. You're considering making a financial transaction of several hundred thousand pounds, that you will be paying back over 25 years. And by your own admission, with very little financial awareness. You need someone who can help you not just with mortgages, but the best thing to do with your money in your specific financial situation.

Over time, property increases in value significantly over cash savings. Had you kept that £160k in a savings account instead of putting it towards a deposit, it would be worth 5% less in a year's time than it is now - probably even less, the way inflation's going. These can be very costly decisions to get wrong.

There are loads of really good free resources out there - moneysavingexpert being just one - so have a look and build your knowledge up. But independent advice will be worth its weight in gold to you, and hopefully help you find the right property for you and your family, at a price you can afford. Good luck!

You could consider keeping a small amount of the money in savings and getting an offset mortgage, where the amount in your savings account is deducted from the amount you owe on your mortgage.

Please be careful. If you're putting in half the money, really your partner should be paying the difference by getting a mortgage so you're equal.

Just a word to the wise...

Definitely see a financial advisor to explain it all to you. The one I used offered free advice but charged a fee for arranging the mortgage.