First time buyer on property ladder

[jayman21]

I need some advise on behalf of my cousin who works busy shifts hence little time to reach out in search of information. I created similar thread in the past but I guess there may have been a lot of changes.

He is a first time buyer (with wife and two kids) seeking to get on the property ladder. They desire a four bed house but do not want to go the shared ownership route hence desire the second hand open property market. With a deposit of 15k but most of the properties they come across are in the region of 380k in the south east areas of England.

He runs a small company with approximately annual business turnover of 70K. His partner earns an income but he would like to approach the mortgage process alone due to his partner’s credit challenges.

1. Can you advise on steps for him to take and how to approach the mortgage process,
2. is he best approaching the mortgage process by himself or best using a broker?
3. If using a broker can you suggest brokers he can seat with who would be helpful enough to run him through the process?
4. What type of mortgage is best to go for? Thanks

1 & 2. I would advise him to use a broker

1. Ask friends/family for recommendations
2. Ask the broker

I don't think that a 15K deposit is enough on a house of c380K, it isn't even 5%. On top of this, additional money will be needed for solicitors fees, moving costs, stamp duty etc. Does your friend have this as well?

Also how much he can borrow will depend on his income, not turnover. To be honest, even if he earned 70K a year it wouldn't be enough to secure a mortgage of that size, it is over 5x income and he has 3 dependents to account for.

I don't think they stand a chance with those numbers, sorry. I am also a ftb so have researched this a lot and am living it right now.

If self employed and single applicant it makes it even harder to secure a mortgage at all. There are a few lenders out there offering 95% LTV but you need a good income to secure them. My broker is insisting on at least 10% and I have perfect credit and stable income from more than one source.

What is his actual salary? He won't be able to borrow for a 380k house. Could they look at a cheaper area?

I would advise them to get a smaller house. They may want a four bed but they need to be realistic about what they can afford. Everyone has to start somewhere. If his turnover is only £70k, without knowing his actual profit, I would hazard a guess he's going to struggle getting a mortgage on his own with two dependants.

Thanks all for your comments. I had the same assumptions as well but your comments confirms my fear.
@UrethaFranklin: The 15K does not include solicitors fees, moving costs, stamp duty etc so really a challenging start

@Leatherboundanddown: due to the kids schools they are restricted to their search area hence can't look else where.

@delilahbucket: YOu are right, opting for a smaller place may be an option but that will be a challenge for them with four people.

It looks like they have to spend more time saving and searching for thr right opportunity.

Why would a smaller house than four bed be a challenge they have two dc . A two bed will be perfectly fine to get on the property ladder, then eventually a three if diffferent sex dc.

Not everyone needs their own bedroom though. Even going to a three bed will make a difference in price. Where I live a fourth bedroom costs around an extra £60k. Where they are this will be considerably more.
If the kids are young they can move schools without any problems. We did it with DS.
Either way, he is not going to get a mortgage without some significant changes.

Two bedroom would surely be ok for now?

I'd go for a 2-3 bed with the possibility of a loft conversion at a later stage. I think they are being unrealistic to think they can Go for a 4 bed as their first property. Ex Local authority properties may also be worth looking at

There is two dc , they never need a four bed!

He needs to contact a broker, they will do all the legwork, but TBH there isn't a chance in hell he'll get a £380k 4 bed on a £15k deposit unless his salary is absolutely huge. A 4 bed house is a luxury, not a necessity. We live in the SW, one good professional income and one part time income, had a deposit of £20k and could still only borrow £180k to get us a £200k two bedroom house for us and our 3DC. All three share a room because that's what had to happen for us to buy and they are completely uncomplaining. Wehave a fab house in a lovely area, and it has loads of scope to extend in the next year or two as we need more space.

They desire a four bed house

I desire a Ferrari. doesn't mean I'm going to get one anytime soon. Your cousin needs a reality check.