First Time Buyer and Mortages

[danIT]

I know this is not relevant to IT in anyway and admin remove me if im making a mockery of a sham...

 

But, Im about to move into a flat which i will be living in for 12 months before buying it. Its a relatives flat and he is just glad for someone to be living there keeping the place safe and in good order etc..I'll just be paying the bills each month and thats about it.

 

After 12 months I will be buying the flat, the 12 months will give me time to save a decent deposit hopefully 10% of the value.

 

But as a first time buyer in 12 months time do you think i will have trouble getting a mortage. I know 12 months is a long time and this can all change in that time but any opinions or information appreciated. The martage would be no more than 3.5 times my wages at present.

[plexer]

To be honest it sounds like you are in a favourable position the 10% is what people are recommending at the moment I suppose if you could manage 15% say then that would give you a bit more leverage in 12months time becuase as you say no one can predict the market at the moment.

 

If you couldn't get the mortgage you needed in 12months time would he continue to rent it to you?

 

Ben

[ICT_GUY]

With a 10% deposit? They will bite your arm off!

 

The days of people having a 10% deposit were long gone, its the 100% or even %115 mortgages that got the banks in serious trouble (and also fuelled the crazy house price inflation).

[Friez]

Also consider you might not *GET* a mortgage since the banks are being pretty tight with their lending now.

[plexer]

Unless you now have a 10% deposit you are likely to not get a mortgage offer.

 

Ben

[Guest Guest]

With a 10% deposit? They will bite your arm off!

 

The days of people having a 10% deposit were long gone, its the 100% or even %115 mortgages that got the banks in serious trouble (and also fuelled the crazy house price inflation).

 

The days of that are gone now. The absolute minimum is now 5%, with most people recommending you save up 15%.

[MK-2]

Plus reports today say that house prices are set to drop a further 9% this year.

[Guest coquet636]

There is alot of scaremongering in the press fueling people to believe were all gonna lose our houses and end up back living in huts.....

 

If you have a deposit you will get a morgage, Its just the special offers and lower rate morgages that are hard to get. Yeah you will probably be paying a high interest rate for the time being. If you can afford it then fine, then in 5 years time when this gloom lifts your on the market and will probably be in a better place for moving up the ladder.

 

If you arent planning to stay in the flat more than 3-5 years its probably not a good idea as the value is likely to go down before it goes up so if its short term i would say no, but long term definately.

[CyberNerd]

The days of that are gone now. The absolute minimum is now 5%, with most people recommending you save up 15%.

 

Halifax are still offering 3% (MAX LTV 97%) Halifax Mortgages | FTB Choices for 1st time buyers. A good way to end up in negative equity. but its still possible.

[dave.81]

First time buyer here, well not for a couple of years, on the money i earn in the place i live there is no hope of buying. Will just have to keep renting for another 18-24 months and hopefully the drop in house prices continues and i'll be able to afford a modest flat somewhere.

[Lee_K_81]

Halifax are still offering 3% (MAX LTV 97%) Halifax Mortgages | FTB Choices for 1st time buyers. A good way to end up in negative equity. but its still possible.

 

Negative equity is only an issue if:

 

1. You cant afford the mortgage payments and bank has to reposses

2. You are selling

 

Any other situation and you can cope with negative equity.

 

Banks are still lending, giving out mortgages, loans, credit cards, etc.

 

You should be able to get a 90% mortgage at 3.5x your salary without any issues.

[somabc]

I heard some lenders will want a 25% deposit. It depends on your credit history. If you have made any slip ups, even minor expect to find it very difficult. Banks are not at all into any sort of "risk" now. If you have a good income, a hefty deposit (at least 10%) then it should be alright. Note: for the 97% Halifax you will need an HBOS Current Account into which you pay your salary otherwise max LTV is 90%.

[Hightower]

My bro is a business advisor for a major bank and his wife is a mortgage advisor - They both say that prices will hit their lowest at the end of this year before starting to rise again.

 

I got a mortgage AIP the other day on my pretty lowly wage with 10% deposit and they said I was allowed up to £109,000 - that's quite a lot.

 

I'm going to buy a house at Christmas - Wilf says that'll be the best time to buy.

[somabc]

TBH anyone who says the market will bottom out this year is just guessing, it is almost certain prices will fall for the rest of this year, but for how long?

 

The Governor of the Bank of England today said Britain faces its worst financial crisis for 20 years. The credit crunch, inflation etc. could all be combining for a perfect storm that makes the next decade look more like the 1970s (and hopefully not the 1930s).

 

BBC NEWS | Business | Bank governor offers bleak view

[dave.81]

I got a mortgage AIP the other day on my pretty lowly wage with 10% deposit and they said I was allowed up to £109,000 - that's quite a lot.

 

Wouldn't buy you much around this area, 1 bed flat if you were lucky.

[somabc]

I'd love to be able to buy a 1 bed flat for £109,000, even a studio here would cost £150,000 at least

[PEO]

I spoke to a financial adviser and he recommended I should put down 15% deposit. the difference between 10 and 15 is huge when it comes to interest.

 

Any one who took or takes out 100% mortgage is looking for trouble IMO. Your in a good position so save hard and find a good savings account. Don't leave your money in your regular bank account as the Tax man will rape you!

 

Halifax are thinking about offering 100% mortgages during summer.. Not sure if that will materialize.

 

Kev

[CyberNerd]

I'd love to be able to buy a 1 bed flat for £109,000, even a studio here would cost £150,000 at least

 

Suddenly that London weighting is looking much less attractive.

[ICT_GUY]

I bought a three bed Detached in 2000 for £115K (with a 50K mortgage and I was 30yr old) I was on target to have it paid off by now.

 

The house is now worth £250 unfortunately I sold it in 2004 for 168K and bought the ex wife a house in Germany.

 

Still, the soon to be current wife has a interest free mortgage with the bank of Mum And Dad and if you didn't guess already, that's how come I get all the best toys

[Hightower]

£109,000 plus £11,000 deposit would get you a nice 2 (possibly 3) bedroom new build up here.

 

The builders are struggling to get rid of new houses and will take stupid offers on them. I know a couple who offered £95,000 for a build worth £110,000 and the builders snapped their arm off at that.

 

I'm saving hard for it, and making my money work in shares that is managed by my bro - thing is, shares aren't doing too good either. That's why I'm trying to get more money put in! Buy low sell high.

Edited June 19, 2008 by Hightower

[somabc]

£109,000 plus £11,000 deposit would get you a nice 2 (possibly 3) bedroom new build up here.

 

The builders are struggling to get rid of new houses and will take stupid offers on them. I know a couple who offered £95,000 for a build worth £110,000 and the builders snapped their arm off at that.

 

I'm saving hard for it, and making my money work in shares that is managed by my bro - thing is, shares aren't doing too good either. That's why I'm trying to get more money put in! Buy low sell high.

 

If your saving for a deposit I wouldn't buy shares! Put it in the bank at high interest 8%+ Why take a risk? You need to remember to cut your losses sometimes rather than ploughing in more money IMHO

[jcollings]

Wouldn't buy you much around this area, 1 bed flat if you were lucky.

 

£109000 wouldn't buy you a lot here either.

 

 

And if I could predict the property market I wouldn't be here!

[Hightower]

If your saving for a deposit I wouldn't buy shares! Put it in the bank at high interest 8%+ Why take a risk? You need to remember to cut your losses sometimes rather than ploughing in more money IMHO

 

Sorry somabc - didn't realise you were a financial expert. So should I take my money out and put it into a bank?

 

My money is being managed - meaning if shares aren't performing they are sold and others bought. High risk in the shares market when managed isn't high risk. Yes, you could lose a lot, but you have a business manager who will pull the money at the first sign of trouble.

 

Do you really think my brother is going to let me throw my money away or is he going to tell me the best way to make money work for me?

[somabc]

Fair enough if you are happy to take on the risk that's your business, and managed is often better than unmanaged. You obviously trust your brother enough to make investments for you, if he is generating returns of greater than say 5-6% then go for it!

 

I meant generally investing in shares just now should only really be done with money you are willing to lose or at least not see gains ie not your house deposit!

 

I wouldn't mention "risk management" to some of the bigger banks ie Bear Stearns who now know full well the dangers of thinking you understand all the risks and can hedge your bets when in fact you don't know if the whole shebang is spinning out of control. I am not an economist but there's a lot of miserable people walking around the City just now!

Edited June 19, 2008 by somabc