First time mortgage advice
First time mortgage advice
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dave0010

Original Poster:

1,405 posts

177 months

Wednesday 9th February 2011
quotequote all
Hopefully in the next year I will be in a position to buy my first place.

The question is I will soon be starting a new job £18000 a year possible, how long will I have to be in the employment to be able to apply for a mortgage? IE how many payslips will I need to have received.

I will have maybe £15000 in savings so ideally would not want to use all of this as a deposit to give myself some safety money.

Also including the deposit what is the most I could spend on a property?

many thanks for any advice guys

Wacky Racer

39,915 posts

263 months

Wednesday 9th February 2011
quotequote all
No doubt someone with more knowledge than me will be along in a minute, but what I will say is this:-

The old rule used to be borrow 3.5 or 4x Salary...ie:£18,000 x 4 with a 10% deposit.

Borrowing more is fine, (assuming someone will lend you the money) in a rising market..but bear in mind any fool can borrow money, but it's no fun living on beans on toast and not having any money to go to the pub every week etc.

Also, what happens if you lose your job etc, all these things have to be factored in.

Good luck anyhow, just gather as much information as possible from as many people as possible and make an informed decision.

splodge s4

1,519 posts

253 months

Thursday 10th February 2011
quotequote all
dave0010 said:
how long will I have to be in the employment to be able to apply for a mortgage? IE how many payslips will I need to have received.

Also including the deposit what is the most I could spend on a property?

many thanks for any advice guys
A lot of lenders don't have any minimum term that you have to be employed, most people think you have to be working for 6 months or so & this isnt true. If your employed on a permanent contract, no probation period then you can get a mortgage straight away. However...& its a big however...lenders will credit score your application & you may not get a sufficiently high score to pass so they could decline you on credit score. Your score is made up of lots of things including how many addresses you have had in the last 3 years, if you have track record of paying credit (credit cards loans etc) how long you have had a bank account etc, there's lots of things they will take into account, not being in your job very long will go against you but it wont be the only reason you may be declined. You could still be declined after working there a year if your credit score still isnt high enough for that particular lender.

Deposit is the answer. A larger deposit means lenders wont require you to have such a high score for you to be accepted. A 10% deposit is really the minimum, you have to have squeaky clean to be accepted.

So to answer your question of how much you can get, on 18k, no loans, no dependents, 30 year repayment mortgage Halifax will offer you £89,840. They may offer you this but work out your figures & make sure its affordable. add your 15k deposit will give you a purchase price of £104,400.

Purchase fees would be about £300 for a survey-valuation & about £1,000 for legal fees. Theres probably a mortgage arrangement fee of about £995 but most people add that to the mortgage so you dont need to write a cheque to pay it. It doesnt go away though as its repaid over the whole term & interest is added. eek

Hope that helps, there's a lot to think about mate. Now your next question is going to be how much is an £89,400 mortgage per month....scratchchin

smile


dave0010

Original Poster:

1,405 posts

177 months

Thursday 10th February 2011
quotequote all
splodge s4 said:
Hope that helps, there's a lot to think about mate. Now your next question is going to be how much is an £89,400 mortgage per month....scratchchin

smile
well?? thanks for that advice, made a lot more sense then any online article or phone call I've found or made. Luckily for myself I have been with the same bank for about 15 years, have had a few loans all paid off now and have lived in the same house for maybe 15 years as well. I have also had finance over the years on cars and have never missed a single payment so credit score should be pretty good, but as you said this isn't always enough.

splodge s4

1,519 posts

253 months

Friday 11th February 2011
quotequote all
dave0010 said:
well??
Thats a complicated question!

There's 3 elements that make up your monthly payment.

1) The amount you borrow.
2) Interest rate charged.
3) Term of the mortgage if its a repayment mortgage.

The reason I'm saying this is if I said for example a 80k mortgage costs £500 per month someone will always come along & say I have a 80k mortgage & I only pay £400. If the figures are different it has to be one of those 3 elements listed above that's different. Maybe the term is longer/shorter, maybe its interest only & no capital is being repaid, maybe the interest rate is higher-lower. there will be a reason. So to a point, your monthly repayment is what ever you want it to be within certain limits!

To keep it simple, a 30 year repayment mortgage for £80,400, with a 15% deposit could be around £460 per month. You get a far lower interest rate with a 15% deposit rather than a 10% deposit but that gives you an idea. You could fix the payments for a couple of years or opt for a tracker rate which will be slightly cheaper than quoted but will increase when rates rise.

Thats the bare bone mortgage payment. Also with this is your insurances, buildings cover, life cover, income protection, only buildings cover is compulsary but most people take others. This all has to be taken into account when looking to see if the payments are affordable.

It was a simple question with a long boring answer nerdblabla


dave0010

Original Poster:

1,405 posts

177 months

Friday 11th February 2011
quotequote all
But was very informative and clear, just trying to get as much information and understanding as possible before I start going to banks and brokers and getting all confused.

SteveScooby

825 posts

193 months

Friday 11th February 2011
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As a very rough ball park figure, look at paying £6 per month for every £1k borrowed. £100k = £600 a month

Scraggles

7,619 posts

240 months

Friday 11th February 2011
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SteveScooby said:
As a very rough ball park figure, look at paying £6 per month for every £1k borrowed. £100k = £600 a month
so I owe £32k and by ur calcs should be paying £192 each month, think it is £270 and that is on 2.5%, so maybe a snafu ?

texasjohn

3,687 posts

247 months

Sunday 13th February 2011
quotequote all
Looking at things another way, unless you are desperate to live alone you can buy the property and have a lodger.

When I bought my first flat I spent about 3 times salary so things were affordable and I could still go out, have a car etc. I worked for a large company so there were always graduates/apprentices not much younger than me looking for somewhere to live. Get one to move in and you will probably have 60-70% of your mortgage paid each month.

In my case I bought the flat, promptly got a job abroad and moved two in!