Jump to content
House Price Crash Forum
Aunt Sally

Help! Ftb Mortgage Advice!

Recommended Posts

:unsure: Hello,

I would like to request some assistance - now I'm a Bear - I've been praying for a crash for about 6 years - it's hardly even been a skid, let alone a crash, in Greater London, but I am in a bit of a conundrum as myself and my Fiance are FTB's...

We currently rent a 2 bed flat in Walthamstow. We want to start a family soon and my Fiance wants to expand his business from home so we need more space and would like to buy a modest 3 bed house (preferably with a garage). We are currently in Zone 3 and want to move further out (cheaper houses) to Essex, Zone 6 but still commutable.

We are struggling to decide how to proceed with obtaining a mortgage as the market is indeed very bleak for people like us wanting to get on the ladder, we only having a modest deposit (despite saving for years and waiting for prices to fall) and so we are now at the stage where enough is enough - we can't move forward with the business or family plans until we have a Property. We need security of a stable family home for the next 5-10 years at least!

Here comes the Finance bit......

We have £30,000 deposit.

I have outstanding student loans of £400 per month

We have a current combined income of £65k pa (althoug this could increase as I have also started a business from home)

Current rent is £1,000 per month

Property values in our desired area - £220k - £250£k (average of say, £240k but open to offers below and judging by www.propertysnake.co.uk values have only fallen by 5% on the typf of house we want).

My credit is not the best (was a bad student) I have no savings and no pending inheritance

My Fiance has excellent credit

My Fiance is self-employed and has savings (not sure how much though but probably around £30k)

My Fiance also has a current 50% share in a 3 bed house with equity of around £150k (100% total value on inheritance).

Now based on the above - online calculators suggest we could borrow enough to cover the costs of a mortgage on a 25 year, repayment mortgage at 5% interest and pay around £1,200 per month - however this was the same as 2-3 years ago when we first started to keep an eye on the market! If we have had a so-called "crash" why the hell are houses still the same value and costing the same in real terms, despite falling prices and interest rates?! :blink:

We have already been told by one IMA that he only had one 90% LTV product on the market with a ridiculous 7% interest rate.

Barclays however, have said they have a lot of products available and we are seeing them next week.

HSBC looks like they have good interest rate deals on the market for 90% LTV at 4.9% (managable IMO as this was the going rate when we first started checking out the market 3 years ago). This looks like our best bet so far.

Abbey also has great offers on 5 year fixed rate FTB mortgages but with 25% deposit.

I am struggling to find any other 90% LTV mortgages....

Can someone please give me some advice as to how to play this game a little more astutely.... are we not utilising savings or the equity as well as we could be....? I'm not sure what other products are on the market and if anyone has any suggestions that would be great!

I HATE putting my personal details "out there" but would really like to pick your brains so any suggestions are welcome and appreciated - I'm new to all this house-buying marlarky! :rolleyes:

Thanks x

Share this post


Link to post
Share on other sites

You should buy as many properties as you can with as little deposit as possible. Don't worry about the interest rate. Don't worry about rental income. Capital appreciation is guaranteed - houses rose by 2.6% last month, which would see prices double in less than three years.

Lovely!!

Share this post


Link to post
Share on other sites

Why not live in the house you have?

If it not suitable; sell it.

Share this post


Link to post
Share on other sites

wait 1 year at least.

not only are you potentially going to find property cheaper, but you are then contributing to the fall in property prices.

Owning a mortgage means nothing. it just ties you down. You couls well do better waiting 10 years and having loads of money and being able to buy almost outright.

fill the void in your life as you wait by upping your post count on internet forums.

Share this post


Link to post
Share on other sites

This isn't moneysavingexpert! However as a rule of thumb, lets say if you're looking at 225k you'll need a minimum of 22,500k At 90% LTV that will put you at a rate of 5.5% at best, depending on how bad your credit is lets say 6% (it's not that bad, we were all students once). You'll be looking at paying appx 1,100 on a repayment mortgage which i think is appx 880 IO so on that basis its 'cheaper' to buy. However in the eyes of the bank you'll be responsible for the depreciating asset.

I suggest you wait, 6-12months, you won't 'miss' the boat as by your own admission the boat hasn't gone anywhere, up or down. See how all this economic news works its way through the system. If you make a bad decision how far will houses rise in a year given the backdrop of fading employment?

If they fall, you can re asssess and haven't lost anything. you cant include your rent as lost money, you'd be paying a similar amount in mortgage interest.

Share this post


Link to post
Share on other sites

The best advice I have seen on here is wait. Because if property has bottomed out, it will not rise significantly for a while, if it hasn't it could easily drop another 10-20%.

Personally I would have thought it's ambitious to be paying off 400 a month, not earning while you start the family, have the added expense of the family, and have the added expense of a mortgage and other household bills. And a more expensive commute.

And if you can't afford a 7% interest rate you could easily be in trouble within a few years. Look at interest rates during the last housing slump in the early 90s.

Share this post


Link to post
Share on other sites

You come to housepricecrash.co.uk and ask for advice on how a FTB should buy a house?

Rent for two more years (that should be around the bottom), save more, buy the house you will live in for years at a price you can afford.

You want advice on how to buy a house now? Go to MSE. You'll get lots of <<<HUGZ>>>.

Share this post


Link to post
Share on other sites
HSBC looks like they have good interest rate deals on the market for 90% LTV at 4.9% (managable IMO as this was the going rate when we first started checking out the market 3 years ago). This looks like our best bet so far.

Yes this looks like a good one on the face of it, however with the £1500 non-refundable arrangement fee, it's a big risk if the seller should decide to back out.

I guess it's all about finding the right deal for you. At the moment, there are no good deals, but if you are prepared to pay a higher rate, a big arrangement fee or get your family to deposit 30k in a savings account (lloydstsb), then there is stuff out there!

Personally, I'd wait a little longer. I think before the end of the year, the deals will get a lot better.

Share this post


Link to post
Share on other sites

if you find a house that is reasonably valued - and i've seen those selling at end 2003/early 2004 prices - then ignore the perma bears and go for it.

you could of course ask a landlord for more security of tenancy and ability to open a business there and rent a bigger house in a cheaper area

but if you want to buy YOU ARE IN A GOOD POSITION as you have nothing to sell as you're not in a chain

BUT you need to prove to the estate agent you're in a strong position to buy

get a mortgage pre-approved for a certain value

and use various tools to find properties that have been cut in price

use firefox rather than internet explorer and search for and install propertybee

this allows you to find properties reduced in price on rightmove - it finds so much more than propertysnake!

home.co.uk also has reduced prices though.. as does zoopla if you register.. but i like my propertybee

then when you found a property look how much it or similar properties sold for on the same street

zoopla has this or you can use mouseprice.net

if you see a property priced for at 2004 prices then it's around 20% off peak and a good deal for the long term

don't buy a small property you would want to sell in a few years - go for a bigger one then you save on fixed costs of moving house

if you can find one below £175k i think you'd save on stamp duty?

i'm not an expert on best mortgages for low deposits, sorry

Share this post


Link to post
Share on other sites
We want to start a family soon and my Fiance wants to expand his business from home

We have a current combined income of £65k pa (althoug this could increase as I have also started a business from home)

Far from your income increasing because you are starting a business, it is almost certain that that your income will fall; for a few years at least.

Small businesses EAT cash! It is imperative that you keep as much cash available as you possibly can for the forseeable future in order to fund two growing busibesses. It would be madness to even contemplate buying a house right now.

Find a more suitable rental place, put your baby plans on hold, and concentrate on your businesses. The trough in house prices is a good three years away yet - that will be the time to think about buying.

You did ask!

Share this post


Link to post
Share on other sites
Why not live in the house you have?

If it not suitable; sell it.

We don't have a house, we rent a 2 bed flat. It's not for sale. We need a larger premises to expand our business and our family! That's the whole point of buying. x :rolleyes:

Share this post


Link to post
Share on other sites
We don't have a house, we rent a 2 bed flat. It's not for sale. We need a larger premises to expand our business and our family! That's the whole point of buying. x :rolleyes:

rich frackers.... go and troll elsewhere.

Share this post


Link to post
Share on other sites
wait 1 year at least.

not only are you potentially going to find property cheaper, but you are then contributing to the fall in property prices.

Owning a mortgage means nothing. it just ties you down. You couls well do better waiting 10 years and having loads of money and being able to buy almost outright.

fill the void in your life as you wait by upping your post count on internet forums.

I wish I could wait, but really can't. We've already been renting for 10 years - why pay a Landlord when I can be paying off my own mortgage - if we leave it any later we won't even be able to get a 25 year mortgage as we'll be too old! :unsure:

Share this post


Link to post
Share on other sites
I wish I could wait, but really can't. We've already been renting for 10 years - why pay a Landlord when I can be paying off my own mortgage - if we leave it any later we won't even be able to get a 25 year mortgage as we'll be too old! :unsure:

Trolls cant keep a straight face.

Share this post


Link to post
Share on other sites
You come to housepricecrash.co.uk and ask for advice on how a FTB should buy a house?

Rent for two more years (that should be around the bottom), save more, buy the house you will live in for years at a price you can afford.

You want advice on how to buy a house now? Go to MSE. You'll get lots of <<<HUGZ>>>.

We simply CAN'T rent any longer, time is not on our side, if we leave it any longer we won't even be able to get a 25 year mortgage! Why throw money at a Landlord when I could be paying off my own property which we will own outright eventually?

I thought forums like this were supposed to help people who want to get into the property market.... I've been on and off the forum for a good few months now watching and learning whilst the country and world economy disintegrates around us - it really seems that no-one has a clue what's going on as these times are unprecedented - any extra knowledge or advice I can glean for my own personal education before I take the plunge is a bonus so please don't patronise, we're not all fortunate enough to be "homeowners" who've made a few bob in the boom .... :P

Share this post


Link to post
Share on other sites
We simply CAN'T rent any longer, time is not on our side, if we leave it any longer we won't even be able to get a 25 year mortgage! Why throw money at a Landlord when I could be paying off my own property which we will own outright eventually?

I thought forums like this were supposed to help people who want to get into the property market.... I've been on and off the forum for a good few months now watching and learning whilst the country and world economy disintegrates around us - it really seems that no-one has a clue what's going on as these times are unprecedented - any extra knowledge or advice I can glean for my own personal education before I take the plunge is a bonus so please don't patronise, we're not all fortunate enough to be "homeowners" who've made a few bob in the boom .... :P

wondertroll.

disintegration of your bridge means starting a business is tricky, buying anew bridge is tricky and even a new tight uniform will be tricky.

Share this post


Link to post
Share on other sites
if you find a house that is reasonably valued - and i've seen those selling at end 2003/early 2004 prices - then ignore the perma bears and go for it.

you could of course ask a landlord for more security of tenancy and ability to open a business there and rent a bigger house in a cheaper area

but if you want to buy YOU ARE IN A GOOD POSITION as you have nothing to sell as you're not in a chain

BUT you need to prove to the estate agent you're in a strong position to buy

get a mortgage pre-approved for a certain value

and use various tools to find properties that have been cut in price

use firefox rather than internet explorer and search for and install propertybee

this allows you to find properties reduced in price on rightmove - it finds so much more than propertysnake!

home.co.uk also has reduced prices though.. as does zoopla if you register.. but i like my propertybee

then when you found a property look how much it or similar properties sold for on the same street

zoopla has this or you can use mouseprice.net

if you see a property priced for at 2004 prices then it's around 20% off peak and a good deal for the long term

don't buy a small property you would want to sell in a few years - go for a bigger one then you save on fixed costs of moving house

if you can find one below £175k i think you'd save on stamp duty?

i'm not an expert on best mortgages for low deposits, sorry

THANK YOU! Useful advice on sites - I've discovered Mouseprice, but not the others - this is very helpful as I'll need to know whether market prices are "realistic" before we start putting offers in.... :rolleyes:

Share this post


Link to post
Share on other sites
I wish I could wait, but really can't.

As my primary school teacher was wont to say: "Can't means won't, and won't gets a smack".

In other words, if you've rented for a decade already what's one more year going to do? You'll regret it if you buy now.

Share this post


Link to post
Share on other sites
THANK YOU! Useful advice on sites - I've discovered Mouseprice, but not the others - this is very helpful as I'll need to know whether market prices are "realistic" before we start putting offers in.... :rolleyes:

Trolly trolly.

Share this post


Link to post
Share on other sites

After reading your initial post, I think it would be madness to buy at the moment. As you say yourself your deposit is minimal, the interest rate you are being offered is high and prices in London haven't fallen at all. Also you haven't been able to save. How will you feel if you stretch yourself, buy, struggle and then in three years time you find your neighbour bought for significantly less than the value of your outstanding mortgage? Or worse you get repossessed and the new owners pay half what you did and you are saddled with NE debt for the rest of your lives?

Re: why should you pay the landlord, well the way I see it is, is why should you own when prices are falling, let your landlord take the hit for that! Looking at the numbers you set out below

Re: baby, it take 9 months to grow and it might not happen straight away. So don't put it on hold, but plenty of babies have born into 2 bedroom flats. And you can always trade up to renting a house or a bigger flat quite easily if you can't manage in a 2 bedroom flat.

Also why can't you live in the house that your husband has 50% of?

Share this post


Link to post
Share on other sites
Re: baby, it take 9 months to grow and it might not happen straight away. So don't put it on hold, but plenty of babies have born into 2 bedroom flats. And you can always trade up to renting a house or a bigger flat quite easily if you can't manage in a 2 bedroom flat.

Agreed, the size of one's abode shouldn't dictate when to start a family. We've got a new born in our one-bed flat. Not exactly a barrel of laughs at times but i'll be damned if I was going to wait for the market to bottom-out before doing my bit to profligate the human race....

Hoo ha.

Share this post


Link to post
Share on other sites
Far from your income increasing because you are starting a business, it is almost certain that that your income will fall; for a few years at least.

Small businesses EAT cash! It is imperative that you keep as much cash available as you possibly can for the forseeable future in order to fund two growing busibesses. It would be madness to even contemplate buying a house right now.

Find a more suitable rental place, put your baby plans on hold, and concentrate on your businesses. The trough in house prices is a good three years away yet - that will be the time to think about buying.

You did ask!

+1

Very few peoples income is garanteed right now especially if you are self-employed. Taking on a maximum mortgage at the stage of growing a family and business 'could' be a potenial nightmare.

If you're wanting to buy for the long term (10 years +) then you won't mind your property going down in value so much, but you will restrict yourself for future moves as the deposit will be wiped out and possibly end up in neg equity.

I would seriously question whether buying IS the right thing for you at the moment.

If I were you, I'd move into a larger rental property, allow for your businesses to grow and improve allow for those to stabilise, give it at least another year.

I know you said time isn;t on your side, but you don;t have to have a 25 year mortgage!

Share this post


Link to post
Share on other sites
Trolly trolly.

Excuse me? Do you have a problem? I've also quite liked your posts and found you very amusing but I'm wondering why you've taken a mocking attitude towards my posts?!

I'm just genuinely interested in the general consenus of more knowledgeable folk on this site.worked my ASS off and sacrificed much just to get to this position so please don't mock people's circumstances when you have no IDEA what they've had to go through in order to just be "normal" and have a stable home to call their own.... :P

Share this post


Link to post
Share on other sites
We simply CAN'T rent any longer, time is not on our side, if we leave it any longer we won't even be able to get a 25 year mortgage! Why throw money at a Landlord when I could be paying off my own property which we will own outright eventually?

I thought forums like this were supposed to help people who want to get into the property market.... I've been on and off the forum for a good few months now watching and learning whilst the country and world economy disintegrates around us - it really seems that no-one has a clue what's going on as these times are unprecedented - any extra knowledge or advice I can glean for my own personal education before I take the plunge is a bonus so please don't patronise, we're not all fortunate enough to be "homeowners" who've made a few bob in the boom .... :P

When you have a mortgage you are throwing money at the bank instead of the landlord. It's called "interest". You pay it and you never see that money again. Work out the interest component of the mortgage on the home that you want to own. Is it lower than the rent on a similar place? If not, then you lose nothing by not buying while prices are static or falling. Only when prices are rising does this rule not apply, and prices won't be rising for a good while in all probability.

Save the difference between the mortgage you would be paying an the rent you are paying. Then, when you come to buy you can put down a bigger deposit and get a shorter term loan (say, 20 or 15 years) if you're worried about getting old. Simple!

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   285 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.