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AV-1

Couple Wanting To Buy For The First Time - Need Basic Help!

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Hi,

ok, we will cut to the chase.

My girlfriend and i ( we are both 26 years old ) have approximately £63,000 in savings. We want to use this money as a depost for a place (either a flat or a house). The problem, however, is that both of us are pretty clueless as to how this all works. I have heard so much conflicting information that i just don't know what to believe.

We once heard that a 10% deposit was sufficient but we have also heard of GP's being refused mortgages despite having 20%. We don't know where we stand.

We understand a large part of the decision is based on salary. My girlfriend and i both earn quite well ( between £35,000 - £45,000) but our credit rating (from credit cards) is not particularly good - we often are late with payments (through mis-management, nothing else) - although we have very few outstanding debts.

In fact, these are our outstanding debts (they are all on my side).

Credit card £700

Student loans (Student Loan Company - Official Government body) £18,000

We both live and work in Moscow, at the moment, but want to buy somewhere in London or Paris.

My girlfriend was born in France, i was born in London.

Oh. The relationship is long term. We plan to marry. Any purchase would be in a joint name.

Erm, what else should we mention?

Well, we guess that's sufficient information about us.

What would we like to know, if any of you would be so kind to help, is the basics.

With £63,000 combined savings what type of property should we be looking to buy.

* What i mean, is, would we be unrealistic if we wanted somewhere that would cost £320,000?

* Would we be wiser to look for somewhere that would cost £250,000?

* With a £63,000 deposit what type of mortgage (and how much) would we be correct to ask for?

---- For instance, if we purchased a flat for £263,00, that would mean a £200,000 mortgage.

* In this instance, what type of interest rate would we be likely to have to pay?

* In this instance, what type of monthly repayments does that involve? £1000? £2000? I have no idea. Can rent cover 70% of it? Where do i stand?

Oh, some extra information. I will inherit a house in North London from my parents, although not for a while yet, hopefully. It could be transferred into my name, if necessary, relatively quickly.

* Would it be in my benefit, short term and long term, to do this?

* What type of effect would it have?

I can't speak to a mortgage advisor as i live in Moscow and when i am in London my time is limited, so, for the time being, it isn't an option. This is why i am asking here, on the forum. Also, i can't ask my parents because they just wouldn't know themselves. The same applies for the majority of our friends. We are a rather clueless bunch of people when it comes to money matters.

So, can anybody point out the basics and answer, in some way or another, our queries?

We hope so.

Eagerly awaiting replies.

Thanks. :) :)

Edited by AV-1

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I don't know about Paris but if you're not actually resident and working in London I don't think you will be able to get an owner-occupier mortgage. Simple as that. There may be the opportunity to get a different sort of loan, like a buy-to-let loan, but this will have a higher interest rate and lower loan-to-value (maybe 60%) meaning the most you could spend would probably be less than 200K which, as you probably know, won't buy you much in London. I think mortgage companies will net off your student loans too, which means your deposit is closer to 45K. Also, if you don't have tenants in the place you will have to pay council tax and service charges yourselves. What you need to do is find a professional mortgage broker and book a consultation next time you're in town. But my I'm pretty sure that they will advise you that your plan is too ambitious in the current climate - you will present as a high risk borrower to any bank, unfortunately.

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Oh, some extra information. I will inherit a house in North London from my parents, although not for a while yet, hopefully. It could be transferred into my name, if necessary, relatively quickly.

* Would it be in my benefit, short term and long term, to do this?

* What type of effect would it have?

This is way of avoiding inheritance tax. Be very wary of this.

I know someone who had his mother's house transferred to him as part owner many years ago. His mother ismoving though and he is going to be liable for the capital gains for the house sale. Basically that means he will have a multiple thousand pound bill on money he never gained ( as his mum will use the money it to buy a new place ).

So only consider it if your parents aren't ever going to move. When your parents retire and you get kids they are may want to move near you. As such, I think getting their house put in your name would be unwise.

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This is way of avoiding inheritance tax. Be very wary of this.

I know someone who had his mother's house transferred to him as part owner many years ago. His mother ismoving though and he is going to be liable for the capital gains for the house sale. Basically that means he will have a multiple thousand pound bill on money he never gained ( as his mum will use the money it to buy a new place ).

So only consider it if your parents aren't ever going to move. When your parents retire and you get kids they are may want to move near you. As such, I think getting their house put in your name would be unwise.

Interesting. I will read up about inheritance tax. Thanks for the warning though. Much appreciated.

Non-Frog, i appreciate the sentiment, only ringing a mortgage advisor from my flat isn't sensible ( benefit vs call cost ) compared to a forum.

And Gimble, thanks for the information :) . So we are deemed high risk? Fair enough. I guess we won't just buy for now then, going by what you say, and will keep saving instead.

Any other thoughts? Practical advice? Information?

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......

Non-Frog, i appreciate the sentiment, only ringing a mortgage advisor from my flat isn't sensible ( benefit vs call cost ) compared to a forum.

......

You should be able to get a reasonable idea of finance from a website like moneysupermarket. Do you have broadband? If so Skype is less than €0.02 a minute and works fine with non geographic numbers too (we use it for France to UK) There's a lot of stuff about on the Internet if you look. If you're on some crappy Russian dial up please have my sympathy :)

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what type of monthly repayments does that involve? £1000? £2000? I have no idea. Can rent cover 70% of it? Where do i stand?[/u]

Oh, some extra information. I will inherit a house in North London from my parents, although not for a while yet, hopefully. It could be transferred into my name, if necessary, relatively quickly.

* Would it be in my benefit, short term and long term, to do this?

* What type of effect would it have?

If your parents are still living in it it is a "gift with reservation" and the move is ineffective as an IHT saving. But for CGT purposes it will have moved at "today's" value and if that increases before you use it as your "main" home the increase will be liable to CGT.

tim

Edited by tim123

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When I was last in Moscow, cheap calling cards/sims with special international rate were available at kiosks on every corner. Go on moneysavingexpert.com, read up on their broker advice and call a couple of brokers.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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