Graduate Aims To Clear Debts And Buy Home

[JST]

I normally like the telegraph financial pages but the advice for a FTB in 'Telegraph money. is pretty dreadful.

We are told that 'like many recent graduates' 23 year old Charlotte Lidster is desperate to clear her student debts and get on to the property ladder.

Her 'vital statistics' include debts of £15,000 and savings of virtually nil

So what do the three IFA 'experts' suggest regarding her property buying ambitions?

What the experts say

Mortgage

Because Miss Lidster's income restricts the amount she can borrow, Ms Chalmers [an IFA with The Financial Practice] suggested a guarantor mortgage. "These enable first-time buyers to borrow more than standard income multiples would allow with help from a guarantor. Lenders normally require that the guarantor be a legal guardian."

David Hollingworth, of mortgage brokers London & Country Mortgages, advised that if she is able to get a mortgage, Miss Lidster must work out if she can really afford the repayments.

Nick Gardner, director at brokers Chase de Vere Mortgage Management, suggested she consider taking a mortgage on an interest-only basis.

Mr Hollingworth said she must also consider the other costs involved in buying a property. "These costs will include survey fees, which will vary depending on the purchase price, but a typical fee for a basic valuation would be £200 or £300. Legal fees will also vary depending on the cost of the property and it's well worth shopping around but she should expect to pay £700 or so. The potential big cost would be stamp duty, which would kick in on a property in excess of £125,000 and is charged at one per cent on the purchase price."

So what she is advised to do is either:-

1. Get her parents to act as guarantors and so threaten their financial future if she gets into difficulties with repayments in order that she can borrow more; or

2. Get an interest only mortgage with no suggestion as to how the capital is ultimately to be repaid.

Really, this is terrible advice. The only saving grace is that Mr Hollingworth suggests the she 'should work out if she can afford the repayments'.

What annoys me though is the lack of any caveats or long term plan. It's simply a case of stretch yourself to the limit with a guarantor mortgage and be screwed in the event of a downturn in the property market or take out an interest only mortgage with no suggested capital repayment vehicle.

See below:-

http://www.telegraph.co.uk/money/main.jhtm...6/ixperson.html

Edited May 6, 2006 by JST

[MarkG]

An acquaintance of mine just became an IFA... because she got married and bought a house and they needed a higher income to pay the mortgage.

I guess IFAs don't get paid if their advice is 'forget it, you don't earn enough and have too many debts already'.

[Kam]

They make it sound like 25k is cr@p wage,

it's not that bad for that area is it and above average

[aussieboy]

I normally like the telegraph financial pages but the advice for a FTB in 'Telegraph money. is pretty dreadful.

We are told that 'like many recent graduates' 23 year old Charlotte Lidster is desperate to clear her student debts and get on to the property ladder.

Her 'vital statistics' include debts of £15,000 and savings of virtually nil

So what do the three IFA 'experts' suggest regarding her property buying ambitions?

So what she is advised to do is either:-

1. Get her parents to act as guarantors and so threaten their financial future if she gets into difficulties with repayments in order that she can borrow more; or

2. Get an interest only mortgage with no suggestion as to how the capital is ultimately to be repaid.

Really, this is terrible advice. The only saving grace is that Mr Hollingworth suggests the she 'should work out if she can afford the repayments'.

What annoys me though is the lack of any caveats or long term plan. It's simply a case of stretch yourself to the limit with a guarantor mortgage and be screwed in the event of a downturn in the property market or take out an interest only mortgage with no suggested capital repayment vehicle.

See below:-

http://www.telegraph.co.uk/money/main.jhtm...6/ixperson.html

Did you see that smug beehatch in the Times yesterday? She described herself as a "lucky girl" because her parents had helped her buy a nice two bedder.

From the photo she's 35 if she's a day. Girl indeed. Where's your pride, woman?

[tonification]

Ridiculous, she stands no chance.

[Killer Bunny]

I normally like the telegraph financial pages but the advice for a FTB in 'Telegraph money. is pretty dreadful.

We are told that 'like many recent graduates' 23 year old Charlotte Lidster is desperate to clear her student debts and get on to the property ladder.

What annoys me though is the lack of any caveats or long term plan. It's simply a case of stretch yourself to the limit with a guarantor mortgage and be screwed in the event of a downturn in the property market or take out an interest only mortgage with no suggested capital repayment vehicle.

What you have here is the classic situation: people assume that financial advisers actually give advice - the clue is normally in the name. :angry: Such FAs do not give advice they are brokers - just like home or car insurance. You tell them what you want and they find a good solution - apart from don't do it! 'Cos as has been said they don't earn unless a product is sold.

Some advisers/planners do actually sell advice.

FP

[expatowner]

The only saving grace is that Mr Hollingworth suggests the she 'should work out if she can afford the repayments'.

What annoys me though is the lack of any caveats or long term plan. It's simply a case of stretch yourself to the limit with a guarantor mortgage and be screwed in the event of a downturn in the property market or take out an interest only mortgage with no suggested capital repayment vehicle.

Where is the deposit money coming from?

[CrashedOutAndBurned]

They make it sound like 25k is cr@p wage,

it's not that bad for that area is it and above average

Communications Officer jobs, private and public sector, are hard fought for too. I've been interviewed for a couple of these in the past and I was one of hundreds of applicants and one of ten people being intereviewed. I didn't make it and only several years on did I earn a sniff more than 20k.

For every one 23 year old 25k comms officer, there will be dozens if not hundreds of similarly qualified unsuccessful applicants making do with low-paid non-graduate work.

Where do the median (£19k) and below workers live? HMO slum until they're 40?

This tripling of house prices combined with a McDonaldiation of the job market has made poor people out of many who should be having a reasonable, nothing flashy, standard of living.