26 years old looking to plan for first mortgage
Discussion
I'm relatively money clueless and having secured the career that I've been after for a few years it's time to start taking a serious look at my finances.
Mortgages are alien to me and I have a limited at best knowledge of them but could do with a quick run down. I plan to see a financial advisor, probably the same one my stepfather who has his own business uses but a quick summary would be beneficial.
I would be looking at getting a mortgage with my girlfriend and we currently have a combined income of £38k.
Using mortgage calculators is all well and good but I don't know what interest rate I would be getting and what is realistic for us to be attempting to be accepted at.
A quick calculation on a £100k mortgage at 3.65% over 25 years brings it to approx £513 a month, which is 26% of our net monthly income.
1) is that interest rate relatively accurate/attainable (thats the average for first time mortgages according to a newspaper article
2) would a mortgage such as the above be likely to be accepted?
Next we get onto the tricky business of deposits. I could get a family loan for maybe £10k but a reasonable return on it would be expected. Obviously this will be dependant upon what return this individual could get elsewhere but what would be a reasonable return on investment on a £10k loan for a family member? Id be willing to match whatever they're getting from the money at the moment but what is that likely to be.
3) If i manage to get hold of the deposit in this way will it be known to the bank and seen as a black mark?
4) is it possible to get bank loans for the deposit and then use that towards a mortgage? this seems completely counter intuitive and I'm guessing it would be a no.
I guess that's it to start with. Probably simple questions to you experienced lot but I'm really a beginner in this area and any help would be appreciated.
I'm on the electoral roll, will be getting a credit card to put petrol and pay off in full at the end of the month. The only loan i have is my student loan, and the only credit rating i have is my phone bill that is paid in full each month.
Mortgages are alien to me and I have a limited at best knowledge of them but could do with a quick run down. I plan to see a financial advisor, probably the same one my stepfather who has his own business uses but a quick summary would be beneficial.
I would be looking at getting a mortgage with my girlfriend and we currently have a combined income of £38k.
Using mortgage calculators is all well and good but I don't know what interest rate I would be getting and what is realistic for us to be attempting to be accepted at.
A quick calculation on a £100k mortgage at 3.65% over 25 years brings it to approx £513 a month, which is 26% of our net monthly income.
1) is that interest rate relatively accurate/attainable (thats the average for first time mortgages according to a newspaper article
2) would a mortgage such as the above be likely to be accepted?
Next we get onto the tricky business of deposits. I could get a family loan for maybe £10k but a reasonable return on it would be expected. Obviously this will be dependant upon what return this individual could get elsewhere but what would be a reasonable return on investment on a £10k loan for a family member? Id be willing to match whatever they're getting from the money at the moment but what is that likely to be.
3) If i manage to get hold of the deposit in this way will it be known to the bank and seen as a black mark?
4) is it possible to get bank loans for the deposit and then use that towards a mortgage? this seems completely counter intuitive and I'm guessing it would be a no.
I guess that's it to start with. Probably simple questions to you experienced lot but I'm really a beginner in this area and any help would be appreciated.
I'm on the electoral roll, will be getting a credit card to put petrol and pay off in full at the end of the month. The only loan i have is my student loan, and the only credit rating i have is my phone bill that is paid in full each month.
1) The rate that you can obtain is dictated purely by your deposit and the subsequent LTV. From experience, you would need a 15% deposit to be able to secure a rate of 3.65%
2)Thats too big a question to answer. There are dozens of variables that go into a lending decision such as LTV, income, credit score, credit commitments, address history, employment history etc etc.
3)Yes. the lender will ask you for the source of your deposit and proof of it. The monthly payment to repay the Gifted Deposit will be taken into account in the same way as any other loan, whether the lender accepts this is down to affordability.
4)Yes you can but the same affordability issues as above apply.
2)Thats too big a question to answer. There are dozens of variables that go into a lending decision such as LTV, income, credit score, credit commitments, address history, employment history etc etc.
3)Yes. the lender will ask you for the source of your deposit and proof of it. The monthly payment to repay the Gifted Deposit will be taken into account in the same way as any other loan, whether the lender accepts this is down to affordability.
4)Yes you can but the same affordability issues as above apply.
As a starting point pop over tohttp://moneysupermarket.com and their mortgages section. You can have a play with borrowing/deposit figures and see the sort of rates and monthly cost you might expect.
If you are looking at variable rates remember interest rates are at historic lows right now, but won't stay that way forever. Whatever interest rate you can obtain work out if you could still afford the mortgage at 1 or 2pct higher interest rates.
And looks at costs involved in buying. You may need to budget for conveyancing, survey, various searches (land registry, etc)
If you are looking at variable rates remember interest rates are at historic lows right now, but won't stay that way forever. Whatever interest rate you can obtain work out if you could still afford the mortgage at 1 or 2pct higher interest rates.
And looks at costs involved in buying. You may need to budget for conveyancing, survey, various searches (land registry, etc)
GTI Scott said:
I could get a family loan for maybe £10k but a reasonable return on it would be expected. Obviously this will be dependant upon what return this individual could get elsewhere but what would be a reasonable return on investment on a £10k loan for a family member? Id be willing to match whatever they're getting from the money at the moment but what is that likely to be.
I have quite a big loan from my parents, on which I pay the rate of interest being paid that month by the Investec High 5 account. It means that they're getting a consistently good savings rate, but is also good for you.Dom
A couple of notes to add-
Why not get the mortgage out over a longer term? You are young, and all sorts of things can get in the way. If you're doing OK/ get a pay rise/sudden bonus, overpay, if either of you lose jobs/become pregnant/ want to buy expensive stuff that month, just pay the minimum required.
Most mortgage companies in their offer period will only allow a maximum amount of overpayment, so check that first.
Why not get the mortgage out over a longer term? You are young, and all sorts of things can get in the way. If you're doing OK/ get a pay rise/sudden bonus, overpay, if either of you lose jobs/become pregnant/ want to buy expensive stuff that month, just pay the minimum required.
Most mortgage companies in their offer period will only allow a maximum amount of overpayment, so check that first.
I'm in a similar situation, although maybe a little further along with some money saved but my folks have also offered to help towards a deposit.
How would a mortgage lender differentiate between a loan from parents or a gift?
I also have some questions regarding contracting/permanent I'd like to ask you Sarnie, if you don't mind a few PMs.
How would a mortgage lender differentiate between a loan from parents or a gift?
I also have some questions regarding contracting/permanent I'd like to ask you Sarnie, if you don't mind a few PMs.
Herminator said:
How would a mortgage lender differentiate between a loan from parents or a gift?
I also have some questions regarding contracting/permanent I'd like to ask you Sarnie, if you don't mind a few PMs.
The lender will ask the question; "What is the source of your deposit?" when you tell them that an element is being gifted by parents they will ask if the loan is to be repaid or if there is going to be any security taken over the property.I also have some questions regarding contracting/permanent I'd like to ask you Sarnie, if you don't mind a few PMs.
It's fine if it's to be repaid, but the loan repayments would be taken into account like any other loan.
Feel free to PM me if you like
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