Mortgage - 1st time buyer, £40k total

[anonymous-user]

Hi guys,

I'm about to buy my first property. It's a housing association flat that I've lived in for several years and have now acquired the right to buy, with a discount taking in to consideration how long I have lived there.

I've had the place valued at £68k, and I qualify for a 50% discount. Hence I'm being offered the flat for a tiny £34k. (It's a 1st floor, 1 bedroom, no garden affair, but I'm planning on buying it as a pension for the future.)

Before I can get in to town/arrange a meeting with a mortgage man at the weekend, I thought I'd ask the PH opinion. Please note I am not a financially-minded type. I really know very very little about the differing types of mortgage etc.

Use the £4k I've got saved as a deposit on a £34k mortgage, therefore borrowing £30k?
Apply for a mortgage for the full £68k, and then immediately pay off the £34k left over from the purchase to reduce interest payments? Does it work like that?
Apply for a £38k mortgage and use the spare to buy carpets/new kitchen? (Which are needed!)

I'm hoping that I can apply for a 10 year mortgage and it'll cost similar to my monthly rent payments - approx £400/month.

Thoughts appreciated.

[anonymous-user]

That's fair enough I guess - I don't see why the discount is so great but I'm not going to argue it. Still, it's a tiny flat, hardly a "home" - no gardens, parking, etc. I'd certainly have to sell if I wanted a family. I guess it's of pretty much no use to housing association family tenants, old, disabled etc due to the stairs, narrow corridors and the like - hence why I qualified/was offered (and subsequently accepted) it. I'd certainly not be able to afford to get on the property ladder elsehow.

[scotal]

musclecarmad said:

good luck. your trouble will be with the small mortgage, some lenders only offer over £40k for example.

There are specialist schemes for RTB cases, you should have no problems finding the right lender.
(Most mmortgages start at £20k minimum blance, so it shouldn't be a problem.)

[anonymous-user]

scotal said:

musclecarmad said:

good luck. your trouble will be with the small mortgage, some lenders only offer over £40k for example.

There are specialist schemes for RTB cases, you should have no problems finding the right lender.
(Most mmortgages start at £20k minimum blance, so it shouldn't be a problem.)

^^ Thanks - good to know.

[Oggs]

Opulent said:

scotal said:

musclecarmad said:

good luck. your trouble will be with the small mortgage, some lenders only offer over £40k for example.

There are specialist schemes for RTB cases, you should have no problems finding the right lender.
(Most mmortgages start at £20k minimum blance, so it shouldn't be a problem.)

^^ Thanks - good to know.

Scotal is also a great man to do business with
Recommended by myself and others

[Zippee]

musclecarmad said:

have to say though it boils my piss you being given a 50% discount for a house - bloody welfare state.

Have to say I agree - though not the fault of the OP and to be honest you'd be daft not too.

Thing that really gets me is this expectation that everyone has a right to own their own house. You don't and thats why rentals and the housing association exist.

[Jettagti]

Zippee said:

musclecarmad said:

have to say though it boils my piss you being given a 50% discount for a house - bloody welfare state.

Have to say I agree - though not the fault of the OP and to be honest you'd be daft not too.

Thing that really gets me is this expectation that everyone has a right to own their own house. You don't and thats why rentals and the housing association exist.

tell me about it, me and my other half have been saving for years to buy our own place, and still we havnt got enough (we could buy a nice Porsche/TVr with what we have saved)

[Maxf]

Opulent said:

Still, it's a tiny flat, hardly a "home" - no gardens, parking, etc. I'd certainly have to sell if I wanted a family.

A bit like most one bed flats then, certainly in London (but without the state fairy magicing away 50%)

Not moaning at you - I'd buy it too and take the discount! But it does seem to take the piss a little that there are such discounts being thrown around when I the tax payer funds the houses and should be entitled to best value.

[Maxf]

Maxf said:

Opulent said:

Still, it's a tiny flat, hardly a "home" - no gardens, parking, etc. I'd certainly have to sell if I wanted a family.

A bit like most one bed flats then, certainly in London (but without the state fairy magicing away 50%)

Not moaning at you - I'd buy it too and take the discount! But it does seem to take the piss a little that there are such discounts being thrown around when the tax payer funds the houses and should be entitled to best value.

[anonymous-user]

Maxf said:

Opulent said:

Still, it's a tiny flat, hardly a "home" - no gardens, parking, etc. I'd certainly have to sell if I wanted a family.

A bit like most one bed flats then, certainly in London (but without the state fairy magicing away 50%)

Not moaning at you - I'd buy it too and take the discount! But it does seem to take the piss a little that there are such discounts being thrown around when I the tax payer funds the houses and should be entitled to best value.

If it helps placate, I'm not allowed to sell it for a few years, if I do then I must offer it back to the housing association at the same discounted rate - I have no intention of turning it in to a quick profit.

[KENZ]

TBH I don't agree with this. With a huge shortage of proporties to rent at the moment. This does nothing to help the young person with limited funds looking for a place of their own.

[anonymous-user]

KENZ said:

TBH I don't agree with this. With a huge shortage of proporties to rent at the moment. This does nothing to help the young person with limited funds looking for a place of their own.

Erm... I was a young person with limited funds, and when I qualified for the flat, and when it was let to me, I was also looking for a place of my own? I also was on a waiting list, until something came up that wasn't elderly-friendly, kid-friendly, etc with the points I'd got. You're talking like I defrauded someone out of it or something. Wind your neck in.

[KENZ]

Opulent said:

KENZ said:

TBH I don't agree with this. With a huge shortage of proporties to rent at the moment. This does nothing to help the young person with limited funds looking for a place of their own.

Erm... I was a young person with limited funds, and when I qualified for the flat, and when it was let to me, I was also looking for a place of my own? I also was on a waiting list, until something came up that wasn't elderly-friendly, kid-friendly, etc with the points I'd got. You're talking like I defrauded someone out of it or something. Wind your neck in.

Why do you think you waited so long for a flat ?

[anonymous-user]

KENZ said:

Opulent said:

KENZ said:

TBH I don't agree with this. With a huge shortage of proporties to rent at the moment. This does nothing to help the young person with limited funds looking for a place of their own.

Erm... I was a young person with limited funds, and when I qualified for the flat, and when it was let to me, I was also looking for a place of my own? I also was on a waiting list, until something came up that wasn't elderly-friendly, kid-friendly, etc with the points I'd got. You're talking like I defrauded someone out of it or something. Wind your neck in.

Why do you think you waited so long for a flat ?

Because I didn't qualify for a house as I am a single person - and there are more houses than flats in my town. FAR more houses. In fact, I think there are only around 40 flats in the entire town (all of which are down my road), when there are several streets of council houses. So, I waited, and eventually was awarded a shell of a flat, which I have spent the last 5 years gradually fixing, and now I've got the opportunity to buy it. I didn't ASK for the opportunity to buy it, it happens to be a built-in part of the system.

Are people getting pissed off that I can buy the flat I rent, or the discount? I make no apologies for the discount. NONE. I've paid my rent on time, every time, paid my taxes on time, every time, and apart from this purchase discount, have never claimed a thing off the gov't. No need for people to get jealous. Believe me, it's not been easy.

ETA: ALL of my neighbours are longer-term residents than me. I am STILL the new boy in the street.

Edited by Opulent on Thursday 16th September 14:12

[okgo]

Don't hate the player, chaps.

[auditt]

Opulent said:

Hi guys,

I'm about to buy my first property. It's a housing association flat that I've lived in for several years and have now acquired the right to buy, with a discount taking in to consideration how long I have lived there.

I've had the place valued at £68k, and I qualify for a 50% discount. Hence I'm being offered the flat for a tiny £34k. (It's a 1st floor, 1 bedroom, no garden affair, but I'm planning on buying it as a pension for the future.)

Before I can get in to town/arrange a meeting with a mortgage man at the weekend, I thought I'd ask the PH opinion. Please note I am not a financially-minded type. I really know very very little about the differing types of mortgage etc.

Use the £4k I've got saved as a deposit on a £34k mortgage, therefore borrowing £30k?
Apply for a mortgage for the full £68k, and then immediately pay off the £34k left over from the purchase to reduce interest payments? Does it work like that?
Apply for a £38k mortgage and use the spare to buy carpets/new kitchen? (Which are needed!)

I'm hoping that I can apply for a 10 year mortgage and it'll cost similar to my monthly rent payments - approx £400/month.

Thoughts appreciated.

So you want to borrow the FULL MARKET VALUE

pay of what you agreed which is 34k and you get left with 34k

Sounds great, Where do i sign up.

Edited by auditt on Thursday 16th September 16:10

[anonymous-user]

auditt said:

Opulent said:

Hi guys,

I'm about to buy my first property. It's a housing association flat that I've lived in for several years and have now acquired the right to buy, with a discount taking in to consideration how long I have lived there.

I've had the place valued at £68k, and I qualify for a 50% discount. Hence I'm being offered the flat for a tiny £34k. (It's a 1st floor, 1 bedroom, no garden affair, but I'm planning on buying it as a pension for the future.)

Before I can get in to town/arrange a meeting with a mortgage man at the weekend, I thought I'd ask the PH opinion. Please note I am not a financially-minded type. I really know very very little about the differing types of mortgage etc.

Use the £4k I've got saved as a deposit on a £34k mortgage, therefore borrowing £30k?
Apply for a mortgage for the full £68k, and then immediately pay off the £34k left over from the purchase to reduce interest payments? Does it work like that?
Apply for a £38k mortgage and use the spare to buy carpets/new kitchen? (Which are needed!)

I'm hoping that I can apply for a 10 year mortgage and it'll cost similar to my monthly rent payments - approx £400/month.

Thoughts appreciated.

So you want to borrow the FULL MARKET VALUE

pay of what you agreed which is 34k and you get left with 34k

Sounds great, Where do i sign up.

Edited by auditt on Thursday 16th September 16:10

That's why I was asking for advice - I'm not financially minded and was not aware of my options.

[Big E 118]

Not knocking the OP (as I'm sure we'd all jump at this if in his situation) but as above, it does seem like housing associations are giving away properties. Why not just sell it for the full market value if they don't want it?

It makes the £50k I saved to put a deposit down and the £150k mortgage I have on a flat probably the same size as the OP's seem like a complete waste of my money. Oh why didn't I just apply for a HA or council flat!

[anonymous-user]

Big E 118 said:

Not knocking the OP (as I'm sure we'd all jump at this if in his situation) but as above, it does seem like housing associations are giving away properties. Why not just sell it for the full market value if they don't want it?

It makes the £50k I saved to put a deposit down and the £150k mortgage I have on a flat probably the same size as the OP's seem like a complete waste of my money. Oh why didn't I just apply for a HA or council flat!

That's why I applied. I had a mortgage certificate for a house all sorted 10 years ago, then got made redundant, and had to spend my savings before any benefits were forthcoming (ETA I never claimed a penny...). Then the property explosion happened, so I thought why not put my name down. Fill in the form, send it off and to be honest I wasn't expecting to hear anything. And a while later, I did. Its not like my flat is in the middle of Harrow or anything either - it's in rural Essex/Suffolk, long way from any major towns, shops, etc. Guess just unsuitable for a lot of applicants.

Edited by Opulent on Thursday 16th September 16:43

[AcidReflux]

Providing and maintaining social housing costs the local authority considerable amounts of money. If they can offload this housing by selling it to the tenants under carefully-managed conditions then they save themselves money in the long-term while preventing speculators from exploiting the system.

Given their desire to get these residences off their books, the LA must offer discounts to the tenants - many of whom will be on low incomes - in order to make the opportunity feasible and attractive.

Without considering the big picture it's easy to criticise the LA for selling these properties at less than the open market value but I bet this mechanism delivers better value for money to the taxpayers than the alternatives.