House buying / mortgage advice.

[AlexGSi2000]

Morning,

After abit of advice really as I am completely new to house buying / mortgages.

The scenario is, myself and by girlfriend are still living with our own parents - I am 24 and Rachel is 26, I have really wanted to move out for the past year - Rachel much longer as girls tend to flock the nest a lot sooner.

We have been together for 5 years, two years ago we decided it would probably be a good idea if we started putting some money aside for the future.

At this point in time we have enough deposit for a 2/3 bedroom place - originally we have been looking at a modern apartment/flat just outside of Liverpool for around the £80-95k mark.
We have found a few properties that have caught our eye - one in particular stands out, as these apartments where built a few years ago, they are ready to live in (fitted kitchen.etc) with little work.

Our aim is to get ourselves onto the property ladder via an apartment like the one above, live there with minimal outgoings for around 5 years and then move on into a house.

As we are both fairly keen to get ourselves in somewhere soon - I am going to start looking around for mortgages (I'm booking a slot with the adviser at my bank today).

I have a question which I could do with some help on - basically Rachel is currently employed but covering maternity, this cover comes to an end early December - would this hinder our chances of a joint application for a mortgage?
As she will still be working when I go and meet with the mortgage adviser - can I just state that she is employed and leave it at that?
If not - I may take the mortgage out in my name only - can Rachel be added at a later date?

I know I have probably asked a few amateur questions on this! Would appreciate anyone's advice....
Thanks!

 

[danA3T]

I work for myself so needed a self-cert mortgage which are nigh on impossible now. Your girls job may be seen as a temp position which might not be favourable for a new mortgage application.

You can take a mortgage out in your name and get a solicitor to guarantee her share as it were, it's not usually worth the hassle of adding her before remortgaging as this often represents a cost in itself.

I used a broker for my first house and I feel it got me over a lot of the jargon and got me a better deal as a first time buyer.

I was in a similar position as you, went as far as a valuation on a modern flat
(luckily failed due to structural issues) and reviewed my decision and instead went for a house in a not-top-notch area instead. Three years later my house has held more of its value than any of the flats I was considering, so maybe worth factoring this in to your decision.

Good luck.

 

[J_V_DUB]

Prepare yourself for what is probably the most stresfull thing you'll do in your life.

From my experience when I bought my first flat the mortgage advisor wanted 6 months worth of payslips and bank statements as well as proof of the money for the deposit, he sent the paperwork and we were accepted within 5 days, at which point you have a letter that confirms your bank is willing to lend so you can make offers. Factor in all the other costs like solicitors etc. Can run in to thousands sometimes...

Your own bank is good first step but always make sure that you meet up with some independet advisors. When I took my mortgage out I got a good fixed deal with Halifax through the independent advisor, this deal was not available if I'd went directly with the bank. If you only planning on living there for 5 years it might be worth fixing your mortgage for that long as that way you know exactly how much you'll be paying out every month. You need to also weigh the option of a tracker mortgage which might be less or more...

Make sure you've got about £1500-£2000 set aside for anything unexpected, things can go wrong and it's better to be safe than sorry.

 

[jojo]

I'd go with the above, you'll need around a grand for solicitor fee's for your property purchase, there's no stamp duty for your price range, make sure you do all the research regarding buying a flat/apartment. There are usually annual ground rent charges, these vary between £50 to £300(not seen more than £300 in Birmingham city center), and there are annual service & maintenance charges aswell, so make sure you have all these details prior to making your offer.

As for getting the mortgage offer itself, I'm not sure if your other half's position will hinder your application, but what I am sure of is that the more combined income you have, the easier it is to get a mortgage. Banks have a computer system which estimates your cost of living, and it's no good telling them your other half will pay for this and that, they will only lend to you if you are in a comfortable position to make the repayments, so I'd recommend using both incomes, unless your own personal income is quite substantial?

Just remember that flats/apartments you never actually own, they are lease hold, and as future investments, houses are a better proposition, as they are freehold, and more than likely will go up in value quicker than flats/apartments.

 

[StateOfPlay]

Under the new rules, Banks have to make sure you can afford to repay the mortgage in the future.

If you don't tell them she is only employed on a contract, and they do an employer reference and find out, you will be royally screwed.

Best bet is to tell the truth and let them guide you.

 

[superkarl]

move abroad

 

[AlexGSi2000]

Many thanks for the advice - some good points to note there.

My salary can cover the cost of the mortgage, so we may well do that and have a solicitor guarantee Rach's share.
(hah, yes I do trust her...)

I have booked an appointment next week to view some of the properties we like the look of.
Also booked in with mortgage advisers with our local banks to see what they can offer.
Im inclined towards a fixed-rate, as I can only see variables rising over the next 5 years.

 

[_G_]

Money Saving Expert Forum is the best for this. The bigger your deposit the better as well to get the best deals. It would be worth while signing up with Credit Expert or Experian to have an idea of what your credit is like if you have not checked. Adverse credit can go against you as you may know. Sometimes you can add a third person to a mortgage.

We brought a home and I had to sell up. Long hard story but my credit repaired within a year after paying off my mortgage. When I wanted a new home having crashed with my parents for a bit, my mum agreed to put her name on the mortgage so they took her credit rating into account too. This increased my chanced and bam I got the mortgage. Obviously, mums name was not on the legal documents and she didn't want that either.

Let us know how you get on.

 

[Foxmeister]

Dont ever add extra onto yoyr salary, as this is not a consistent allowance and as such, if you base your top mortgage on that, you will be over your budget and in future will cause you problems.

I made the mistake of basing my mortgage on a great contract i had at that specific time, which opened doors for some great properties, and the mrs didnt have to work at the time. Got the mortgage, got the house, and within a few weeks, had to spend around 2G on new boiler, painting decor etc as others have said. Fast forward around 3yrs and my well paid contract came to an end and i went back to a more basic pay and struggled for some time. In the end i lost a job to recession, and nearly lost the house to missed payments etc.

Always forsee what you can comfortably manage from a wage, never top it up to get more. And also consider all the delights that add up every month aswell as the mortgage, like council tax, leccy n gas etc, i had a major shock when these bills started adding up aswell. It is THEE most stressful thing anybody or couple can experience IMO.

But if done wisely, it will be rewarding for you's in many ways.

 

[Ste_Nova]

to add to all that cash is king, turn up at the bank with as much as you can, you shouldn't even be allowed in the morgage section without a years wages in cash

 

[StateOfPlay]

Mortgage advisors have targets. They are not your best mate. They want you to like them so you buy the mortgage, the life cover and the home insurance with them. And if you do, they will get a pat on the back, and you will be paying more than you need to.

The first 5 years are the hardest, so go for a good 5 year fixed rate and you should do well.

Do not buy the insurance with the mortgage, it will be more expensive than you can get it elsewhere. Go online to a price comparison website and get a life cover quote before you go in for your meeting.

Some of the best deals come with a big arrangement fee. For example, the Chelsea B/Soc have a cracking fixed rate of 2.34% for 2 years, but it comes with an arrangement fee of £1895. Shocking! Natwest have a 3.19% deal with no fee.

If you borrow £100k with Chelsea, it will cost approx £2340 in interest. Same with Natwest will cost £3190. The difference in interest over 2 years between them is £1700.

So the Natwest deal is actually cheaper if you are borrowing £100k, than the cracking offer from Chelsea B/Soc. But if you borrow £150k, then the Chelsea deal works out cheaper.

If you don't get a good feeling about the Bank advisers, try John Charcoal, a good online broker.

 

[Gops]

I always wondered what would be a good deposit on a house? Is it 10%?

 

[lgooch]

Some great advice here.

The only advice can give is save like crazy for the biggest deposit you can. It will put you in a better position in terms of LTV and subsequently better deals will be open to you.

Don't be put off by big fees to take a mortgage pit. Do you sums and if you have an iPhone or IPAD get the My Mortgage app. A great tool to compare different mortgages and will put it plain and simple to yo which is the cheapest over a period of time.

5 year fixed is a wise decision if your unsure about future outgoings, however a 3 year deal any be a better proposition. As in 3 years time there could be better deals. There is no right answer to this and you and you only should know what is most suitable for your needs. Clearly discounted trackers are only ever going to go up.

Also be aware of fees if you want to get out of your mortgage, I have been stuck on a 5 yr fixed at 5.75% which has huge fees to buy my way out of it. It was the best deal at the time with I remortgaged and I wanted no sudden increases in payments, however when interest rates dropped to nothing I was paying well over the odds. It cost me 2k to get out of it to go on a 2.1% tracker but I saved this in a matter of no time.

Do not stretch yourself. All the other headaches of owning a home can cost you dearly as others have said. All to often people don't think about the other bills you have which can more than equal if not be more than your prospective mortgage. A good sensible and realistic budget is the key to happiness here. There is nothing worse to me than being asset rich and cash poor which is in essence why this county is goosed.

And don't forget it's only a house. You can always sell it after a few years once on the ladder.

 

[jojo]

I always wondered what would be a good deposit on a house? Is it 10%?

The more deposit, the better naturally Gops.

 

[StateOfPlay]

I always wondered what would be a good deposit on a house? Is it 10%?

10% is a good deposit. You will be able to get a mortgage with that.

The bigger the deposit the better. But 10% is realistic for most people.

 

[AlexGSi2000]

Thanks again for all the advice, I have an update on the current situation;

- We are booked in to see the property at 3.30 this-afternoon, thought I would check back on right-move to have another quick scan through the pictures. There has been a public notice added to the page, with an offer - which obviously means its a repo.

I have no idea how long the public notice has been up there for as I haven't looked at the page in about a week - the property is listed at £89k and the current offer is £84k.

Which really puts us in abit of a predicament - we are going to either have to love the property and do some serious thinking in a short space of time, or agree to forget about it.

I was meeting with the banks early next week, I have called up and can re-arrange appointments for late this week if required.

I am still researching this as I type this out - but I am aware that you can make an offer without having a decision in principal - which I may well do if the property is "perfect" - and it will have to be!

 

[jojo]

Just to let you know that by law, a public notice has to be put up for a minimum of 7 days online before the sale can take place. More than likely, it would require the buyer to purchase within a 4 week timescale. So in your scenario, with you needing a mortgage in place to buy it, there's a high probability they won't accept your offer, unless you are nearing the asking price. Bank usually prefer a quick sale over a higher offer, but need to wait sale from my experience. Make an offer by all means, you have nothing to lose, and worse they can say is 'no' really.

 

[StateOfPlay]

Until you know whether you can get a mortgage it isn't a good idea to make an offer.

Personal opinion.

 

[lgooch]

Agreed. You don't buy a car then go and get a bank loan to to find out you can't afford it.

Get a mortgage offer first for the max they will lend you and then look for a property within your budget without stretching yourself.

I had a young couple view my last house and they fell in love with it right away. When their offer came in it was less than I was expecting. During the negotiations I found out that to mortgage it to my minimum price I was willing to drop to they were borrowing based on bonuses and overtime. I did them a favour and told them I would not sell it to them. This is I'm essence why this country is fubarred financially.

Sold it to the next viewer.

So please have some respect for the seller. They will be excited that they have an offer and will then probably start looking for a new property themselves. For you to possibly come back and tell them you cannot get the finance is very annoying for them. I am sure you would not like it.

It's good etiquette to get a mortgage offer first IMHO.

 

[AlexGSi2000]

In relations to the posts above, we were certain we would get the mortgage as we have been offered mortgages for a much higher value.

After meeting with the bank on Friday the mortgage was agreed up-to our top figure for the flat which was £90k, paperwork submitted, went to the underwriters and has now been pended until / if the offer is accepted.

Well, here is the current predicament;
After placing an offer on Friday with proof of deposit & mortgage paperwork, we had a phone-call back literally around 10 minutes later saying it hasn't been accepted by the re-possessor and they are continuing with the original offer of 84k.
We told them we would call back after discussing amongst ourselves.
We thought it was a pretty quick turnaround time for an offer, but the next day decided to up the offer, which again was "turned down by the re-possessor"

Surely the re-possessor would want as much as possible for the property, we weren't offering stupid figures, it was a few grand above the 84k.
The estate agent wasn't picking up the phone or returning calls in the end!

I have since found out through the grapevine that the people who submitted the original offer of 84k are getting their mortgage through the estate agent - so they will be getting commission for it. - So im pretty sure our offers have fallen on deaf ears and doubt the re-possessor even knows about them.

Not sure where we stand on this one - im tempted to try and seek some legal advice.

 

[jojo]

Not sure where we stand on this one - im tempted to try and seek some legal advice.

There is no law about this in england, they have accepted their offer and refused yours, it's as simple as that. The only way you can gazump the deal is to be in a position to offer a higher price and to complete the contract in a short time scale. I got gazumped yesterday(and for the second time on this specific property), someone upped the offer to £5k more than me, money talks I'm afraid, I'm sure they must have refuse £1-2k above for someone to make an offer above the asking price!

 

[StateOfPlay]

Sounds rough mate, but the thing is that the mortgage company need to sell it asap to stop the borrower incurring more fees and charges. If the other buyer is further along than you, then they will go with them.

Who knows what deals are taking place, the other buyer might be a mate of the agent, but unless you can prove the transaction is fraudulent and report it to the Police, you can't do a lot more. Don't waste any of your hard earned money on legal fees.

 

[StateOfPlay]

Oh, and I forgot to say, a much better property will come along, just be patient.

I have been gazumped, it doesn't feel nice, but every time it went wrong, a better property came along. I have done this 8 times now.

 

[Goner]

Rent with her first for 6 months and see if you can live with each other, staying at each others houses is much different to living with each other 100% of the time and sharing the financial burden a house brings.

I didn't do this and i am now renting a house out which i co own with an ex GF, worst thing I've ever done.

Roll on June 2013 when the fixed rate deal is up and there are no penalties to repay the mortgage!

 

[MartayMcFly]

Just remember that flats/apartments you never actually own, they are lease hold, and as future investments, houses are a better proposition, as they are freehold, and more than likely will go up in value quicker than flats/apartments.

My flat is freehold.

OP - get the mortgage on your own and add her later, a temp job won't help your application at all (might even increase your rate). As for mortgage deposit, it's probably different in England vs Scotland, but you can only get a mortgage based on the property value so you have to pay anything you bid over the value upfront. Different mortgages and rates depend on your deposit, but I think there are new builds being offered with 95% mortgage deals. Put down as small a deposit as you can to get the rate you want, and don't bother with odd figures - a 13% deposit won't help you as much as a 10% deposit and £3k cash (for example), but a 15% is better than a 10%, 25% better than a 15% etc etc.

 

[AlexGSi2000]

There is no law about this in england, they have accepted their offer and refused yours, it's as simple as that.

I'm pretty sure think the bank / people in current possession even know about our offers.
The "source" that told me has said the offer I placed has not appeared on the system at the estate agents.

 

[the_cueball]

Rent with her first for 6 months and see if you can live with each other, staying at each others houses is much different to living with each other 100% of the time and sharing the financial burden a house brings.

Can't agree with this more! Been there and done that twice.... saved me twice!

Could save a lot of time and hassle...

On another note, there are a lot of people who are starting to talk about house prices needing to come down... and *most* people that I am talking with are looking at the prices falling about 30-40% over the next decade...

This really has to happen at some point, as the property market in the UK has always been grossly overvalued, and we need to get serious, honest about the value of such things and lower the costs....

Maybe something to take on board...

 

[Goner]

Can't agree with this more! Been there and done that twice.... saved me twice!

Could save a lot of time and hassle...

Wish i'd of done that when i bought my house, i bought into the 'renting is dead money' idea, i should of rented first then i'd known the person i was moving in with was a complete ****.

Would of saved me literally 1000's and i do mean 1000's, still paying for the mistake now as i contribute to the mortgage after my bro pays me rent for the house each month.

 

[jojo]

My flat is freehold.

I need to rephrase my quote to most flats are leasehold! lol

 

[SootySport]

Good luck on the house/flat hunting mate, yes it is Frustrating, Expensive, Time consuming. Add to that no more fancy cars for you now. On the plus side £89k. is cheap for a decent flat, wouldn't find anything like that down here.

 

[lgooch]

Yep. Plenty more properties out there. Just move on and don't waste your time. You will be in a strong position being a FTB with an approved mortgage offer.

IMHO, estate agents are the scurge of the earth. They are after one thing and one thing only. Their cut ! They did sweet FA for me when I sold my last gaff. It absolutely killed me handing them £ 2.5k to print off some photos and whack in their window as marketing my property.

In the end the person who bought my property was a passer by. I often think you wold be better sticking your own for sale sign up in your garden.

Put yourself in their position. 1.5% of 84k vs 1.5% of 86k the difference is next to nothing. Sounds like the current buyer is further down the process than you and they simply want the cash ASAP.

Anyways rant over. Good luck to the OP.