Moving out - mortgage - help needed

[Londonboy]

Ok i work and live in London, im 24 and im finally flying the nest (well actually im slowly gettin pushed) I dont want to move out of my area which is west london \surrey areas.
Ive come to the conclusion that renting is just paying off some fat greedy landlord so want to skip that route and go straight into the serious stuff.
I planning to move out with my best mate of 13 years so were going to need a 2 bedroom house \flat. The only problem being that the average 2 bedroom place around here is 170k +

So what the heck are our chances considering -
applicant A (moi) £20000pa, 6k debts (2k savings)
applicant b £20000pa, 3k debts (4k savings)

Ive recently got a book called first time buyers but its not looking pretty at the moment. I was hoping to get 95-100% mortgage but heard it may be quite expensive on interest rates. Aghh any mortgage buffs out there
(ps i do realise i would probably be better off talking to a mortgage advisor but i thought i would get a general opinion first, oh and no funny comments about my pittance earnings :p )

[budda]

They wont give you that much, not unless you are lucky (or unlucky) enough to get a bank (or loan shark) who will loan you both 3 times your income.

Why have you savings and debt? You'd be much better off paying off the debt.

[Londonboy]

firstly - how did i miss "home, law and money" board doh.

secondly bud, savings were for a deposit, holiday maybe to one day pay off debts. Its nicer than just paying off the debt.

It really seems sad that in these days its almost impossible to move out on your own let alone with a mate. I work in the city in a professional job and still earn rubbish money. I wonder how the government are going to deal with this problem in 5-6 years time with more people needing housing and unemployment up. Recession is comin i tells ya!

[budda]

You can move out, you just cant buy anywhere, thats all. There isnt a lack of housing, there's just a lack of banks ready to lend you the money to buy one.

[Fiend_85]

Is it possible to get a split mortgage? So that you'd buy half the value of the flat, and your mate buys half the value, so that you in fact have two mortgages between you rather than two of you buying one?

[budda]

Is it possible to get a split mortgage? So that you'd buy half the value of the flat, and your mate buys half the value, so that you in fact have two mortgages between you rather than two of you buying one?

Its too risky for the banks, I doubt any of the big lenders would touch them with a barge pole.

Its odd really, the French dont go in for this house buying thing like we do, most people in paris rent, yet we must have our own patch of land.

[Fiend_85]

Was just thinking, my dad did it with my sister for her current place.

[Londonboy]

hmm good idea fiend. I will look into that. Just checked out FSA website and it looks as tho my best bet is t speak to a independant financial advisor.

I think if you think about it bud we all need an investment in our lives. Unfortunetly my mum doesnt associate with her family so she never had the chance to have an inheritence and my mum lives in a council flat so i wont get anything. The whole idea is for you to be sitting on an nest egg either for your retirement or for your kids. Renting to me is just paying someone elses mortgage.

[Kermit]

To be quite honest, no, they will not lend you £165,000 on that sort of income. Even if your parents act as guarantor- assuming they have good income and good equity. In your case it sounds like they don't. We have a combined income of slightly less than what you have, and the maximum we were loaned was £95,000.

There are plenty of places to buy, that are affordable. But as you don't want to leave Surrey, which is the most expensive place in the country to buy property, you're a bit stuck really.

I don't think you would get a mortgage, and if you do, you will be paying a gigantic interest rate.

[Kermit]

Is it possible to get a split mortgage? So that you'd buy half the value of the flat, and your mate buys half the value, so that you in fact have two mortgages between you rather than two of you buying one?

Nope.

Banks loan against equity, and against income.

A split mortgage like that would seriously reduce the equity, and seriously increase the risk.

[Wyetry]

There are plenty of places to buy, that are affordable. But as you don't want to leave Surrey, which is the most expensive place in the country to buy property, you're a bit stuck really.


I heard a rumor that Pool in Dorset was actually the most expensive place to buy a house - however I still maintain that belgravia probably tops that.

However its not just that he doesn't want to leave surrey there are hardly any flats to buy in london for under £100K and where they are they are normally either retirement flats or studios - neither of which you could feesably live in as 2 young adults.

[budda]

I heard a rumor that Pool in Dorset was actually the most expensive place to buy a house - however I still maintain that belgravia probably tops that.

Its a small strip by Poole on the ocean, it has the highest average prices of anywhere in the UK, but its quite small.

[Fiend_85]

Nope.

Banks loan against equity, and against income.

A split mortgage like that would seriously reduce the equity, and seriously increase the risk.
I have NO idea what you just said.

[Wyetry]

Its a small strip by Poole on the ocean, it has the highest average prices of anywhere in the UK, but its quite small.

I've sailed past it (the small strip) and its OK but i cant' really see the attraction with it - there must be more beautiful places to live in the UK - or maybe i always go on cloudy depressing days.....

[manickev]

I have NO idea what you just said.

Equity is basically the stake in the house that you own. If the bank are going to give you a mortgage, they expect the stake (equity) to cover the amount you borrow should you not be able to pay it back. They won't consider giving you the mortgage if your combined equity and income give them no signs of confidence that you could actually pay it back.

[spanner]

The area in Poole is called Sandbanks. You have the harbour on one side and the beach on the other - amazing views but the houses are a nasty collection of overly-designed 60's throwbacks :yuck:

Anyhow, back to the mortagage business. Have you considered a shared ownership scheme where you buy part of the house and rent the rest? My friend's just going into this with her boyf - both have irregular jobs so it's hard to prove income etc. OK, you're only buying half the place,. but it's a good start and better than paying all mortagage.

here's some more info for you (http://www.housingcorp.gov.uk/yourhome/shared.htm)

It might be worth you looking at some mortgage calculators too:

Guardian one (http://money.guardian.co.uk/calculator/form/0,1456,603156,00.html)

And finally, Theite's got some good, basic info on buying you first place:

Buying a place (http://www.thesite.org/homelawandmoney/home/buying)

Hope this helps - good luck!

[manickev]

I found shared ownership to be an extremely expensive option.

In addition to a pretty hefty mortgage, you then have to pay rent on top. I found that if you could afford a property on shared ownership, then you should also be able to afford to pay the full amount (mortgage + rent) and get a better straight repayment mortgage.

They don't really save you much in the long run, and you have got the downside of not fully owning your property.

[spanner]

I understand what you're saying, but for people who can't get a big enough mortgage for anything in the area they live it can be a good option. Admittedly you don't all of it but it's a stepping stone. If you really can't get the mortgage, at least you are putting something towards your future. But as with any house buying, it's the biggest thing you'll ever purchase, so it has to feel right for you.

[stargalaxy]

I do wonder - how many people in London can actually afford to buy their own homes? I have a friend who lives in Camden with her sister at the moment, and they say there's absolutely no chance they could buy, and both are on incomes of over £30k a year. London is increasingly becoming a millionaires city, I feel. Is London richer or poorer for it? :(

Anyway, good luck to you with trying to find a solution.

[budda]

I do wonder - how many people in London can actually afford to buy their own homes? I have a friend who lives in Camden with her sister at the moment, and they say there's absolutely no chance they could buy, and both are on incomes of over £30k a year. London is increasingly becoming a millionaires city, I feel. Is London richer or poorer for it? :(

Anyway, good luck to you with trying to find a solution.

People can always rent, there are lots of places you can rent in London for not a massive amount, you just cant buy, its not the end of the World or anything.

[carrot12]

I was reading something in the Times the other day which said the average deposit in the UK for a first time buyer is now £23,000 - £24,000 and I still haven't prized my chin out of the floor...

(I hope I dreamed it, actually)