Any single peeps got a mortgage lately?

Discussion in 'General Chat' started by domtheone, Mar 28, 2006.

  1. domtheone

    domtheone
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    As the title suggests. Anyone single managed to get on the property ladder in recent times. After renting for going on 2 years i'm fed up (still fed up with house prices though:( ) and am thinking about buying my first house.

    Trouble is, I earn only an average wage so even a house costing say, 115K and putting down 15K deposit (which I have) would leave a multiple significantly about the traditional 3-3.5 times than what is normally borrowed.

    Doing a few checks with various online calculators I could just about afford the repayments on a normal repayment mortgage (easily on intreest only mortgages) as there would not be much difference to the rent that I pay at the moment each month (circa £500).

    I have a fairly decent 5 figure amount is savings (tied up in Prem Bonds, cash and Shares - all doing fairly well at the mo especially my shares) and am a little reluctant to cash that in just to help me get a mortgage. Obivously I will have to use some of it for a deposit but to use the rest of my assets on a mortgage..well, am a little reluctant.:rolleyes:

    Basically, has anyone single (or couples as long as the'yre not earning huge sums as it's pretty easy to manage then as long as you've not got a huge mortgage) managed to get a mortgage which is equivalent to a high multiple of their salary due to various circumstances.

    Thanks for reading:smashin:
     
  2. sbowler

    sbowler
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    Are the quotes you have had for 25yrs, you could always try extending the term of the loan to 30yrs, this will reduce your payments.
     
  3. domtheone

    domtheone
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    Aye i've thought about that. 25 years was what I put in.

    Trouble is, I was 33 on Saturday:blush: (though that appears to be the average age now for first timers) so a 30 year would take me into the 60's:eek:
     
  4. nokiauk

    nokiauk
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    try northern rock, they seem good for 1st timers and can offer a non-secured loan if req'd at the same rate as the mortgage.

    i got 3.5 x salary to fund my house with a 10k deposit (to keep the rate down) no problem. That was a 25 year repayment mortgage.
     
  5. RustyZip

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    A lot of people these days, instead of renting, are having an interest-only mortgage (while putting down a deposit)...

    That way, its like your still renting, but when you up-sticks and move, you gain the extra equity the house has gained..
    So if five years ago, you bought for £100K and sold now for £120K, you pocket the 20 grand... Gotta be better than piddling the rent down the drain..
     
  6. domtheone

    domtheone
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    Zip. That is one option that I will be exploring for sure.:smashin:

    Nokia, 3.5K is pretty useless in my position and hundreds of thousands of others unfortunatley.

    Take the average single persons wage, 23k or something. Average house price, 150kish, probably more.

    Many more multiples than 3.5k unfortunately:(

    In this day and age, only higher earners (say 40k +++) and couples (both earning) can afford a reasonable home.

    Most others are severly compromised.

    I'd like to see how most poeple react if they could see how much we pay for bricks and mortar in this country in comparison to many other countries in the western world:rolleyes:

    Even allowing for average earnings and such it's absolutely shocking to see how we, as a nation, value our homes.:rolleyes:

    Personally I think it's absolutely, unbelievably, and stupidly daft, but i'm just bitter:rotfl:
     
  7. Woodywizz

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    Unfortunately, yours is a common situation amongst many single people. Many lenders traditionally use the 3.5 or 3.75 or 4* income multiplier, and this does not help anymore. As a bank manager - if you are looking at getting on to the property ladder - then I would certainly suggest interest-only; it is certainly better than throwing money down the drain renting, and any mortgage lender will let you switch between interest only and capital repayment at any time. With regard to actually securing a mortgage amount which is sufficient enough to enable you to buy a decent property in a decent area, have you tried a self-cert mortgage - effectively where you state what your income is. If you need any assistance then I have plenty of contacts who are mortgage brokers, who will be able to help - if you want some help then PM me.
     
  8. domtheone

    domtheone
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    OK woody thanks for that and the offer.

    I'm lining up a couple of meetings myself over the next week or 2. I'm definately going to examine more closely the Interest Only route as this may well turn out to be the only option available.

    You say it is better than renting but I assume that that statement only applies if their is capital growth in the value of one's house.

    Say (for arguments sake) their is no capital growth for 10 years and you sell your home. Then it's simply a case of how much you've spent on Rent against how much you've spent on Interest Repayment.

    Is that right.:rolleyes:

    If so, I think I could get circa 100k on interest only for a tad less than the rent i'm paying at the mo. With the added benefit of possibly some capital growth (though only long term as I don't see much appreciation for several years due to the sky high ballisticly crazy nature of house prices at the mo).

    Apart from a crash and negitive equity it seems like Interest only is a no branier to renting:)
     
  9. Woodywizz

    Woodywizz
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    Interest only is definitely a 'no-brainer', as a rough calculation then I think you are right that 100k will cost circa 500 quid or less per month. Yes, there is always the danger of negative equity, but this can happen with capital repayment mortgages - where the amount of capital you pay off during the start of the mortgage is nominal. If this is a concern to you then you could always consider a part&part mortgage with part on capital repayment and the other on interest only. At the end of the day, you will be in a property that is yours and noone elses, and that is a great feeling. Avoid negative equity by buying wisely in an up-and-coming area, with good schools. Who knows, in 10 years your property may double in price...it may also not, but bricks and mortar is always a good investment if done wisely.
     
  10. LFCRules

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    :D This is always one of my arguments for not buying a property, coz it ain't yours, it's your mortgage providers property until you pay it off, in 25 to 30 years. And that will extend as you move properties, remortgaging, upgrading, live with someone, get married, etc..... If you dont pay rent, you get kicked out, if you don't pay your mortgage, you get kicked out, same difference :D

    To be serious for a second, I'm actually in the same position, at the same age. I nearly bought about 5.5 years ago, but didn't coz I moved jobs from Birmingham to Edinburgh. Then got settled in Edinburgh, thinking of buying, but was forced to move from Edinburgh to the Portsmouth to keep a job. Now settled in again, but my job security is hanging by a thread, so I could be forced to move again. But when and if I do, this interest only mortgage seems the way to go for me also. Great advice Matt, a lot better than mine above :rolleyes:

    Cheers

    Andy
     
  11. UrbanT

    UrbanT
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    Woody, as a Bank Manager, I'm amazed you would suggest a self-certified mortgage to this guy. Self-certified is a means to an end...the last option if you like. I can't see anything that Dom has typed that would lead you to a self-certified conclusion?

    Dom, many of the lender claculators are out of date, or inaccurate. With the deposit you have, you may be surprised to learn that many of the High Street lenders can lend in excess of 4.5x your salary, at the same standard rates offered to all customers. Some may even take into account some of the investment income you appear to receive. You just need to know which lenders to approach.

    If the first thing a broker advised was self-certified, I would be heading for the door.

    To qualify my opinions, I'm an ex-bank manager myself, and have been directly involved in the independent mortgage industry for 13 years
     
  12. pringtef

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    Got myself a 30 year mortgage, and mine takes me till i'm 65, which fits in with retirement just perfectly.

    Truth be told i've as much bought a place to be my main investment, since pensions just don't seem to be giving the return anymore. Area i'm in in Edinburgh is doing well, and i know that the money's going into something i will be able to get a return on as opposed to someone elses pocket.

    Plan to rent it out next year when i go over to nz/oz. When the time comes i'll cash it in and use the equity to buy a place outright over there.
     
  13. mason

    mason
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    for me, interest only is the way to go also and depending on your job etc it could be the bet way for you to go also.

    I mean- I earn a decent salary but I also earn a decent bonus and dividends from two of my other companies- I will therefore use the bonuses and dividends to repay the capital part of the borrowings.

    Its amazing how much lenders will give you just now. They appear to be throwing money at folk. I have just been offered a mortgage for my new house at a rate of 4.39%!!!!!!:eek: Superb rate- fixed for two years.

    Someone mentioned the Northern Rock earlier in the thread- what an offer they have. They will give you 100% of the purchase price AND up to a 25% secured loan over the same term as the main mortgage!! Could you imagine the problems they would have trying to recoup their money should you default on the payments etc!
     
  14. pringtef

    pringtef
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    One option, which can save you a shechtload of money, though higher risk is to take a lower mortgage with the bank and use credit card shuffling for payment of the excess. Start it off with one (or more) of the cards that allows a super balance transfer at 0% for a period, then shuffle it onto another card a month before the offer expires.Think there's mention of it at moneysavingexpert.com

    Takes a bit more effort, but 0% and low lifetime rate balance transfers can save you a fortune.
     
  15. UrbanT

    UrbanT
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    This is the Nationwide I assume? Another example of a lender who is now offering more to their customers. Just this week, they increased their affordability model to allow single applicants to borrow up to 23% extra :)
     
  16. Johan

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    Hi there,

    Another option you could explore if you can’t raise enough money for a property where you live / work is to buy something where you can afford it (ideally an up and coming area, do your research on it) and rent that out. It should cover your mortgage payments and sometimes a bit more and provide you with the foot on the property ladder. Student flats or property for young professionals is your best bet because they form the biggest renters market.
    Good luck

    Johan
     
  17. giger

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    Dom - I feel for ya buddy. I've had my first home a couple of years, it was just affordable for me at the time but now i'd struggle to afford if buying again myself at the price it's currently worth.

    I would also recommend the advice of others - go for interest only. Stick as bigger deposit in as you can afford (keeping enough back to cover say 3-6 months of bills + emergencies etc) Keep saving any money you have spare each month or every other month. Maybe look at a 30 year term also to begin with. When you remortgage after a few years you can always re-evaluate and then go for a shorter term or full repayment mortgage when the time is right.
     
  18. rwmwg

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    I was with Northern Rock and they were excellent, I only moved because Scarborough BS was offering an unbeatable package.

    I managed to get my first house by getting a 125% mortgage and a hefty deposit, all the houses I looked at within the lower borrrowing rate were right dumps or in areas I wouldnt set a dog loose...

    Rob
     
  19. Woodywizz

    Woodywizz
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    I was suggesting self-cert because Dom himself stated he was on an average wage (23k), that average houses were 150k, and that he had a 15k deposit; therefore requiring a mortgage of 135k - meaning you would need a mortgage lender prepared to offer nearly 6 times salary. If you can suggest a high street lender that is - on a conventional mortgage - prepared to offer this multiplier then I would be interested to hear. Yes enhanced multipliers are offered by some lenders, these tend to be offered to professionals - eg doctors, solicitors, etc. Self-cert is obviously a means to an end, but if that is the only means you can use to secure a decent home in a decent area then that is the means which many people have to use. Self-certs have had a bad press over the years but - any decent broker or bank manager - would always advise a client to ensure that they can afford to service the mortgage and always to ensure that adequate protection policies are in place to cover the mortgage in the event of unemployment, sickness, death.
     
  20. UrbanT

    UrbanT
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    Woody, this is interesting. I'd be interested in your thoughts on how a self-certified mortgage is going to help Dom? Do you think a self-certified lender is going to give him £135000 based upon his income? If not, what income are you suggesting he writes on the form?

    I'm sorry if I appear questioning, but I'm not sure you are up to date on how self-cerified mortgages work.
     
  21. Woodywizz

    Woodywizz
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    Don't apolgise about being questioning, I am simply basing my opinions on clients whom I have passed on to mortgage brokers when my institution could not help. I will speak to one of my broker contacts and revert back once I have the definitive run-down on self-certs.

    In answer to my question, which main lenders will use more than 4* salary multiplier???
     
  22. UrbanT

    UrbanT
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    Woody, I appreciate your honesty that you are not fully aware of how self-certs work. I'd like to explain briefly on the thread, to ensure anyone reading is clear.

    The idea of a self-certified mortgage is that the lender simply does not check the income you state on an application form. It is designed for clients who may have difficult to prove income, or income from several sources. A typical example is a hairdresser who may receive a large amount of tips and not wish to declare all of them. Or a taxi driver who may be in the same position.

    The clients true income is written on the form. Now for the examples above, if they are ever investigated by the Inland Revenue, they could be in trouble for not declaring all of their income. But that is a tax issue, and not related to the mortgage (as long as the client is made aware of this possibility).

    Where this system is mainly abused, is with employed applicants. Dom earns a set salary, and this must be written on the form. If anything, in general, the income multiples/affordability calculations on self-certs are tighter than standard status mortgages as the risk of lending is higher to the mortgage company. So the only way a self-cert mortgage will help Dom is if he, or the broker, writes a much higher income on the application than he is actually earning.

    And theres the problem. Its financial fraud, and in the worst case could lead to the broker and/or the applicant facing a jail sentence.

    Due to the serious nature of the crime involved, I always question anything on the forum when I see self-cert mentioned, as its to widely misunderstood, to often abused, and the potential penalties are huge.

    I hope this helps.

    As for lenders offering over 4x? for the right applicant with good credit history, Nationwide, Alliance & Leicester, Abbey, Halifax...and best of all, Cheltenham & Gloucester. If C&G are happy with an application, they have been known to agree in excess of 5x salary based on their affordability model.
     
  23. domtheone

    domtheone
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    Thanks for all the posts guys. Interesting stuff:smashin:

    The numbers mentioned here and there are pretty close to the mark.

    Have seen some houses (I look on Rightmove quite a bit and i've saved about 8 that I like the look of. (though they'll all of probably sold by the time I get round to doing it:rolleyes:)

    All of them are between 110 and 135K so far.

    Taking an average of say 125k. fair chance of getting a discount these days if im lucky. Say 120K and I could put down a 15K hell even 20K deposit leaving approx 100K to borrow. That's almost 5 times my wage so it seems that it's not beyond the relms of possibility.

    My credit history is spotless. I'm very sensible with cash, always have been. If my repayments on an interest only are not much above my rent (500) then along with other bills and stuff to pay then i'm still left with enough cash to live on. Putting 20k down still leaves me with enough cash;) for a rain day, some holidays and the usual stuff to fit in my new house. Plasma/LCD screen, upgraded amp, speakers etc etc. Hell if I could find the right house I could convert a bedroom/loft to a dedicated home cinema room.

    How cool would that be:D :D
     
  24. UrbanT

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    If you were looking for a mortgage of £100k, based on a salary of £23k, with no debt in the background, then its 4.3x which should be simple to obtain providing you choose the right lender :)

    Best of luck with your plans.
     
  25. Johan

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    The self certified mortgage I took out before was up to max 75% of the value of the property so had to put down at least 25%. Think most are like that reason being that if you can’t keep up the payments the lender money is fairly save. As said before you still need to put down your earnings figure and sign that this is a true statement so might catch up with you if you decide to “improve “ your earnings a bit. In the BBC Whistleblower estate agent program one mortgage broker suggested falsifying the applicant’s earnings to be able to buy a property, so there are always less scrupulous brokers out there.

    Greetings

    Johan
     
  26. domtheone

    domtheone
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    1st visit to the C&G been and gone.

    They offered me significantly less than 100K which is what I want.

    No matter what Deposit I put down, wether it be 5K or 25K (or 5% - 20%) they wouldn't budge.

    A bad start I feel and i'm pretty p*ssed of right now.

    Repayments on an Interest only started at around £270 a month for borrowings of around £80K ish. £225 less than what I pay for rent at the moment ***. Based on that, 100K could be less than £400.

    They said it was a mixture of affordability as well as multiple of salary but it still appears that the multiple of salary is a big problem.

    Next stop is the A&L on Tuesday:rolleyes:
     
  27. UrbanT

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  28. domtheone

    domtheone
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    How can I be going about in the wrong way:eek:

    I havn't done anything yet apart from visit the C&G to speak to an awfully attractive woman:D who unfortunately didn't provide me the answers I was lookng for:(

    edit: 98K says the A&L
     
  29. booyaka

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    I would suggest, if possible, seeking the advise of a mortgage broker/IFA. This will not them limit you to just the individual banks lending criteria. They will be able to search a huge number of lenders to find you the best deal to potentially suit your circumstances.

    This will not then limit you as to one lenders income multiplyer and may open up other avenues with regards your larger deposit etc.
     
  30. m40wen

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    There is always 'non-status' mortageges which while being more expensive, you do not have to declare your income.
     

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