# Jumping On The Property Ladder



## RandomlySet (Jul 10, 2007)

Ok, so my mother told me about a month or so ago, I have 2 years to get my own place.... So best get cracking....

She mentioned the house at the back of our house. 2 up 2 down, at the end of a terrace, and a driveway (like I have now at the parent). Apparently it's up for £69k.... 

As she said, the mortage on that would probably be cheaper than renting.... So, how do I go about it? What kind of deals are there? I remember about 5+ years ago you could buy a house with a £99 deposit.... That's a key thing, I don't really have much saved.... Also, could a mortgage be used to pay current debts (not much, about £5k, if that)

Help and advice would be much appreciated

Mat


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## lee. (Jan 16, 2008)

Deposit 10% minimum

Cant borrow anymore than 90% so won't manage to borrow additional funds to clear debts.

All very tight at the moment.


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## ryanuk (Jun 22, 2007)

we were told we needed a 20% deposit when we were looking.

so we just rented in the end.


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## lee. (Jan 16, 2008)

ryanuk said:


> we were told we needed a 20% deposit when we were looking.
> 
> so we just rented in the end.


Depends on the type of mortgage you look at. If you can afford 20% you will get better deals on your mortgage cause you are considered a lesser rusk but 90% mortgages are available.


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## dooka (Aug 1, 2006)

I think it also depends on the amount borrowed, 70k isn't a lot to banks, so you may have a chance of getting a 100% mortgage, worth asking the banks..

maybe buy it, rent it out for two years, then move in..

They reckon property will double again in the next 20 years, well so I have heard..

70k seems very cheap for a house, although I brought my first house for 38k, many moons ago, can't see houses being at those prices again..


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## amiller (Jan 1, 2009)

Pretty much 20% deposit needed for any chance of a decent mortgage rate.

Some times it can work out cheaper to get a loan for the deposit and a mortgage for the 80% rest.


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## lee. (Jan 16, 2008)

Mat,

Going on the 70k with a 10% deposit I rekon you will be looking at around £400 pm for a repayment mortgage over 25 years.


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## lee. (Jan 16, 2008)

amiller said:


> Pretty much 20% deposit needed for any chance of a decent mortgage rate.
> 
> Some times it can work out cheaper to get a loan for the deposit and a mortgage for the 80% rest.


Very true,

The deals are much better if you can get 20%, might be worth looking into this.


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## Ronnie (Nov 15, 2006)

prices now are great it is bargin basement time also try the banks and local auctioneers for any repo's as they are also a good bargin SOMETIMES!!! but be careful. I would say take as little out as possible as interest rates will rise and it over 25+ years £5k repaid is £9kgood luck house hunting!!


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## RandomlySet (Jul 10, 2007)

Had a feeling would be a 10% deposit. People I know who have purchased have always put down 10%, but I wasn't aware that this was a minimum.



qstix said:


> I think it also depends on the amount borrowed, 70k isn't a lot to banks, so you may have a chance of getting a 100% mortgage, worth asking the banks..
> 
> *maybe buy it, rent it out for two years, then move in..*
> 
> ...


Sounds like an idea worth thinking about



lee. said:


> Mat,
> 
> Going on the 70k with a 10% deposit I rekon you will be looking at around £400 pm for a repayment mortgage over 25 years.


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## Dipesh (Oct 12, 2007)

It is difficult mate. I too am looking to get on the Market but I need to get atleast 10% and it's pretty hard to save!!


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## RandomlySet (Jul 10, 2007)

damn right.... especially when I'm tryin to save at same time for hyrbid :lol:


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## zetec_paul (Oct 24, 2008)

Go and see a local independant mortgage adviser


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## PaulN (Jan 17, 2008)

qstix said:


> They reckon property will double again in the next 20 years, well so I have heard..


20 Years......... Id say it would be quicker than that when you look how prices shot up 10 years ago.


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## mattsbmw (Jul 20, 2008)

You will need 10% minimum to get a mortgage.

Or get some one to buy it and rent it back to you with the possibility of buying back at some future point


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## kh904 (Dec 18, 2006)

I'm currently looking to jump on the property ladder!
Unfortunately, living in London prices are nothing like what you are mentioning.

Banks are looking for around 10% deposit, but if you can put down around 20% then you get better rates..
Also take into account that interests rates are not going to stay this long for ever!

I know what I want, researched, taken my time (i don't have a deadline forcing my hand), and quite realistic in what i can afford -nothing flash and too fancy!
I've currently have enough saved to put down around a 30% deposit.

Hold off until after the general election as the economy will wobble a bit, and we start to see the real effects of the recession.
Value a place at what you think it's worth, not what the market/estate agents thinks it's worth! 
ie if the market thinks a Mars bar is worth £50, I wouldn't buy it at that price, even if all the shops value it at £50.
Remember you are committing yourself financially for a good chunk of your life, and the housing market is just a pyramid scheme, which I will predict to collapse/fall again (not to far the future).

After all the hassle of buying a place, you don't actually own it!!! 

;-)


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## Swanny_UK (Sep 12, 2006)

kh904 said:


> After all the hassle of buying a place, you don't actually own it!!!


 Aye something to remember is that until you've paid it off, the bank owns it - the mortgage is a loan secured on your property.

Deposits seem to be key here. The banks want to know that your able to, both from an earning, and self discipline perspective, to allocate a certain (large) chunk of your income to your responsibilities. To them your simply an investment, and you have to prove yourself to them. Unfortunately even having a superb confirmed credit rating doesn't give you much of a positive impact (just not a negative one)

I've recently saved enough for around a 10% deposit, but because the banks are still essentially taking the p*ss (they lose billions, and _were_ the ones that aren't trustworthy?) I've decided to keep saving a large chunk of my income until I can get a good 15% deposit with enough for fee's and basic furniture and white goods. I also plan on getting a mortgage over perhaps 30/35 years. People will say 'ah - but you pay much more interest', yes - I reply, but I plan on progressing in my career!'. I plan on re-mortgaging if/when my partner moves in, once she has a career, and getting it paid off as soon as possible. However I live in an area which has a considerably lower housing price than the national average, yet is still low crime, and relatively nice, and close to some very affluent areas - so I consider myself lucky.

To the OP - my opinion is that you're quite lucky with the local housing prices, so I'd knuckle down and save as much as is reasonable each month, don't throw money away, and use what time your Mum has given you to get the cash together for a property like you mentioned, and make the biggest deposit you can.


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## kh904 (Dec 18, 2006)

Swanny_UK said:


> Aye something to remember is that until you've paid it off, the bank owns it - the mortgage is a loan secured on your property.


Iirc you actually don't own the home even if you paid off the mortgage! If i remember correctly, all you are paying for is the transfer of the deed which means you are the custodian.
Similar to your car - It's not you property


Once the car is registered to the DVLA, it's the property of the GOVERNMENT!!! That's why it can be crushed if it has no road tax etc.
You are just the registered keeper.

Oh, and anyone who's registered their children's birth, they've handed over their children to the state, while creating a legal entity (the PERSON) which is the child's name in capital letters


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## A210 AMG (Nov 8, 2008)

Buying a house will be one of the best moves hopefully you do.

I bought young and did the house up, sold made a profit, moved to another house that needed doing up and have done three or more times now. Made huge amounts of money that saving would never manage.

Different times now though, although 70K for a house is a cheap house these days. 

You have to cut back serioulsy, nice car, games, gadgets etc have to all go on standby for a while. I ditched my almost new Golf Gti at the time and bought a cheaper car (a 2nd hand Mx5) people actually thought I had gone 'up' in the car world but actually I was saving a fortune.

If your handy then look for something that needs work. Kitchens, bathrooms and decorating is easy, just needs time.

I think that you can even get 30 / 35 year mortgages now (now I would not want this myself I understand that everyones different and obvioulsy your mortage will be less per month.....but more over the period of the loan).


Your best bet would be to go to the agents where the house is for sale @ £70k and ask could you speak to their mortgage adviser. He / she will run though the costs with you and although they generally only offer certain mortgages at least you get an idea of what it will all cost. More importantly this advice is free.


Just be careful if you choose 30 / 35 year deal as its good now and as you earn more you will then pay more off etc.... You will get use to spending what you earn. I'm trying to pay more per month so my mortage term is reduced, a little overpayment makes a huge difference.


Good luck


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## JCW85 (Oct 29, 2009)

Useful thread - I'm on the market for a property too and hopefully got my eye set on one but thats another story.

Personally Mat I would try to pay off your 5k debt otherwise it will make living very starined with having to make mortgage and loan repayments (plus council tax, insurance, utilities, food etc)

The few places I've looked insist on a 10% deposit, unless you can get the Builder to pay this. I even looked at increasing the deposit but made no difference to the interest rate?

Keep us updated with how it goes :thumb:

Chris


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## mba (Jun 17, 2006)

If you are looking at BUy to Let mortgages you need at least 25% iirc


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## Spuffington (Jan 26, 2009)

A few additional comments to this - some interesting points made thus far:-

Firstly, if you were to buy then rent it out for two years, it will be considered a "Buy to Let" which, as post above, requires a minimum deposit of 25% and you will have to demonstrate you have sufficient 'rental cover' which is cash you have which can cover the mortgage (sometimes several times over) in the event that you are unable to rent the property. It's considered a far more risky profile than an owner-occupier - for good reason.

In terms of the property market - yes it will increase over time but we won't see anything like the same rate of price increases as we saw in the lead-up to the credit crunch (i.e. anything like the rate over the last 10 years). This was all fuelled by exactly the cheap credit which fuelled the credit crunch and the banks falling over - the two are intrinsically linked. Anyone who touts the line about the banks being to blame forgets that the banks were responding to supply & demand - the public were demanding cheap credit - the banks were supplying it. The housing market was booming - more people Buy-to-Let ting and more people flipping properties, making money from it, was fuelling the boom, and ultimately the size of the bust.

Yes, property will increase over time, but don't bet on huge rises for at least another ten years. There will also be busts again - maybe bigger, maybe smaller. But as sure as eggs is eggs, there will be.

Unless you can judge the property market perfectly - doing up, selling on and making a profit will mostly be at the vagueries of the property market unless you can judge an area right, keep to a tight budget and you have no problem selling up every few years.

Just like any investment - a house should be viewed as a 5-year plus commitment. Current interest rates are VERY low and they will not stay this low forever. A sensible thing to do when you take out your mortgage is to 'sensitise' your income for interest rate increases - say up to 2.5% more than you are currently paying. If you can't afford that, then it's not going to take long for you to be 'under water' if inflation pushes interest rates a few notches higher.

DO NOT buy based on what you can afford on today's rates.

Remember also, you will need to factor in stamp duty, solicitors fees, buildings & contents insurance and life insurance, which can take a huge chunk out of your deposit.

Good luck and happy hunting. :thumb:


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## Silver R26 (Jul 19, 2008)

JCW85 said:


> The few places I've looked insist on a 10% deposit, unless you can get the Builder to pay this. I even looked at increasing the deposit but made no difference to the interest rate?
> 
> Chris


A higher deposit certainly decreases the interest rate, I am looking to remortgage and my financial advisor who I have used a few times said to get a good deal with a reasonable interest rate you ned 25% deposit. If you have a 10% deposit then rates seems to be quite high.

I just did a quick search on Charcoal for 70k hse price, 63k mortgage, 25k earnings. Cheapest rate it come up with was 5% on a tracker, cheapest fixed was 6.49% :doublesho:doublesho

My advice seek out a independent financial advisor, through a recommendation if you can, have a chat get the info from the horses mouth. Guy I used has got me some good deals that aren't advertised. Make sure the financialadvisor is independent and not tied to a particular bank, building society, they should be truly independent and have access to the whole mortgage market.

Good news no stamp duty on a 70k hse


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## details (May 13, 2009)

5-6% is low I have friends that switched to trackers recently and saved hundreds, try getting that on a personal loan at moment. When lending was high in say 2004 it would have been easy not now.


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## chunkytfg (Feb 1, 2009)

Spuffington said:


> *Remember also, you will need to factor in stamp duty, solicitors fees, buildings & contents insurance and life insurance, which can take a huge chunk out of your deposit.
> *
> Good luck and happy hunting. :thumb:


This is the thing most people forget when buying homes and then realise why there 10k in the bank to buy the 100k on 90% LTV actually is miles away!

However looking at 70k properties as you have indicated you wont be paying stamp duty which will save you 1% of the house costs but the rest will be at least 1k if paying up front.

Also can you actually afford to live alone?

Regardless of weather or not the bank will lend the money or not a figure of £400/month was mentioned for mortgage costs.

Now factor in to other things. guessing costs roughly

council tax - £100(inc 25% single occupancy discount)
leccy - £50
Gas - £30
TV -£20 for first 6 months then £10
buildings contents insurance - £30
food - £200

So thats £830/month before you even take into consideration other costs. how much does the car cost you? Tax, insurance, petrol etc?

Do you see how expensive living alone is?

NOw add the paying off of the debt to it?

Can you still afford it?

I'm not trying to put you off in any way but you need to make sure you are realistic in what you can afford! At the end of the day you are in debt whilst living at home with your mum where i'm guessing you pay a minimal rent. How are things going to be when your bills are probably not far shy of a grand a month?

On the other hand though if you can get on the property ladder then providing you can pay the bills each month then you will ultimately make money on the house as regardless of rises and falls in the short term in the long term property prices will rise meaning you make money! The biggest step is always getting on the ladder climbing it from that point is alot easier:thumb:


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## goste (Dec 11, 2009)

Mat,

Mortgage companies will tie you to the deal for 2-5yrs - make sure you can afford the repayments etc for that period of time, then, you'll hopefully be looking to trade up - by then, worst case scenario, the house will (probably) still be worth what you paid for it!

Don't hang about, then wish you'd taken the plunge.

Also, remember that if the price is £69k, you're also free to make an offer.......say £60k......depending on how long it's been on the market!

G.


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## big ben (Aug 25, 2009)

im in the same boat...

i earn £1500 a month, debt of 9k which is 200 a month (just got a loan to consolidate)

i can save 10-20%, but ideally want to pay off my debt at the same time!? im looking at a homebuy where i buy 50% of the house, and rent the other half, just to get on the ladder really...

i suppose i will have to pay off my debt, and try and save 10%


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## JCW85 (Oct 29, 2009)

Silver R26 said:


> A higher deposit certainly decreases the interest rate, I am looking to remortgage and my financial advisor who I have used a few times said to get a good deal with a reasonable interest rate you ned 25% deposit. If you have a 10% deposit then rates seems to be quite high.
> 
> I just did a quick search on Charcoal for 70k hse price, 63k mortgage, 25k earnings. Cheapest rate it come up with was 5% on a tracker, cheapest fixed was 6.49% :doublesho:doublesho
> 
> ...


Thats what I thought but it was obv HSBC not wanting to give me a good deal unless I had a huge deposit which I don't. I've settled on Nationwide because they wanted 15% deposit for a new build everywhere else wanted 20-25% and got it down to 5.74% (good times)


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## THE_BHOY_C15RLN (Jan 16, 2010)

buying my house was one o the best things ive done the others my missus LOL


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## mba (Jun 17, 2006)

THE_BHOY_C15RLN said:


> buying my house was one o the best things ive done the others my missus LOL


You bought your missus  :lol:


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## goste (Dec 11, 2009)

mba said:


> You bought your missus  :lol:


:lol: Definition of marriage - buy a house for a woman you don't like!!


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