12vStig
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Registered: 23rd Dec 07
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So I'm thinking of taking the plunge and getting on the property ladder, the thing is I don't really know the first thing about it other than the fact I'd quite like to have something to show instead of pissing rent away every month. A pretty old school view I know.
So here's the deal, I'm currently living with my parents, I have an ok job and looking at flats around here to rent prices are in and around the 500-600pcm bracket.
Now having used a few online repayment calculators I know that this sort of figure is enough to get something affordable, my plan was to get a flat for around 70k.
Now the drawbacks, I've got a pretty abysmal credit rating through some bad choices a couple of years ago. This pretty much rules me out of many high street lenders as far as I'm aware. A quick read up reckons that the rates for "higher risk" borrowing are higher but are gradually becoming more and more competitive as the market gets bigger.
Another potential flaw to my plan is the fact that currently I don't have much in the way of a deposit. I've got a couple of grand in the bank but I'm not even sure what sort of figure would denote a healthy deposit or infact if I even need one as again a quick google suggests I could get a 100% mortgage for cheaper than the rent I could be paying.
Basically any help, advice, horror stories or dreams come true would be great at this stage, if only to point me in the right direction, many thanks
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John
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Registered: 30th Jun 03
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You'll need at the very least 5% deposit + a couple of grand on top.
£600 a month is a lot more than you think, then you need to eat and live on top of that. You thinking you can afford that doesn't mean the bank agrees.
95% mortgage with a bad credit rating will be a terrible interest rate, if they give you one at all.
Probably not a good option for you.
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Ian
Site Administrator
Registered: 28th Aug 99
Location: Liverpool
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Also don't overlook the fees, not only to move in but also to sell it again when you outgrow the flat.
You might find fees + interest + fees again for the time you intend to spend in there is comparable to the sum of rental. And that's before anything breaks.
First real step is to go see a few people and commit to nothing. Just tell them you have a few grand in the band and want to see what you can get.
You'll learn more about the process along the way and you don't even need to sign anything. If you go to enough providers there will be at least a few of them who will take some time to give you a few hints and tips.
Just post them all here so we can tell which which are useful and which are poppycock to hook you in.
[Edited on 04-03-2014 by Ian]
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12vStig
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Registered: 23rd Dec 07
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Cheers chaps, definitely going to look at learning the process a bit more as I am honestly clueless as I think everyone must've been at one point or another.
One more thing, I'm looking to cobble together about 10k in the next 6-8 months. This is where I think living with folks and then buying suits my situation more, the alternative being move out and rent and find it harder to save up a sizeable deposit to offset the bad credit.
I'm not wanting to seem like a dog with a bone with this, but would you say it's not a realistic option?
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deano87
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Registered: 21st Oct 06
Location: Bedfordshire Drives: Ford Fiesta
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Your plan isn't entirely unreasonable and with the Help to Buy Mortgage Guarantee you could get a better rate than you think.
With your credit rating, £10k is the figure I'd be aiming for. Thats 10% deposit plus more for fees. With no stamp duty to pay under £125k you'll have money left over from the £3k for moving.
Best bit of advice is to go and get yourself some financial advice so you know what your options are, and start looking at properties, so you can figure out what you want. Until you start looking and seeing what £70k gets you and in what area, you don't really know what you want.
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Ian
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Registered: 28th Aug 99
Location: Liverpool
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There's no decision to be made on saving up £10k. If you can do it, of course do it.
There's no down side to having money in the bank. And there are some very large upsides.
Biggest problem is actually doing it. I was going to save up a deposit, then I was going to buy all the stuff to go in it with savings, then I was going to pay off all the debt I accrued moving in, then I was going to overpay the mortgage.
Like all the best plans, I somewhat completed some of them.
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12vStig
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Registered: 23rd Dec 07
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Definitely agree with you there, I've had a couple of very brief chats and had one very good telephone conversation.
Basically they said the same thing, cash is king and that there is no harm in saving whatever so to press on with that should be my priority. However they did mention that at this stage it might be worth me saving as I would've but over a longer period of time. Saving a much bigger deposit and even sitting out the poor credit until it is wiped from my history.
What this would mean is almost guaranteeing myself a significantly better rate, no adverse credit history plus a much bigger deposit and better LTV ratio.
What this would mean is looking to have around 10k saved up before I outstay my folks welcome, and then renting in the meantime, saving what I can over potentially a couple of years and then looking to buy from there when in a much stronger position.
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AndyKent
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Registered: 3rd Sep 05
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If you can avoid the renting part in the middle, do, it'll allow you to save much more
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