Affording a mortgage

[Soph20]

Can someone tell me if I could afford a mortgage and how much? I am 20 years old. I earn 12k a year before tax and this is my only income. I am single. I don't have any savings. I have a car all bought and paid and have not got anything at all on credit/loan. I pay �300 per month rent on a room in a house. Don't know if this is all the information you need. Please advise me if and what amount of mortgage I coul get for my income and roughly what sort of monthly payment that would be.

[EmEd1984]

most lenders have mortgage calculators - any adivce anyone was to give would have to be under fsa regulation!!

https://www.halifax.co.uk/mortgages/calculator/mortcal_main.asp?brand=halifax&app=borrow

though be warned, at the moment, you'll probably get less than usual - a big deposit will make a huge difference as100% mortgages are becoming more and more difficult to come by

good luck x

[mattie]

When I bought my house about 9 years ago, it was valued at �44000, my mortgage, when I was on the standard variable rate was about �280 per month, however, you are going to be pushed to find a house for that amount of money these days. Also, I was earning more at the time.

For example, a two bedroom flat where I live is going for �65000.

The situation is this, you can't afford a deposit, you will be lucky to get a 100% mortgage, especially at the moment, and could you afford the repayments on even the cheapest property.

[CheekyChops]

Only if you want to buy a garden shed.

Lenders will typically lend around 3.5 times your salary, so you could lend somewhere around �42000. This may vary depending on the lender. Also you will need a 10% deposit.

You are therefore looking at houses in the �47000 price bracket, �4700 deposit and �42300 mortgage. Are there any properties available for �47000?

At 6%, the repayment on 42K will be around �273 and then you have got council tax, gas, electric, water rates, tv licence, insurance, food etc. Can you afford all this?

You are better off waiting for a few years and saving as much as possible in the meantime. Along with the deposit, you will also need money for solicitors fees, furniture etc.

[Soph20]

Thanks for all your replies.

I actually work as an administrator for a mortgage broker buit still don't understand it all and too embarrased to ask Paul cus I'm scared it's obvious that I can't afford one and shouldn't be asking or that I should know the answer

It's just people seem to be able to get these mortgages even with a lowish income and I don't know how they do it. I really feel like I'm missing a trick.

As for saving for a deposit. That seems pretty impossible too as I have only got �1,000 savings but I am soon to be spending half that on a hol and half on another car. It jsut seems to take so long to save even a thousand pounds and jsut as you save it you need to spend it. So I just don't know how me or anyone else manages to save a deposit of �20k, 30K etc. My friend who is my age has just bought a house and she must earn 14k 15k 16k not sure but she has a bf who is on about the same and I don't know how they could afford it either. I think it must have been part buy part rent or something? I really feel like I should be able to afford a home and that I'm missing a trick. How does everyone else do it? Am I just being thick or can I really not afford one?

[CheekyChops]

I'm sorry but if you want to buy a house that badly then you wouldn't be spending your savings on holidays and cars!

Your friend has a boyfriend so there will be two incomes to take into account. If they both earn �15K then that would mean they could borrow a lot more than you can on a solo income of �12K. Why don't you ask her how they managed it? How much are smallish houses/flats where you live?

Also 100% mortgages were available until recently where you didn't need a deposit. Due to the current climate these have now disappeared. You still need savings though to pay for searches and solicitors! How are you going to buy furniture, crockery, cutlery, bedding, curtans etc etc?

What would you do if there was an emergency, say your boiler broke or something, where would you get the money from to fix it?

I was only earning �13500 when I bought my house 5 years ago BUT I live in an area where houses are quite cheap, I had got a 5% deposit and I got a second job to help me pay the bills.

You could look into shared ownership where you get a mortgage on a share of a house - you would then pay rent on the other share so in effect you are paying rent AND mortgage.

To be honest, you really are working in the best place - ask your employer!!! You could pretend that you are thinking about it for the future and ask him how much you would need to save, how much you could borrow etc.

[Soph20]

I know it seems strange that I am going on hol but I haven't had a hol for 5 years and I desperately need one now. I just think that if its so impossible to save I may as well have a hol. I will ask my colleague paul whos a mortgage adviser I just thought that he would think I should know after working in a mortgage firm but I don't. And I understand that having a car takes a lot of chunk of money from my income. Even if I didn't have a car though, I would still have to pay rent. I think it's just impossible really isn't it?

[CheekyChops]

I agree, it is difficult. The only reason I managed it was because I was made redundant and therefore had some cash to use as a deposit. Saving is a swear word in my world!

Saying that, I was 30 before I bought my house - you are still young and have plenty of time, don't worry about it too much just yet.

[Soph20]

Ok thanks cheekychops for putting my mind at rest. x

[EmEd1984]

Everyone has to make sacrifices, and many perhaps your and my age (23) are mortgaged up to the eyeballs - its the only way we can manage to get on the property ladder. My husband and I bought our first house 3 1/2 years ago, and we were very lucky to be given a deposit as a wedding present by his parents. We were on an interest only tracker mortgage, and it cost us nearly �700 pcm (regularly varying from �620-�720 being a tracker!). I could never in a million years have got a mortgage on my own, so don't panic, you're still young! We were advised that if we weren't planning on staying in the property for longer than say 5 years, to get interest only, as that would be all we'd pay off anyway on a repayment mortgage. Also, if we had less than 10% deposit, to just put down 3%, as the difference was minimal month on month, but left us the cash for stamp duty and fees etc.

All of this was advised to us by a mortgage adviser - you have to speak to one, as everyone's situation is different, and an adviser will know the perfect product and the best deal for you. Perhaps you and a friend could go in on a mortgage together? Maybe move back to your parents and save up for a deposit? and ask for 'bottom drawer' items for birthdays / christmas?

I know how you must feel, I felt the same way and i know its frustrating, but don't rush into it (especially at the moment), a mortgage isn't something to take lightly, its a huge commitment!

You've got the perfect opportunity to get free advice from your employer, who'll only be happy to help you out so don't be scared or embarassed to ask

good luck x

[Soph20]

Ok I am definitely going to ask my employer now. I am going to set up a different savings account as well so that I can pay money into it each month to help me save and maybe when I am 30 or find a boyf then I might be able to.

Thanks xx