I earn £23,000 and am looking to move from my parents home. I have been looking into shared ownership. I have £1,000 on credit cards. £10,000 personal loan paying off £300 per month. I was hoping to get a mortgage of around 25% of say a £200,000 property and then pay rent on the rest. Is this feasible as I would like a 100% mortgage on the 25% and also try to get £10,000 ontop to pay off the personal loan? I bank with HSBC for the last 14 years and they gave me the loan.

my take home is £1450 so was looking to pay around £600 - £700 for mortgage and rent !!!! do you think this maybe possible? Any ideas on good free financial advice as well

any help would be much appreciated as am totally lost!!

Sorry lulu but the 100% market has effectively disappeared and the low share of 25% is not available. The fact that you want to borrow on top of the mortgage would be against you anyway and will affect the amount you could borrow. Paying the rent on a 200K property along with the mortgage and the loan would be unaffordable, if you need to move out I would suggest just renting for the time being.

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Regards

Ian

It seems unwise and a little risky to spend such a high percentage of your salary on mortgage/rent.

Thanks for replying - if I rent I would feel it is money down the drain - i have a friend who rents £1000 a month and has around £400 left over for the rest of the month and also has a 6 month old baby!! and gets not extra support. I fear that if i rent I would end up completley broke and unhappy in the knowledge that the property was not mine (so to speak). If I were to go for a mortgage on the open market and not shared ownership do you think with my salary and debts I would be able to afford it - I do have access to £5,000 cash savings that I have kept for legal fees, stamp duty etc......? I would consider eating beans on toast for a year if it means moving out !!!

Would it be worth speaking to a financial advisor or would i be wasting their time and the best thing to do is just sit it out until my debts are lowerd ?

Thanks again - any comments gratefully welcomed

Hi Lulu,

The problem is with your commitments you would only be able to lend about £100000 (if you're very lucky). You would also need a deposit (5% minimum) then there are valuation costs, legal fees etc. That's only the beginning - once you're in you have council tax, gas, electricity, water, phone, insurances and general maintenance. Ask any homeowner at the moment and they'll tell you everything is costing more with no salary increase to balance the cost.

Sorry to sound so negative but having experience makes you a bit more wise to the pitfalls. I'd stay cosy with your parents for a bit and save a bit more. Maybe the dreaded credit crunch will have subsided by then.

Lex x

Hi...the most you would probably be allowed is 90-95K, this is based on the higher multipliers from some lenders. I do not know property prices or rental fees in your area, but the monthly payment for either commitment will not include council tax, insurance, utilities, phone bills, tv licence, food, etc. It is really tight for everyone at the moment and the best way forward would be to rent with a friend to share the cost? It may get better in a year or two but currently the property and mortgage markets are so unsettled that you may not be in the best position to purchase. If you still wish to buy see a fees free broker to see what your realistic options are.

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Regards

Ian

Thanks for replying - can you tell me when the home buy agents ask for 3 months worth of bank statements, are they asking for this to check all your outgoings and that what you are telling them you spend on a monthly basis is correct or are they asking for the 3 months worth of bank statements purely for proof of address/person only?

Think you are right. They not only want to check how much you earn, but what your other regular commitments are too. I mean they are not going to lend you money if they think that you might get into financial difficulties paying it back are they? They have an obligation to you and the bank/building society to lend only to those who can afford to repay - or so they told me when I applied for a further advance on my mortgage recently.

Hi...if it was just residency one month would do, three months is to see your income going in and how your account is handled.

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Regards

Ian

The reason why I ask is that i told the finance guy that I pay £200 on a loan per month and I also wrote this on my application, but when looking at my bank statement you can see that I do pay out £400 from loans - This being that i got the loan out for myself and a family member who is paying half! so on my statement it will say outgoings £400 but out of my money I am actually paying £200 and when I do get a mortgage on part buy part rent, this loan will be included in the mortgage so I am wondering if my application will be scrutinised due to this once they see my bank statement!!!!!!!

Am concerned as I do not want to lose my plot that I have reserved over a stupid little thing which will be sorted out by the time I am due to move in August time!!

Hi....if the loan is being consolidated and the lender is aware of this it will be ok. If not then they will deduct the total loan payment from your income before applying income multiples.

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Regards

Ian

My advice would be to hang tight! If you really need to get away from rents then look for a friend or two to flat share/house share for a bit splitting the bills,it wont be that expensive 2/3/4 ways, wait for a bit of stability in the market. Increase that 5k deposit! the better the deposit the more you can lend. The easier the buying process will be. I was looking 6 months into buying my own place, however with the instability in the market i decided against it! Try to pay off as much credit as possible that isnt necessary, so when you do get a mortgage there are minimal outgoings!

If you do want to go down the shared ownership route look at something a bit cheaper! 25% of a 200k property is 50% on a 100k property. It might not be the nicest in the street or as nice as the house your living in at the minute, your parents probably worked extremely hard for the house they are living in, but just remember all your trying to do is get the first foot on the ladder! Not set up a home for life!