By in Personal

Frustrated

Seen as I had no real debt, was miles away from my pension and didn't own a house when the financial crisis hit I thought it had no real effect on me. I guess it did indirectly, wages not increasing and the like but I didn't really feel it the way others did.

I sure am feeling it now though! The removal of 100% mortgages is costing me thousands of pounds a year and I'm getting super frustrated by it.

I had never really been interested in buying a house before, I knew I didn't want to live where we used to live and knew I didn't have the money to pay out if something went wrong with the house, although I could have afforded the mortgage had I wanted one because if you can afford to rent you can certainly afford mortgage payments. My dad tried and tried to bully me into buying a house and I resisted because I didn't want stuck living somewhere I didn't want to be. Oh how I wish I had bought something with a 100% mortgage and just sold it when I moved, if only it were that easy.

I know deep down I was being sensible, I wanted to get a decent job and be settled in an area before committing and that's exactly what I did but now I am suffering for being sensible. Had I bought my flat in my early 20's which was offered to me for £44000 my mortgage would have been buttons each month and I would have had a flat to sell when we moved here. I wouldn't have needed a deposit and my monthly payments would have been around half my rent payment. I wasn't interested though and to be fair my early 20's were not my most stable from a financial point of view so maybe I did make the right decision.

However now I find myself in the same position as many first time buyers these days. I have a good job and am fortunate to earn enough where I would easily get a mortgage large enough to buy a pretty nice flat in the area we currently live while the prices are as low as they are just now. However I also live in a pretty expensive rental area and therefore cannot save for a deposit.

The bank had the cheek to tell me they would offer me a mortgage which was great news of course, but I need to find thousands of pounds for a deposit first. They then had the further cheek to ask if I needed another loan (I have a bank loan already) and tell me they would offer me up to £15000 of a loan as long as I paid my current one off with some of the money. However I cannot use the loan for a deposit because that's against the new rules, despite the fact that the loan and mortgage together would actually cost me between £100 and £200 less a month (depending on the price of the house of course) than my current loan and current rent payment cost put together.

I fail to see the logic here. I can afford to do this, in fact it would save me money, plus I would no longer be paying for a house we do not own. Since moving here four years ago we have paid almost £20000 of rent! Say I bought a £50k flatt, I would have paid nearly a quarter of it off by now (minus interest obviously) it beggars belief really.

It is made more frustrating by there being the perfect flat for sale just round the corner from us which is well within our price range and exactly where we would want to live. If we could get a 100% mortgage on it we would be paying around £150 less than our current rent each month. I just don't understand how this makes sense? We are not a massive risk to the bank given that my job is as secure as it gets these days and they clearly think I can afford the mortgage on my own or else they wouldn't have offered me one myself in the first place surely? However because we don't have £3000 sitting in the bank doing nothing we stand no chance.

So I guess my question is - does anyone have £3k they want to give me? that seems to be the only chance we have


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Comments

MegL wrote on February 25, 2017, 10:45 AM

Yes, the new finance rules on buying seem to be totally up the creek. Could you take the loan and put it into an ISA? Then use the isa as the deposit? There is also the house buyer's ISA, where they give you 20% increase on top of what you save towards the cost at completion (not for the deposit). There may be some mortgage brokers who could help you. In the UK

melody23 wrote on February 25, 2017, 1:30 PM

no not really, they investigate where the money has come from and since you aren't allowed to get a loan to fund savings in the first place I could get in trouble for doing that. The home buying isas are a load of rubbish by the way - like you say you cant actually use it for a deposit which is what they advertise it for, my bank doesn't even offer them because they are so bad. No one will do a 100% mortgage anymore the only exception being if a parent puts their savings down as security for the first three years.

The whole thing has got me super upset actually, I cant believe the position we have been put in. 20k in rent and we have nothing to show for it and that's not including all the years previous to that. I could have paid a mortgage off by now

MegL wrote on February 25, 2017, 1:39 PM

http://www.moneysavingexpert.com/mortgages/ I don't know why this comment won't appear!

MegL wrote on February 25, 2017, 1:41 PM

I had this link in the original response but it seemed to get cut off. Martin Lewis is a REAL financial expert and much better than the banks, who only look out for themselves!

MegL wrote on February 25, 2017, 1:56 PM

http://moneybulldog.co.uk/can-you-fund-a-mortgage-deposit-using-a-personal-loan/ check this out

melody23 wrote on February 25, 2017, 2:51 PM

As this article says, not every lender will allow you to even borrow money for a deposit in the first place and then 99% of mortgages wont accept you if that's how you funded your deposit. I have heard on the grapevine that Santander allow you to do it though but unfortunately they don't have online chat so I wasn't able to find out if it was true or not. I will need to try and call them when I have a bit of time on a weekday which is rare just now with my nightshifts. Zopa did pre approve me for a loan but whether they would let me use it for a deposit or not I would need to check with them I guess, just now I am looking at refinancing my existing loan and possibly car finance which will save me £100 a month and actually still pay it off quicker, saving the hundred quid with the credit union and waiting years for it to build up while continuing to pay thousands of pounds worth of someone elses mortgage

melody23 wrote on February 25, 2017, 2:52 PM

I love Martin Lewis, but unfortunately even he didn't have an answer for me other than to get a parent to put their savings down for the Barclays springboard mortgage. since I hate my dad and my mum is disabled that's unfortunately not an option for me

MegL wrote on February 25, 2017, 5:03 PM

One possibility I don't know whether you have or would consider - group funding. There is an American site called Kiva . com . Supporters can provide $25 support for someone wanting to borrow. Borrowers have many reasons for wanting a loan and these include building a house or buying shop stock. Many supporters = a loan. Many of the borrowers are in 3rd world countries but others are in the USA. I haven't seen any borrowers in the UK but I don't see why not. The loan gets paid back, so it's not a gift. There may be other, similar sites but a lot of those are looking for gifts, which I don't think you are. Actually, I think it may be Kiva.org

Last Edited: February 26, 2017, 2:59 AM

melody23 wrote on February 26, 2017, 3:52 PM

That would still be borrowing though? I've all but given up on the idea to be honest, have tried every way round it I can come up with and there is nothing so I guess I'm stuck paying someone elses mortgage until the government/banks realise that they are going to have to allow 100% mortgages again to allow first time buyers to actually buy anything

Colibry21 wrote on March 4, 2017, 6:23 AM

Things are definitely changing when it comes to buying homes and being able to apply for a mortgage. It's getting harder and harder. Things are also getting quite expensive too. I don't know how different they are here from the UK, but I'm sure it's not easy whether you're here in Canada or in the UK. I wish I could own a home, but it might be a while. Hopefully, we can both get a home in an area we like and have the money to afford it.

Last Edited: March 4, 2017, 6:24 AM

melody23 wrote on March 4, 2017, 8:52 AM

Getting the mortgage isn't my problem, although I know it is for a lot of people - because my job is looked on very favourably by the banks I guess because effectively I work for the government (I work for the National Health Service). That's what makes it more frustrating though, I could walk into the bank tomorrow and get a mortgage so they have told me, but because I don't have savings of thousands of pounds I cant actually buy a house. I am sitting here now going through our budget, trying really hard to find savings we could put away.

The rules for getting a mortgage are so tough now, I honestly think if I was in any other job earing the same as I currently do I wouldn't be approved because I don't earn that much really but because my job is secure and they know that, that goes in my favour considerably. Many of my friends are flat sharing or living with their parents to try and get the money together but we don't have that luxury unfortunately

Colibry21 wrote on March 5, 2017, 4:18 PM

The fact that you work for the government definitely does work in your favour, for sure. Even here, working for the government is pretty secure. I know that here you're supposed to have a certain amount as a down payment, when it comes to buying a house. Plus you must have worked at the same place for at least 2 years. That's how it works here in Canada. I hope that you're able to save some money so that you can get a mortgage. It might be a while for us, before we can get a mortgage. We'll see.

melody23 wrote on March 5, 2017, 6:36 PM

Usually here these days you need a 10% deposit for your mortgage but the rules are relaxed to 5% in some cases - somehow I fit into the 5% bracket thankfully. They don't actually need you to be in your job for a set length of time (when they originally pre-approved me for the mortgage I didn't ask for I had been in my job a matter of months) its more about the security of the job you are in - how regular your hours and more importantly your salary is, if you earn different amounts each month it hurts your application considerably, mine only varies by £100 or so a month so thankfully I am ok for now. It will be a while before we are able to save the deposit for sure, but I am super determined

Colibry21 wrote on March 5, 2017, 7:41 PM

It does seem as though you could get a mortgage, which is good. Or at least, you know what you need. I hope that you are able to save and get your mortgage and your house.