1st time buyers case studies

the problem

Karen is 31 and works as a Pensions Administrator. She is living at home with her parents and wants to purchase a property of her own. Despite being able to afford mortgage repayments and having a good credit history, she is finding it difficult to buy the house she wants. She doesn’t have a large deposit and based on her income, the amount she can borrow is not enough to buy her house.

Karen had found a two bedroom terrace valued at £135,000. The market generally would have been willing to lend her £87,210 on her salary of £19,380 per annum (i.e. up to 4.5 times her annual income), which would leave her with a deposit shortfall of £47,790 that she would need her father to fund. Karen’s father wanted to help her get a mortgage but was unsure about how he could do this.

the solution

Karen visited her local mortgage broker who recommended our 1st Start mortgage because of the unique way the parent’s mortgage commitment is treated. Rather than taking the parent’s total outstanding mortgage balance from the borrowing amount, as done with a normal Guarantor mortgage, with 1st Start, Karen’s father income was included in the calculation and only his annual mortgage repayment was deducted from it. This is what we would do for a credit card or other loan commitment. Take a look at our worked example.

With 1st Start, Karen’s father was going to be jointly liable for the mortgage repayments. As such, he took tax, financial and independent legal advice before agreeing to help Karen.

Karen considered various options to help her pay the mortgage repayments. These included sharing the repayment with her house mate and her father. However, she decided that she could afford the mortgage repayments by herself.

the outcome

Using 1st Start, Karen was able to purchase the house she wanted in the area she wanted to live. She was able to afford the monthly repayments and by taking a fixed rate, she had the certainty of a fixed repayment amount in the early years. By including her father’s income, using our unique 1st Start calculation, he was able to help his daughter purchase her desired property without the need to liquidate funds for a large deposit.

with kind permission of Bank of Ireland, 1st start is only available for purchase and is not available in Scotland. Borrowers must be 18 and over. Written quotations available on request. The above solution should not be regarded as a recommendation. Full advice and recommendation will be provided by Thinc Group Ltd Ltd which is authorised and regulated by the Financial Services Authority.