Colin Dale is head of lending at Skipton Building Society
“Bella isn’t obviously in a strong position to purchase a property. She’s on a good and growing salary scale, but what little she has saved will be eaten up by expenses, such as Stamp Duty, legal fees and valuation fees, leaving nothing for a deposit. Applying basic lending multiples, Bella will find difficulty buying a property solely in her name, especially in an area like Putney.
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Even from her starting position though, there are alternatives Bella can explore – renting short-term to enable her to save a bigger deposit; looking at alternative locations; trying for a 100 per cent plus mortgage; purchasing the property with a friend or friends; or approaching her parents to act as guarantors and help out with a deposit. However, the increased competition in the market and the flexibility and experience lenders now have in trying to find solutions to situations such as Bella’s should work in her favour and enable her to find a solution.
Rod Murdison is proprietor at Murdison & Browning
“The best advice that could be given to Bella would be to wait until she has either built up a larger deposit, had substantial increases in earnings, or met someone she can share the purchase with.
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Looking at her preferred location first of all, the likelihood that she could buy anywhere near Putney is remote. Looking further afield – the Crystal Palace area, for example, she would still have to pay over £200,000 for a halfway decent flat.
If she’s determined to buy, then potential lenders would have to offer a combination of mortgage and unsecured loan, up to a maximum 125 per cent loan-to-value (LTV), with the unsecured element typically being a maximum of £30,000. Lenders offering this include BM, Northern Rock, Godiva and Alliance & Leicester. However, all offerings would have to be calculated on a ‘total to pay’ basis, as arrangement fees can range from zero up to £1,999.”
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James Cotton is a mortgage specialist at London & Country
“Buying a property should not be too much of a problem for Bella. On her salary she could certainly get a mortgage of around £200,000 with a good credit score. The issue is whether she can afford what she wants, where she wants. Prices in Putney are high so she may have to make a few compromises.
If she wants to buy now, she would be better off using the £3,500 to cover Stamp Duty and other costs, rather than use it as a deposit. She would then need a 100 per cent plus deal. A number of lenders would look at this, including Northern Rock, Alliance & Leicester and BM, who go up to 125 per cent LTV – Scottish Widows will go to 102 per cent for graduates.
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If she does buy at 100 per cent, she needs to buy somewhere she will be happy for a while – having no equity means moving in the short term might be difficult.”
