Anyone know mortgages?

[sumimasen]

The missus and me are gearing up to getting on the housing ladder (one way or another), but are finding that it is a complete jungle out there with it being nigh on impossible to finding what type of buying would suit us best:

- Conventional mortgage
- Help to buy
- Shared equity
- Shared ownership
- etc?

We live in east London, and are looking to buy somewhere around east London as well. Having looked around and plonked our details into basic mortgage calculators, it appears we are maximum allowed to borrow ~£280k, which unfortunately is borderline not enough down here. Is this just a guideline and you can actually qualify for more? I don't want to put myself in a black hole so not looking to going into crazy leverage.

(Worth mentioning that we don't exactly have an anormous deposit at hand, looking at around £20k, maybe £30k in a pinch.)

Therefore we started glancing at Shared ownership, but this only gets more complicated with all the various limitations. Apparently you have to earn less than £66k to get a 1- or 2 bedroom place, and when I then went on to look at a development they obviously had a minimum income required to qualify: £65.5k?!?! So you basically have to slot into that narrow £500 band to buy there? And if you earn £67k, is your only option 3-4 bedrooms? Those prices are astronomical!

I'm keen on getting a little bit more clued up about all this before I get credit-checked etc, should I go see a mortgage advisor or is it just a waste of time unless I'm ready to hunt for the specific mortgage?

I'm completely clueless about this, and don't even know at which end to start..

[Mr Speirs]

Use a mortgage advisor. Usually their fee comes from the Mortgage Co so no extra for rates and expertise that the Mortgage Advisor has.

Mine saved me a boat load of money in repayment interest as he managed to get me a rate 1% below any high street lender with my deposit (20%).

I would steer clear of any other 'scheme' to get on the housing market tbh.

Also your advisor should be able to show you a list of mortgage options that are available to you...make sure to look at the fee's not just the monthly cost. The fees can range vastly and pay the fees upfront rather than add it to the mortgage. My fees in total were £850 and I got £250 back upon completion. Take into account the application fee also.

Remember to budget for solicitors fees and stamp duty. I was a First time buyer and my conveyancing fees were £1200.

I would seriously recommend a mortgage advisor.

[sumimasen]

Great, thanks for the info!

I guess talking to a mortgage advisor is the way to go. Are all created equally? Is there any advantage in trying to find a local one, or it doesn't really matter?

[Mr Speirs]

A local one would be better I would say as it means you can drop in with documents without having to wait for post etc.

Do a wee search I'm sure you'll find one close to you and call up to see if you can pop in for a chat. Ask about their fees and make sure they will take their fee from the lender for a first time buyer.

[timwilky]

Make sure your mortgage adviser puts you with an good lender and not one that gives them the best deal. My son hit a nightmare when the mortgage lender withdrew the mortgage between exchanging contracts and completion.

The lender then claimed the reason was my son had failed to declare a middle name which when used failed a credit check. When we looked he had declared it on his initial application. The lender had checked in all forms of his name and there was no credit fail in any form. Simply, the lender had withdrawn the product and was seeking to retrospectively withdraw it from people they had made offers to. It cost him two months in penalties whilst he argued with his lender.

[Bibio]

just remember that interest rates are low at the moment but could go up to say 10%+ in the future.

[sumimasen]

Well, when my parents bought their house back in Sweden in the seventies, they were forecasted 16% interest rate.

I wonder how high the defaulting numbers would be in UK if interest rates hit 10%?

Will spend the weekend trying to hunt down a good advisor.

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[timwilky]

I had a conventional repayment mortgage. I cannot recall the exact figures, but seem to remember within months of buying the house, the interest rate had gone up from about 12 to 15%. It hurt.

But I got used to my payments, so when the rates when down, I continued paying the historical high monthly payment and never reduced my standing order. As a result I paid the capital quicker, reducing the annual interest and cascading the reduction in my outstanding capital. I paid my mortgage 8 years early.


It is the nicest feeling in the world to make the phone call what is my redemption fee? and to walk into the building society and hand over the cash. My deeds now sit in the safe, no one can take the roof from over my head. So good luck, I hope you get a good deal, find the right house and enjoy your own little palace.

[Specialone]

Use a mortgage advisor. Usually their fee comes from the Mortgage Co so no extra for rates and expertise that the Mortgage Advisor has.

Mine saved me a boat load of money in repayment interest as he managed to get me a rate 1% below any high street lender with my deposit (20%).

I would steer clear of any other 'scheme' to get on the housing market tbh.

Also your advisor should be able to show you a list of mortgage options that are available to you...make sure to look at the fee's not just the monthly cost. The fees can range vastly and pay the fees upfront rather than add it to the mortgage. My fees in total were £850 and I got £250 back upon completion. Take into account the application fee also.

Remember to budget for solicitors fees and stamp duty. I was a First time buyer and my conveyancing fees were £1200.

I would seriously recommend a mortgage advisor.

This.
I used to sort my own deals but now use one at every time my current deal runs out, his rate isn't that much, he gets access to deals that aren't advertised by the lenders, he chases everything up, collates all the info needed etc, I hardly have to do anything.

[veenee]

I used mortgage advisor for getting a mortgage and then changing to another lender - can recommend one in Guildford area.

[Spank86]

This.
I used to sort my own deals but now use one at every time my current deal runs out, his rate isn't that much, he gets access to deals that aren't advertised by the lenders, he chases everything up, collates all the info needed etc, I hardly have to do anything.

The mortgage advisors I went to couldn't match the price I'm paying at abbey national.

If you want to do any of these shared scheme things that's one thing but if you just want a straight mortgage I recommend you do a bit of the old internet legwork and get some comparison site quotes first, It'll give you an idea how good the advisor's prices are.

[ClunkintheUK]

Get an Advisor. I have a recommendation from the upstairs neighbours for one in south west london. Probably better off to ask people at work if any of them can recommend one, as they'll be fairly local.

Also, your first time buy will be a stretch in London unfortunately, the bubble will burst, but I don't think it will for in the next couple of years. The advisor will be able to explain the different types, but to cover against the increase in inflation you'd just want to get a fixed mortgage, though technically the difference between the fixed rate and floating rate will reflect the markets (read lender's) views on the chances of the rates rising, so will certainly appear high initially.

Another recommendation, once you have a safety net of savings (3-6 months repayments and necessary outgoings) put everything you can into repaying, don't keep building up savings, check how much you can repay, most will let you overpay by 5% to 10% a year.

I did the calcs on a £300k, 25 year mortgage at 5% once. Overpaying by £100 a month took like a year and a half off the mortgage, £200 a month was about 4 years. The monthly payments were £1250 a month normally, overpaying by £600 (half the requested payments) brought just over 12 years off the mortgage. It really makes an enormous difference.

[Specialone]

The mortgage advisors I went to couldn't match the price I'm paying at abbey national.

If you want to do any of these shared scheme things that's one thing but if you just want a straight mortgage I recommend you do a bit of the old internet legwork and get some comparison site quotes first, It'll give you an idea how good the advisor's prices are.


That might be your advisor mate but I know for a fact his firm gets rates that are simply not offered to customers who contact them off their own backs.

I'm pretty clued up on the mortgage area, I've had one over 18 years and lots of moving and remortgaging etc etc, my guy earns his money and saves me a lot of hassle, I 100% recommend using one if a first time buyer, they will have lots of good advice and make the whole thing much easier, leaving you time to enjoy life and not stress so much over it :)

[Spank86]

That might be your advisor mate but I know for a fact his firm gets rates that are simply not offered to customers who contact them off their own backs.

I'm pretty clued up on the mortgage area, I've had one over 18 years and lots of moving and remortgaging etc etc, my guy earns his money and saves me a lot of hassle, I 100% recommend using one if a first time buyer, they will have lots of good advice and make the whole thing much easier, leaving you time to enjoy life and not stress so much over it :)

I'm not saying don't use an advisor, I'm saying do some prep first.

I went to an advisor when taking my mortgage and when renewing, they couldn't beat what I could get direct. As we don't know what advisor the OP will use there's no way to tell how good he'll be.

A search of the market first will give him a better chance to determine that and with comparison sites is pretty quick and easy.

[Dave20046]

The advisors I went to Plus London & country mortgages (who get raved about) couldn't beat the deal I got with First Direct.
I went to an advisor I know and he showed me his trade sheet and pointed out the ones they don't get commission on/can't advise - First direct was one of them

[Dave20046]

Abbey national, then Abbey, Now Santander & First direct are the big banks that I repeatedly hear people saying are cheap

[L3nny]

Advisors aren't that great, I used one for my current house but always found my own deals before which have always been as good as what the advisor can find.

I used the help to buy scheme when I bought my house. It's not as good as it first appears when they offer it to you but it was the only hope I had of buying in the area I'm in.

I wouldn't touch shared ownership with a bargepole, I have heard a lot of horror stories about people not being able to sell due to the inept management companies.

If you are buying leasehold be very careful about how much you have to pay and check out the management company. I was stuck with a £700 bill one month on my old flat when a small hole was discovered in the roof, there were 12 flats and I'm sure it didin't cost £8400 to fix and because the contract was in such a mess there was nothing we could do, someone had a nice holiday that year I'm sure.

A lot of people will try and sell you rubbish trying to make out that buying a house is complicated when really it isn't I might even try and do without a solicitor next time as I ended up doing most of theur work for them anyway.

[Specialone]

You guys are using the wrong advisors...

[Spank86]

Perhaps but since my non advisor interest rate is 3.2%, I can live with it.

[Specialone]

Mine is lower than that I think, 5 year fixed too.

[PyroUK]

Not sure when it's coming in to play but there is the possibility that you won't be offered interest only which is usually the cheaper at initial set up.

Thanks to the yanks and the **** poor mortgage decisions which landed us in this marvellous recession, banks will have to confirm you can absolutely clear the mortgage at the end of term on interest only otherwise they shouldn't sell it to you.

Not a bad thing necessarily but something to be aware of as you may only get repayment mortgages offered which are higher monthly and set up fees.

[sumimasen]

Would it be possible to leverage your pension against the interest-only repayment? Could save some bucks as it's tax-free?

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[PyroUK]

Possibly, I guess being the money grabbing bar stewards that they are, they wouldn't give two turds if you were starving and freezing because they took your pension. Haha

But yeah essentially I guess you would have to show that either you earned enough to clear it or had saving and investments etc that would clear the debt after the 25 years eg.

Bit of a nightmare for me at the moment as I want to get off the interest only I'm on but I don't earn enough to cover the repayment options

[sumimasen]

In theory if I upped my pension saving by the difference between repayment and interest-only, it would get cheaper as its pre-tax?

I may have missed a detail or two here...

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[PyroUK]

In fairness I'm not really sure how pensions work other than initially paying for them but I think that it's taxed when you get it. So as long as your pension comes in under your tax code you wouldn't pay tax on the income at that point. But if you were to leverage it you would need a lump sum payment from it, if yours allows that, which would then likely be taxed, possibly heavily.

[Spank86]

Mine is lower than that I think, 5 year fixed too.

Likewise.

Oddly the 5 year fix was lower priced than the 2 year fix.

[Spank86]

Bit of a nightmare for me at the moment as I want to get off the interest only I'm on but I don't earn enough to cover the repayment options

Interest only but overpay by 10% to bring the capital down? Or simply save what you can and pay a lump at the end of the locked in period?

[PyroUK]

Interest only but overpay by 10% to bring the capital down? Or simply save what you can and pay a lump at the end of the locked in period?


Sadly I might not be able to get another interest only now, which means sticking with what I have currently.

[Specialone]

Likewise.

Oddly the 5 year fix was lower priced than the 2 year fix.

The one I was offered was slightly worse than the two year deal ~0.1%, that's not a bad deal then.