Mortgage information please

[s879]

Morning. There are so many gurus on this forum (BA miles, clubcard, cashback etc ), i hope there are a few who can advise me on taking out a mortgage. We have been living with my father-in-law in the coutryside but feel its now time to move on as DH's commuting to work is becoming horrible (thanks to the delays and signal failures on the underground). Can someone please offer some useful words on what is the best approach, who are the best banks to go to etc etc. - basically just pass down some of your experience. We will do our own research ofcourse and i realise it all depends on individual circumstances. Some people only pay the interest. We only have a little daughter now so no school etc expenses yet and hence can pay a high amount for now but i think it would be risky setting up high payments too in case (God forbid) something happens to DH's job. i quit work when DD was born. Yesterday he got a rough estimate from a bank and i must say £1500/month for 28 years is quite scary...

[gobbyash]

How many times earnings are you looking to borrow?

gobby

[s879]

We are looking at about £230,000 but may go for £200,000

[navara]

Try this

http://mortgages.charcolonline.co.uk/mortgages/calculator/calculatorhome.aspx

[Maverick]

Go and see an Independant financhel advisor, as it all depends on your credit score, income multiples, type of property you wish to buy if it is non standard. As to which bank will be the best for you, you can look uo the best deals but if you are stretching yourself, have abad credit score or whatever you may not be applicable for one of these rates, also you may have redemention on your current mortgage, which may mean its better to port it over, but may still be worth moving it.
You can get a policy to protect you for redundancy if thats a worry.
If you can afford it go repayment, otherwise how are you looking at repaying the loan at the end of the term, downsizing?
Also you need to take in to account the fees involved with the mortgage depending on the size of the loan then, sometimes a higher rate works out better than a lower rate, over the term of the loan taking all this in to account.
You needent pay for a advice from a broker they work on commision, but make sure you see a WHOLE of market advisor and not one that is tied to a particular bank, or can only deal with a few.

[scorour]

I'm defo no expert, but couple of things I would be looking to do if I was in your situation:

- I would look at increasing the term a little, this would bring down the monthly payment, but I would still make the £1500 payment, this would eat away a little at the loan, therefore reducing the term in the long run if maintained. It also gives the flexibility to reduce your payment whenever required to the amount specified for the term.

- I would also check out mortgages with payment holidays if concerned still about maintaining the payments.

You want to pay as much of the capital which in turn reduces the loan amount and therefore reduces the interest. Your term of 28 years is only 28 if you maintain the provided capital and interest payments, any increase in capital payments will reduce this term.

I know this is easier said than done, I just chuck any bits and pieces of money I get into my mortgage, this has reduced our initial term of 25 years down to 12 after just 3 years.

Like I said, I ain't an expert so someone else might give better advice.

[s879]

Thanks all. Its a lot to take in so will sit with hubby and go through it but it all looks very helpful and i am sure the tips will come in handy. Have repped you all. Scottiedog, will need to wait a bit before repping you as i repped you recently.

[Maverick]

Just make sure you do :p
Seriously good luck, and hope you find a nice new home.

[Raffles]

Do not take out an interest-only mortgage. These are crazy products which leave you massively exposed if house prices fall, since your total debt never reduces.

It makes sense to take out a discounted rate for a couple of years, but be wary about being tied in at the end of the fix. The best product is a discounted rate which allows you to remortgage as soon as the 2-year (or whatever) discounted rate ends.

Look carefully at the fees, both on the way in and the fees you may need to pay if you remortgage and leave them. A slightly more expensive rate can be a better deal if the fees are lower, especially if you intend to remortgage when the fix ends.

Put down a big enough deposit to ensure you qualify for the best discounted rates and do not have to pay a Mortgage Indemnity Guarantee, which is a waste of money.

Do not use a financial adviser that charges you. It IS worth talking to a good one because they often have access to products that the general public cannot otherwise access, but don't forget to shop around yourself. Remember that a financial adviser will NOT recommend a product to you that does not pay a big fat commission to him/herself.

If you get bonuses in your job, pick a mortage that allows you to make overpayments without a penalty. Think also about whether you may need payment holidays at some point.

Be careful not to breach the £250k purchase price level, which will leave you exposed to the higher rate of stamp duty (3%).

[s879]

Raffles this has been VERY helpful - and its all make sense to me gradually. Have a rep :) Oops have to spread some before giving it to you.

[tiger]

I agree about the interest only mortgage Raffles. We were persuaded to take one out, by a Financial Advisor about 20 years ago. In our case it was a re-mortgage to finance the business. For various reasons the plan didn't work out. The one good thing he did for us though, was to get the mortgage with Nationwide. They were very helpful in letting us change to a repayment mortage, let us pay off larger amounts and because we were in front with payments they also allowed us a mortgage break when we needed cash for something else. We paid off the mortgage early and the account was left open, so when we needed a loan recently, we just drew it off what was still available on the mortage.

[Raffles]

An 'interest only' mortgage, when you think about it, is simply a massive gamble on house prices continuing to rise.

Your current rent is probably about the same as your repayments would be under an 'interest only' mortgage. However, when you buy you are also responsible for maintenance costs plus the stamp duty and other buying costs, plus sale costs when you sell. And what do you get in return for all this extra cost? You get to gamble the future of your family on whether house prices will rise or fall in the period before you come to sell the property. Even in the best scenario (prices continue to rise) you still need to come up with a way of paying off the capital sum before you retire / get made redundant.

These are crazy products that will come back to haunt most people who take them out. They are only suitable for people expecting massive future increases in salary (ie graduate trainees, junior doctors) or people expecting bonuses / inheritances which could clear the capital sum.

[tiger]

In our case it was to invest in the business so that we could then put the profits into the pension plan and pay it off on retirement. Just didn't work.

[pumpkin]

s879, we do have an independent financial advisor on the forum, who presumably hasn't seen your thread yet, will pm the person and they will no doubt be in touch in due course

in the interest of privacy don't want to post the person's name on the forum!

[s879]

Thank you so much pumpkin and everybody else. DH and I will have an interesting read of this thread tonight.

[adam1uk]

I'd back up what Raffles was saying about fees. Lots of rates look good to start with, but the small print contains a huge arrangement fee. You need to look at the total cost, including the fees, before making up your mind.

You'll almost certainly have to pay a fee of some sort, but if at all possible pay it up front. The lender will undoubtedly offer to add it to the mortgage, which sounds good, but isn't because it means you'd be paying interest on it for 25 years.

[scorour]

The lender will undoubtedly offer to add it to the mortgage, which sounds good, but isn't because it means you'd be paying interest on it for 25 years.

The same with building/contents insurance, some offer to add the yearly premium to the loan to make it 'cheaper' (initially)...... making it more expensive as you are paying the interest on it annually, then they may add the following years premium again the next year :eek:

Loads of really good deals about for buildings/contents available.....

[DebbieE]

hi, lots of useful advice given here already, but if u want to ask me anything, i was a mortgage advisor for 9 years before i had my DD (although not independent).

Feel free to pm me

:)

[f1girly]

Just a quickie from me compared to most but I'd recommend a fixed rate mortgage, I too gave up my job (although now I'm a reg childminder) when I had my first so we needed to be sure of what our outgoings would be for the next 5 yrs or so.

[icklejulez]

s879, we do have an independent financial advisor on the forum, who presumably hasn't seen your thread yet, will pm the person and they will no doubt be in touch in due course

in the interest of privacy don't want to post the person's name on the forum!

And if its who i think it is she's great and couldnt of done it without her!

[tyroleandancer]

I'm defo no expert, but couple of things I would be looking to do if I was in your situation:

- I would look at increasing the term a little, this would bring down the monthly payment, but I would still make the £1500 payment, this would eat away a little at the loan, therefore reducing the term in the long run if maintained. It also gives the flexibility to reduce your payment whenever required to the amount specified for the term.

- I would also check out mortgages with payment holidays if concerned still about maintaining the payments.

You want to pay as much of the capital which in turn reduces the loan amount and therefore reduces the interest. Your term of 28 years is only 28 if you maintain the provided capital and interest payments, any increase in capital payments will reduce this term.

I know this is easier said than done, I just chuck any bits and pieces of money I get into my mortgage, this has reduced our initial term of 25 years down to 12 after just 3 years.

Like I said, I ain't an expert so someone else might give better advice.




I would agree with paying any extra you can. even if we have spare £100 I pay it off the mortgage and always make sure that they don't reduce the monthly payment. We have taken years off ours and will be mortgage free in 3 years :) just as eldest will start university.:mad:

[pumpkin]

icklejulez, long time no see! What have you been up to?

[icklejulez]

Trying to buy a house so spent a lot of time on MSE, when everything kicked off and everyone moved over here i kinda took a back seat as there were so many new members. Im trying to keep track but Tesco things have been put to the back of the list of priorities(allthough I admit I do peep at the codes on here)! My post count from LP has been lost though and I can not see me getting them back! I was a member since Oct 2005! Anyway as life gets back on track slowly Ill try to keep posting!

[Gizmos]

My post count from LP has been lost though and I can not see me getting them back! I was a member since Oct 2005! Anyway as life gets back on track slowly Ill try to keep posting!

Julez apparently from last Friday LP was no more (theres a thread somewhere on here about it) so no need to worry about your post count - have missed you - you were always on before - now how can we entice you back .. free choccy??

[icklejulez]

After my £100 worth od choccies from thorntons for £20 (Thanks MSE) dont think i could stand another bar!!! Anyway I will be back and still am just struggle to find time to post. What I meant by my post count was Ill never get as high a post count as LP. I saw LP a few days ago, not surprised really there was never anyone there!

[tiger]

Nice to see you posting Julez.:)

[janedoe]

Morning. There are so many gurus on this forum (BA miles, clubcard, cashback etc ), i hope there are a few who can advise me on taking out a mortgage. We have been living with my father-in-law in the coutryside but feel its now time to move on as DH's commuting to work is becoming horrible (thanks to the delays and signal failures on the underground). Can someone please offer some useful words on what is the best approach, who are the best banks to go to etc etc. - basically just pass down some of your experience. We will do our own research ofcourse and i realise it all depends on individual circumstances. Some people only pay the interest. We only have a little daughter now so no school etc expenses yet and hence can pay a high amount for now but i think it would be risky setting up high payments too in case (God forbid) something happens to DH's job. i quit work when DD was born. Yesterday he got a rough estimate from a bank and i must say £1500/month for 28 years is quite scary...


Have a look at supermarket.com but we did our research from there and found Standard Life did a good mortgage and then moved to Direct Line and have then moved it to Active but changed it recently again with Active (best rate on offer) and will again in 2 years when the cheap rate finishes.

[colman]

And if its who i think it is she's great and couldnt of done it without her!

Thanks love - only happy to help.....

S879 i have pm'd you.....