Mortgage advice?

Goksly said:
How does it actually work? If I got £100k mortgage and give them £10k deposit, do they then give me the £100k to buy a house with and the £10k pays off a large part of the projected interest, or do I have £110k to buy the house with and the £10k is just their buffer if I mess up and have to sell the house quickly?
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you buy the house for 110k

and the 10k is the buffer, but you need another 3k approx to pay for 'stuff'.

if you pay 110k and then the property value drops below 100k then you can't change lender and you can't sell.

So then the lender can do with you as it pleases.

Also during the lifetime of the loan interest rates will go up and can be expected to average up to 8%. It's all in the lap of the gods. But because you have magically become a 'high' risk they will have a very special high rate for you.
 
The Mad Rapper said:
Mortgage rates suck. We have a Tracker that's 0.15% above base. Won't be getting rid of it any time soon either.
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I wouldn't touch a tracker right now, as I'm sure interest rates are going to climb. I could be completely wrong though, but I'm just very risk averse. I'd much rather pay over the odds at a predictable rate than risk the rates skyrocketing.
 
Slam62 said:
that's a good one, have you stuck all the mortgage money in an ISA or Bond.

I'm on 0.75 above base.

Oh and 24 years later my mortgage seems just as large an amount of cash now as it did when I took it out.

more like the price of 3 series.
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We use the full ISA limit each and then have additional policies on top. Savings may take a small dent when my wife's on maternity leave though - she only gets full pay for 3 months :(

Incidentally, we bank with RBS. We got a letter from them last week telling us they'd sold their English operation to Santander to focus on their Scottish business.
 
vonhelmet said:
I wouldn't touch a tracker right now, as I'm sure interest rates are going to climb. I could be completely wrong though, but I'm just very risk averse. I'd much rather pay over the odds at a predictable rate than risk the rates skyrocketing.
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yes but he's paying 0.65%!!

do the maths

if you were paying £500 at 6.5% he would be paying £50 or something.

anyway, I'm biased because I always go for a variable rate.

oh yes and no one will get these low rate trackers now anyway.
 
Slam62 said:
yes but he's paying 0.65%!!
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Yes, but for how long? It might be great for a while, but what if rates claim to 15%? Then you're boned.

Slam62 said:
do the maths

if you were paying £500 at 6.5% he would be paying £50 or something.
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And if rates go to 15% he'd be paying in the region of £1,400 while I'm still paying my £500.

Like I said, I value predictable outgoings far more than saving money and taking a risk. Everyone has different views on this sort of thing.
 
vonhelmet said:
Yes, but for how long? It might be great for a while, but what if rates claim to 15%? Then you're boned.



And if rates go to 15% he'd be paying in the region of £1,400 while I'm still paying my £500.

Like I said, I value predictable outgoings far more than saving money and taking a risk. Everyone has different views on this sort of thing.
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is yours fixed for life then?
 
Slam62 said:
is yours fixed for life then?
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10 years.

I could have gone for 20, but the rates got a bit higher than I could afford right now.

10 years gives me enough time to get promoted and earn a fair bit more, and for my wife to get back into full time work, so even if rates do climb in time for the end of our fixed rate period, we should be covered.
 
Found them all completely useless. The ones associated with banks or estate agents were particularly terrible in trying to force us in the direction of certain deals and the "independent" financial advisors we visited clearly had agendas and preffered providors as well. Take their advice with a pinch of salt and do a lot of your own research, it'll pay off. Dont sign anything.
 
vonhelmet said:
10 years.

I could have gone for 20, but the rates got a bit higher than I could afford right now.

10 years gives me enough time to get promoted and earn a fair bit more, and for my wife to get back into full time work, so even if rates do climb in time for the end of our fixed rate period, we should be covered.
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fair enough if it suits you and you got a decent rate.

10 yrs seems a long time, any tie ins? just curious
 
The Mad Rapper said:
We use the full ISA limit each and then have additional policies on top. Savings may take a small dent when my wife's on maternity leave though - she only gets full pay for 3 months :(

Incidentally, we bank with RBS. We got a letter from them last week telling us they'd sold their English operation to Santander to focus on their Scottish business.
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similar to myself, although my kids are about 16 yrs older and they just get more expensive every day.

Sounds like you'll be in good shape though.
 
vonhelmet said:
More concerned about how soon rates climb.
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I think we'd all like to know that :)

The financial press really can't agree; I've read some suggestions that rates will be largely flat for the next 5 years at least, and others that suggest they'll increase.

Given that inflation is still high, and inflationary pressure continues to rise (fuel, food, other imports via weak Sterling) I suspect rates may rise a little in the near future. Time will tell.
 
Slam62 said:
similar to myself, although my kids are about 16 yrs older and they just get more expensive every day.

Sounds like you'll be in good shape though.
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Yes - although you'd think I would have learned! My daughter from my first marriage is 14 today, my wife is having our first child together at the end of next month. Another 18 years of pain! ;)
 
If you are struggling for a deposit you might want to consider a new build as some developers will pay all/some of your deposit on certain properties.

As for the whole fixed vs tracker debate, here's my take on it. Interest rates will inevitably rise at some point; however, in order for a tracker to become a 'worse deal' than a short term fixed rate (up to 3 years), the interest rate would likely need to rise significantly or very rapidly. Fixed rates carry quite a hefty premium and even if say rates rose (in stages) by 3% next year it wouldn't necessary mean that a fix works out cheaper because prior to those rises you would have been paying less on the tracker. So I would say that people considering fixed rates should be looking long term (5 years+).

Also, just to clarify on the £100k example given above, if they are lending you £100k and you buy a house for £110k that means that your deposit is less than 10%. More likely you would need £11k if you wanted to buy a £110k house.
 
vonhelmet said:
I wouldn't touch a tracker right now, as I'm sure interest rates are going to climb. I could be completely wrong though, but I'm just very risk averse. I'd much rather pay over the odds at a predictable rate than risk the rates skyrocketing.
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a tracker ( with no tie in ) is the only way to go at the moment
 
Well the guy we went to see wasn't actually too bad, I was expecting what he said really.
We need a deposit really. Meh.

I'm gonna get a second job as is my GF and were gonna try save 10K+ over the next 1/2 years.

Gonna be great fun! I shall live on bread and butter.
 
unknownsock said:
Well the guy we went to see wasn't actually too bad, I was expecting what he said really.
We need a deposit really. Meh.

I'm gonna get a second job as is my GF and were gonna try save 10K+ over the next 1/2 years.

Gonna be great fun! I shall live on bread and butter.
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don't worry you'll save more than that on house prices anyway.;)
 
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