Mortgages, talk to me

Fantom

Fantom

Fantom

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Joined
13 Feb 2006
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2,445
Location
Cornwall
Hi all,

Im looking into getting a mortgage as a first time buyer.

I wondered if you could share any tips or experiences that could help?

Thanks
James
 
Don't buy the estate agents' legal services or the broker's / seller's income protection.

Fix only if you cannot afford for rates to go up. I was just about to fix when the recession happened and the VBR plummeted...lucky escape that would have cost me thousands. That said the situation is different now, with rates expected to start rising fairly soon so a decent fix may not be the worst idea.

Speak to loads of people before committing. Shop around on moneysupermarket etc.

Get as much equity in as you can possibly muster (fairly obvious unless you have better use for the money).
 
I have been told from a few mortgage providers that getting lots of prices for a mortgage will harm my credit rating, do you know if this is true?
 
Hmm ok, well the one I'm looking at has an overall cost for comparison of 3.9% is this pretty good? or am I looking at the wrong number to get an idea?

Also forgot to mention that is a fixed rate 3 year jobby
 
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Sorry, I'm only able to tell you the experiences I had four years ago. Beyond that, I'd hesitate to advise, as I do not have the expertise nor the experience of the current market.

Overall costs for comparison are useful in terms of sheer spend, but does not take account of cash flow available to you over that period. E.g. cost for comparison is of course lower for a ten year mortgage than it is for a twenty year one.
 
Robbie G said:
Sorry, I'm only able to tell you the experiences I had four years ago. Beyond that, I'd hesitate to advise, as I do not have the expertise nor the experience of the current market.

Overall costs for comparison are useful in terms of sheer spend, but does not take account of cash flow available to you over that period. E.g. cost for comparison is of course lower for a ten year mortgage than it is for a twenty year one.
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Of course, sorry mate didn't mean to put you on the spot :)

Its difficult to find someone impartial and expert in these areas that wont charge an arm and leg to advise me on such things
 
Not at all :) it's just better for you if I don't comment on such things. There'll be someone on here that knows a lot about mortgages I'm sure...

One more thing...bare in mind that you can overpay by 10% of your outstanding balance per annum legally, and many mortgage providers are allowing people to pay more than this (claiming that they're being nice, in reality boosting their cash flow). Therefore it's better to lean on the side of caution in terms of mortgage term in that you can always overpay, but rarely can you underpay.
 
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London and County were helpful for me last time round. I fortunately came off my fixed rate before the drop, but prices can only go up. You just need to take a guess as to when.
 
A broker who you trust can be invaluable. We used a friend of the family and he was absolutely fantastic. The main decision you'll face is how much to fix and how much to put on a floating rate. As Robbie G said, this is a question of timing and what you think is likely to happen over the term of the 2,3 or 5 year deal.
 
Hi Fantom

I am also looking to get a mortgage shortly

I've have got advice from a local whole market independent mortgage advisor (whole market being important). I think I will be asking a few mortgage advisers what they recommend - that way I will have a more informed idea of what mortgage to choose.

At the moment what I can't decide upon is how long to fix my mortgage for. The last advisor suggested 2 years fixed and he was able to get a rate of 3.5%. He said that I could fix for 5 years but the best rate he could get would be 5.9%.

He went on to explain that banks don't really want you to fix for long periods of time so they charge more the longer you fix the mortgage for. He explained that with the current interest rates being at 0.5% the way they can change is up but by how much and when is anybodies guess. So if interest rates went up above 5.9% the bank would start loosing money on your mortgage, but again do you see interest rates going above 5.9%?


Fantom said:
I have been told from a few mortgage providers that getting lots of prices for a mortgage will harm my credit rating, do you know if this is true?
Click to expand...

This is true if, as part of the search, a credit check is made against you. The more credit checks the more it looks like you are searching for credit and are being turned down. You only need to have a credit check carried out when having a mortgage agreed in principle.
 
didgemaster said:
So if interest rates went up above 5.9% the bank would start loosing money on your mortgage, but again do you see interest rates going above 5.9%?
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Very unlikely, but would anyone have said just a couple of years ago that interest rates will be at an historic all time low of 0.5% for quite a while? No. They've been relatively stable since 93 but were in the double digits in the early 90's.

*edit* sorry I misread you, no they're not going to go up that quickly are they derrr...

I've applied for mortgages just recently, ready with my deposit but I'm not earning enough to qualify yet which is quite ****. Next year hopefully.
 
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I would also go fixed rate as a first time buyer as it is easier to control your finances. You know whats happening every month and its all text book stuff for the term you fix in for.

The downside is your sometimes get a higher rate but that is the price you pay for piece of mind.

My other advise is shop around, I bought my house just under a year ago and I did lots of online research, went into estate agent brokers, independent brokers and an IFA or two.

I ended up going directly with Santander as I got a better rate from them than one estate agent broker said they could get. It was also the best I had found throughout the whole time I was investigating. (3-6 months I guess).

As a FTB you won't have many options unless you are minted, standard 10/15/20% deposit limits your options so you will just have to pick the best from a limited range available. (How it was for me at least).

Things have changed a lot in a year though, my advice is to really take your time. Try and fully understand everything and don't get pressured into anything.

Also, Moneysavingexpert forums are a gold mine for advice/research.
 
The fixed/tracker thing really depends on how much buffer you have.

We wanted to keep out disposable income for other things such as saving for a car or vets bills, and as such took a fixed rate that was within out budget.
 
I was explained that fixed rates are a bit of a con really; if it's fixed at x% for 2 years, that means the bank have considered any forecasts and still expect to make money on that rate.

I went variable so I'll have to see how it pans out. The fixed were a good few % above the current rate, so fingers crossed.

Furthermore, someone else mentioned that if you put the savings from going variable into a seperate account and only dip into the account should the rate go above the fixed rate, at what would be the end of the fixed term, you will almost certainly have a surplus in the account.
 
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go and see a mortgage broker or two and sit down and go through the maths


how much deposit

how much you borrow

what price you can afford to buy a property for

how much that would mean in repayments per month


its all in the numbers..
 
thats a good rate, I am with Co-op, on a 2.5% over base tracker, ergo paying 3% at mo, but to fix mine would take it to 4.5, so will stay with the tracker for now as cant see the interest rate going up by 1.5% next year. In fact thats a bloody good rate.
mrs herby
 
Fixed = safest from a monthly budgetting point of view. If your mortage is a significant % of your income or you have very little disposable left then consider fixing. See if the IFA can give you some examples of different rates upto say 10% maybe higher then just look at the numbers. Then you take the gamble.

I still remember people from early 90s when rates hit 17%, some were white as sheets.

I am personally not convinced we can afford to see noticably higher rates for a few years yet, higher rates will hit house prices again as they will yet again prevent new buyers. With the tightened lending restrictions in place its hard for people to enter the market now, add on higher rates and that will slow to a crawl which can only lead to some price impact (all IMO). The only other option I see is a relaxation in the lending restrictions again so back to 95% or 100% mortgages but then I am not sure we will have gone far enough on the cycle to see people having forgotten what happened last time when we got to the 105% with no fees and cashback etc etc
 
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