Mortgages....

Conanius

Conanius

Conanius

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Joined
18 Oct 2002
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So, the time is drawing closer to us wanting to buy somewhere.

We've seen a house that looks absolutely epic, but to be blunt, it needs work doing, and not just a lick of paint. It's got the potential to be incredible (its on a 1/3rd of an Acre plot and is in our ideal location) but its going to take time to get all the work done.

We are confident we could live in it 'as is' and work our way through dealing with the house, but we need to work out where we are money wise as to whether this is even an option beyond evening discussions.....

The property is on the market for lolcash, but we've been told by the agent that an offer would certainly be considered. I think I can get a mortgage for the amount we would be willing to pay, but as the money we have set to one side for deposit would then be used.... I have no idea how I could then raise the capital to do the work to the house. The property is in need of modernisation and would easily show a return on investment.

Potentially we'd consider doing something like a 100% mortgage (do these even exist anymore?!) and then spending the cash we would have used as a deposit on starting doing work on the house. I have no idea if these even exist anymore, let alone the likely monthly repayment costs and if they are available to first time buyers.

So... we need a mortgage advisor recommendation to help explain the best way forward. Independent preferred obviously, but we want to get a feeling as to what our options are. Personal recommendations highly preferred.
 
95% mortgages are available.

Check out Nationwide, currently one of the most competitive. We are looking at re-mortgaging as our 2 year deal is up, and Nationwide are yet again the most competitive.

Just remember though, the less LTV you have the higher the interest is!

What mortgage amount are you looking for? To give you an idea we have a £130,000 mortgage with a LTV of 60%ish (200k house). We currently pay £450 a month on a tracker, looking to go 5 year fix and this will jump to around £550 a month.
 
100% mortgages don't exist any more, and you're facing the same problem that a great number of buyers face - you can't borrow the money to do up the house because banks will only use the lower of the purchase price/valuation to determine LTV.

You'll be able to get a 90% LTV mortgage, assuming you've got anything more than a missed payment or two on your credit history.

I had the same problem as you do, and I've got to stick to the rules as well... which meant that I used 0% credit cards to do up my place. My intention was to get it all done up, and then have it revalued and take out a loan against the improved value to pay off the credit cards. I've just left the money on the cards and I'm about to move what's left onto another 0% deal. Effectively the interest rate is under 2% this way, the repayments are a fair bit higher than a secured loan would be, but I'm quite keen to get them all paid off.

Edit : As to 95% mortgages I don't often look at them, but any I've looked at I've found are more expensive over the fixed period than 90% rates to the point where you pay more than the 5% deposit in extra interest/fees. So at the end of a 2 year period, for example, you end up having given the bank the same amount of money as a 90% mortgage, however you still owe 5% more.
 
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Thanks for the replies guys, gratefully received.

The purchase price we'd be looking at offering is 200k. I think if we could get a 95% mortgage the cash we'd have left would go a decent way to shoring up the existing house in the meantime to be liveable, accepting that the future would bring epicness....

Properties around it are going for 350-400k, so I think this gives you an idea of the scale of the project, its a 1920's property that only had central heating put in during the last 10 years !

However a lot of these locally priced houses are sporting significant extensions/improvements. The land and precedent for planning permission is there, and this would be on the cards for further down the line.

I guess what the hope would be would be buy now, do what we can, and then in 2-3 years look to extend the mortgage to do the real brunt of the building works.
 
It's very early days as to cost of tidying up the existing property. We've only had one viewing so far, so need future viewings/get some friends in who have skills to get an idea of the state of things etc etc.... I'd imagine getting the existing property to a liveable standard could be achieved for 5-10k, but in honesty I have no idea. We wanted to get an idea on mortgages before we could really understand what the chances were as to affordability.

Future work I have absolutely no idea on. The garden must be.... 250 foot long? so it all depends how much we would want to extend out onto/how fancy the kitchen was going to be/whatever... I'd be surprised if you couldn't sink 100k into the property and not see a return.
 
Personally I would never overstretch myself to buy a property, it's just not worth the stress. When I buy a house, I will make sure I have contingency available which will cover drop in earnings, and unexpected costs etc. The housing market outside London is very flat because property prices were pumped up in the credit boom, and in my opinion they are likely to just stay flat as the economy is going nowhere fast.

Personally I would not ever let a property tempt me to over stretch. Make sure the figures are manageable and you are being very realistic in your estimates. I would say don't rush, as other good properties will come up, and if you don't know about mortgages then start educating yourself before you see an advisor. The more you know, the better your chances of getting a good deal.

Rgds
 
And this is the exact reason in my first post I asked about mortgage advisor recommendations.... I have no intention of crucifying myself, and want to see if this is viable.
 
To get an idea on mortgages, have a look at this website. It probably doesn't cover all mortgage lenders but it gives a pretty good range.

Saves you going to each lenders website and using their calculators if they've got them.

As to whether to buy your house, if I was in your situation I personally wouldn't for two reasons:
1 - I really don't enjoy painting/decorating, so doing major work on a house AND living in it at the same time would be my idea of a nightmare. If I had a huge house where I could live in one half and work on the other half in my own time then I might consider it, but for 200k I can't imagine it's particularly huge so you'll probably have to hurdle the paint tins and dodge the stepladders on your way to work every day!

2- I'd want more equity in my house. If house prices were to drop by a reasonable amount then you'd be stuck in your house, a potentially unfinished one if money dries up for whatever reason. Not a problem if you're happy to stay in that house for a long period of time, but what if you start a family and need a bigger house or need to move for new job?
 
Usually not, Relentless. As long as you have enough equity in your current property to become a deposit for the second one.

E.g. if you have a 40K mortgage on a 100K house then you can move to a 200K house and use 60K of that as a deposit.
 
We had a similar issue.

As said 100% mortgages don't exist anymore do we took out a separate 15k loan from another company after getting the mortgage. It was a financial burden but we needed the money, and cope with the repayments, so we just went for it.
 
Relentless81 said:
Whilst theres a thread...

If I already have a mortgage and I want a new house next year worth double my current one, do I need any form of cash contribution?
Click to expand...

depends on the equity in your current house and the resulting LTV on new house
 
No worries on the hi-jack, it was relevant !

So the major reason why I could cope with the 'pain' of living around paint tins etc is that we would be happy here, well, forever, we would never need to move.

I've spoken to my bank this morning who have agreed in principal a mortgage, so I know I can get one. Now I just need to find what the best deal is that I can find.

So, as per post 1, any recommendations for independant mortgage advisors?
 
I got my mortgage through

http://www.watts-ifa.com/

they were recommend by a family friend who has used them in the past and I was more than happy with the outcome, they will look at your situation and find a suitable product for you. Might at least be worth a phone call I seem to remember there was a flat fee once you have completed the mortgage.
 
Just at thought but if houses in the area are worth 400k. If you can get planning to knock the house down and build 3 or 4 new ones on the land you should get 150k per plot.

Also keep in mind if you borrow with a very high LTV ratio your interest rate is going to be very high. However maybe if you take a 2 year deal at 90% LTV and then do up the house and its revalued in 2 years at 400k you can then get very good rate as your LTV will not only be 50%.
 
No1newts said:
We had a similar issue.

As said 100% mortgages don't exist anymore do we took out a separate 15k loan from another company after getting the mortgage. It was a financial burden but we needed the money, and cope with the repayments, so we just went for it.
Click to expand...


Sounds scary but I am sure it will work out ok. Just get your loan paid asap.
 
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