First time mortgage advice and tips

Kaelsin

Kaelsin

Kaelsin

Associate
Joined
7 Aug 2009
Posts
333
Evening all,

The girlfriend and I are nearly in a financial position to start our journey to getting on the housing ladder and I’m looking for some advice in-regards to mortgages or/and the help-to-buy scheme.

Obviously plenty of people here have been through and some are likely going through this process right now.

So I'm looking for any advice and tips that people can give me on the dos, don’ts and pitfalls of the process.

Thanks
 
take a look at the rates an independent adviser can find you... then compare with HSBC rates.

You'll likely be best off going with HSBC in a lot of situations.
 
dowie said:
take a look at the rates an independent adviser can find you... then compare with HSBC rates.

You'll likely be best off going with HSBC in a lot of situations.
Click to expand...

I was planning to have a meeting with HSBC at some point as I have banked with them for years, and have had other services with them such as a graduate account, credit cards etc..

Presume I may /could get a slightly better rate for being a long term customer?
 
Some accounts will get a discount on the arrangement fee but I very much doubt they'll change the rate for you.

IIRC you get a few hundred knocked off the arrangement fee if you're a HSBC premier customer.
 
They won't change the rate for you.

Speak to some independent advisors and then speak to the main mortgage providers directly as well. See what's out there.

What's the value of the mortgage out of interest? (ignore the crap pun).
 
Are you living at home at the minute, or are you renting? The reason I ask is that if you're living at home it can be tricky to know what your monthly expenditure will be, and therefore how much you can afford in terms of mortgage repayments.
 
Speak to a mortgage adviser. Probably not wise to take financial advice from people on here :p

Mind you, from my recent experiences their competence can vary wildly. We had a few meetings with different banks and the Santander and Nationwide chaps we spoke to were brilliant. The Barclay's chap was absolutely awful.
 
Kaelsin said:
Evening all,

The girlfriend and I are nearly in a financial position to start our journey to getting on the housing ladder and I’m looking for some advice in-regards to mortgages or/and the help-to-buy scheme.

Obviously plenty of people here have been through and some are likely going through this process right now.

So I'm looking for any advice and tips that people can give me on the dos, don’ts and pitfalls of the process.

Thanks
Click to expand...

The best thing to do is first do your own version of the financial planning test that they will do as in income and outgoings. Then based on that what is the max budget you can realistically afford for a mortgage.

Also with interest rates potentially going up in the coming months I would suggest that a fixed rate mortgage is your best bet as a first time buyer. This gives you the safety of knowing a set amount is coming out where as other mortgage types i.e. trackers can go up and down depending on interest rates.

As others have said get independent advice but I have been happy with the service I have received from HSBC and they do offer some fairly competitive rates compared to other major lenders.

HSBC do offer discounted mortgages for certain banking accounts (I think premium accounts) this can be either discounted rates or reduced/no booking fees.

Ideally try to make sure that the mortgage payments are no more than 40% of your take home pay before any other deductions. This was a piece of advice given to me by one of the first mortgage advisers I spoke to and have stuck to it pretty much as a general rule. It then means I know that I have another 30 - 40% for monthly bills (including food, petrol etc.) and then the remaining 20% - 30% is for saving/ doing what I want with it.

The worst thing you can do is over extend yourself with the mortgage which is why setting a comfortable upper limit is the best thing to do.

Obviously the mortgage you get will depend on the size of the deposit you have but good luck and hopefully you get a great deal.
 
Jono8 said:
Speak to a mortgage adviser. Probably not wise to take financial advice from people on here :p
Click to expand...

This is good advice. When we bought our first place we used a friend of a friend who is an independent mortgage adviser. She helped massively with what can be a fairly daunting process even if you've done it a few times before.

Ask around friends and family and see if they've used anyone they'd recommend.
 
Get a big deposit. The interest for first time buuyers (or high LTVs in general) is a crying shame.

If I could do it again I'd live in a dump for a couple of years, and save as hard as possible rather than be desperate to get on the ladder with a small deposit.

Make an Excel spreadsheet on an example mortgage with monthly payments, monthly interest taken from your payments, offset savings if applicable, and how long it will take to pay off (even my IFA didn't do this). It's then easy to change a few numbers and see the huge difference apparently small changes can make. For my first fixed period, over half the monthly payment went to the bank as interest.
 
Around the help-to-buy stuff specifically, the phase one thing has finished and only the 95% loan part of it is active. HSBC do the best help-to-buy mortgage (that I could see) but you need to have a deposit of at least £10k to be eligible, but that would do you for a house value of £200k.

If you do go help-to-buy you will get creamed on the interest rate for the fixed term but you need to compare that to the rate at which house prices are rising in your area and the length of time it will take to save more deposit to get lower interest.
 
Going to see an IFA is only one tool, and just because you visit one doesn't mean you have to take their product. They should tell you if they are showing you their exclusive products. Whichever looks best at the IFA should still be compared to what you can see online, on the High Street, e.g. HSBC as mentioned above, some banks have branch specific deals to boost numbers.
 
Trifid said:
I'm going to contradict everyone else, I went to see 2 mortgage advisers, none of them offered any benefit compared to using MSE to search the market. http://www.moneysupermarket.com/mortgages/search/results/?goal=MOR_FTB
Click to expand...

I agree with this, basically you have the tools available to you these days and although they say mortgage advisors have 'rates only available to them' I've not seen it in the past when I've used a couple in 2006 and 2009 then had a look online myself afterwards. Mortgage advisers are a bit like travel agents, I wouldn't use one again when I can do it online myself.
 
Bossk128 said:
Get a big deposit. The interest for first time buuyers (or high LTVs in general) is a crying shame.

If I could do it again I'd live in a dump for a couple of years, and save as hard as possible rather than be desperate to get on the ladder with a small deposit.

Make an Excel spreadsheet on an example mortgage with monthly payments, monthly interest taken from your payments, offset savings if applicable, and how long it will take to pay off (even my IFA didn't do this). It's then easy to change a few numbers and see the huge difference apparently small changes can make. For my first fixed period, over half the monthly payment went to the bank as interest.
Click to expand...

As the OP mentioned Help to Buy for new builds might be worth looking into that. We have done it and its great. 20% interest free for 5 years and after that only 1.8% + inflation and even with only a 5% deposit it means you can get a 75% LTV mortgage which opens up some very attractive rates even on longer fixed terms.

Our monthly payment, even on a 25 year term is less than our rent was and we have fixed for 5 years. Help to Buy has made getting on the ladder incredibly affordable for us.
 
davetherave2 said:
Also with interest rates potentially going up in the coming months I would suggest that a fixed rate mortgage is your best bet as a first time buyer. This gives you the safety of knowing a set amount is coming out where as other mortgage types i.e. trackers can go up and down depending on interest rates.
Click to expand...

Just to put forth the alternative. They're also at a premium to trackers and have early repayment penalties... Not to mention that even after a couple if rate rises the tracker might only just get to the current fixed rate available... and you'll have to remortgage at the end if the fix period anyway. Which to chose is completely dependent on circumstances, personal preferences, market view etcetc there isn't necessarily a generic 'best option'. OP should discuss all options with an advisor.


HSBC do offer discounted mortgages for certain banking accounts (I think premium accounts) this can be either discounted rates or reduced/no booking fees.
Click to expand...

HSBC have probably got the best rates on the market, though I don't believe they discount their rates... I'd be very happy to be shown otherwise though as it would represent a big saving potentially.
 
Just applying for my first mortgage, I used the mortgage broker recommended on moneysavingexperts.com and am happy with them. I have a unique(ish) situation in that it is a right to buy so my LTV is 60% even though the mortgage is 100% of the purchase price and I needed a joint mortgage based on just one parties finances.

Ended up applying for a 5 year fixed with the Woolwich and on checking all the rates and fees the broker advised would have been exactly the same if I had gone direct. They are not charging me a penny but do get a commission payment from the woolwich if it goes through. Have my Valuation survey next Monday.
 
dowie said:
HSBC have probably got the best rates on the market, though I don't believe they discount their rates... I'd be very happy to be shown otherwise though as it would represent a big saving potentially.
Click to expand...

If on the HSBC website and you compare the mortgages available then you will see mortgages that are only available to certain customer types eg. HSBC Advanced customers, premium customers etc.

I have recently done a re-mortgage with HSBC swapped from Tracker to 5 year fixed rate and the fixed rate is slightly lower than the tracker I was on by 0.1% but I would expect the SVR to probably start heading back up to the 5 -6% over the coming years so depending on the size of the deposit and LTV (Loan To Value) percentage a fixed rate is probably the way to go at the moment just my opinion here. But getting professional advice on these matters is always best.

From my own personal experience and my loose understanding of the markets I expect the interest rate to start heading back up either back end of this year or early next year so the current low 0.5% base rate will probably start heading back up to 2 -3% by the end of 2015 and then add on top of that the usual 1.5 - 4+% that lender usually adds on, you could see that trackers start hovering over the 4.5 - 5+% rates. But this is obviously dependant on the LTV as the higher this is the more the rate will be. To get access to the "better deals" you are probably looking at having a 75% LTV percentage.

But as I said and others have said professional advice is always required in these matters as for example my situation is very different to yours and you may be looking at different requirements, needs compared to me.
 
Make sure you can handle repayments when interst rates are 10% and not what you're looking at now. If you can't handle rate increases...look for a smaller property.
 
You must log in or register to reply here.
Back
Top Bottom