Mortgage advice? what to check? FTB

[HungryHippos]

Hi,

I am looking at buying a new build property, which will be ready approx 2nd quarter 2013.

The price of the property after discounts is £153k.

I have a deposit of 40% after saving for the last few years, so an LTV of 60%.

I've spoken to a mortgage broker, and the best deal they can get me at the moment is this:

• 2.69% fixed for 2 years.
• £999 arrangement fee.
• Early exit fee of 3% of the balance before 31/12/2014. After then 0 exit fee.
• Max overpayment of 10% a year.
• 25 Year term.

This seems like a decent deal, I've shopped around a bit and I may be able to do a little better (1.99% with Tesco for example).

I think I would have a lot more headaches than letting the broker deal with it, and as it's a new build the mortgage will elapse before the house is ready.

This broker was recommended to me by the Developer (Taylor Wimpey) as they are used to this happening, and can handle it on my behalf.

Taylor Wimpey will pay £1k towards my legal fees if I use their solicitors (Coffin Mew).

Question 1).

Do you guys think this is worth taking up? Calculated that it would be £425 p/m over the term of the mortgage, and I will easily be able to afford this with bills on top and general living.

I should even be able to save a bit each month so I could overpay.

Question 2).

What should I check and double check before applying? I don't want to be rejected. These are all the things I can think of:

• I'm on the electoral roll at this address.
• I don't have a passport.
• I have a 1k Limit CC with Tesco that is set to take Max payments by DD every month.
• I have no other outstanding debt.
• I have just sent my drivers license off to the DVLA and my car registration form to get the correct address put on them (was my parents).
• I don't have any other monthly outgoings other than the cost to run my car/insure it/tax it.
• I did check my credit report with Noddle a while back and it said I had no red markers, and my credit score was "OK", 3/5 of whatever they mark it on. I haven't checked it recently, don't want checking it too much to go against my credit score.
• I've changed my bank statements to go to my home address rather than on-line only. I will ask them to send me one anyway as I understand this will be needed as proof of identity.
• I've got a solid job. I've had full time employment for 6 years and am earning enough to cover the cost of the mortgage + living expenses. Work can prove my earnings if needed.

Can't think of anything else.

 

[HungryHippos]

Thanks for all the replies everyone.

After the 2 year term at 2.69% the rates would go to std. variable rate of 4.24% (at today's interest rates).

Fixing for longer is a better idea perhaps? Thought it seems that fixing for longer also increases the interest rate somewhat proportionally.

I don't think I can really change the price of the house now that it's been agreed - that price is with a 12k Discount on the sticker price, and I also get a 4k "allowance" to spend on white goods/customisation.

I am anticipating that I should only need to look at flooring/blinds/curtains myself. The rest should be covered by the allowance more or less, this includes getting everything in the kitchen, upgrading most of the lighting to spotlights, amongst other things.

I do wish I'd asked for a little more at the time (a bigger allowance maybe, or closer to 150k on the price) - but for the freedom this will give me, and considering the building is also detached I don't feel I'm being ripped off or anything. I can quite comfortably afford the payments, and I don't plan to sell up any time soon.

The lender will need to value the property anyway, so they may come back and say it's not worth as much as I'm paying, but I would imagine that a house builder will be pricing the properties at a ball park figure that is fairly accurate based on experience in building/selling properties!

TW say I need to Exchange on the contracts sooner than later, the broker seems like the most sensible way to do it as it will allow them to work on my behalf, even if it means I don't necessarily get the best rates, as long as it's close there won't be too much in it for me.

I've spoken to a few companies now about Mortgages, Tesco was one, and HSBC was another. Tesco did not seem interested as the property was not yet built and they can't value it. HSBC flat out told me they wouldn't give me a mortgage for a property that was not ready within 6 months!

I could see about arranging a visit to my local HSBC branch though, I bank with them so I shouldn't have problems getting a mortgage through them if need be.

I've had bad experiences with Nationwide so I'm avoiding them, it's a shame, but when I was younger they would not give me a debit card as I'd "failed" their credit checks. I'd held an account with them for years and I was earning a little beer money in a part time job, so why they failed me I don't know. But if they failed me for that, god knows how I'd get a mortgage from them!

Funny thing is HSBC gave me a current account/debit card right away, and I've never ever been into my overdraft.

All advice welcome.

 

[HungryHippos]

As you will have a relatively low mortgage you should try to seek out products with low arrangement/valuation fees (although obviously do the full calculations to work out the best deal). Paying a £999 fee on a loan of under £100k is a fairly hefty chunk and a 3.19% 3 year fix with NatWest (no fees) may work out better if you do the sums as the additional interest accrued could work out cheaper than the fee.

Tesco 1.99% deal seems the best to me right now, all things considered.

In terms of the lender attitude to new build I am a bit surprised, I bought a new build and getting approval from my lender wasn't a problem although I did need to redo it when it expired after 3 months or whatever. The fact you have 60% LTV should help I would have thought, one of the big issues with New builds is (was) people taking out 90%+ LTV mortgages which meant that they were effectively in negative equity from day 1 due to the market value being significantly lower than what they paid, this shouldn't happen with a 40% investment meaning the lender is a bit more secure.

As for using a broker I wouldn't bank on them busting a gut on your behalf, my first mortgage I went through a broker and it wasn't any easier really than arranging it myself second time around. A broker is by and large just a middleman dealing with many clients who will rush through the forms with much less care and attention than you would pay yourself when making probably your biggest ever purchase to date. If you think about it, spending over £150k SHOULD be a fairly complex and hassle-full experience.

Is it this you are going for (possibly 2+2 = 5!)? http://www.taylorwimpey.co.uk/newhomes/southern+counties/thenightingales/thehurley/

Yep that's the right one, well found

Did you exchange contracts with the lender before the 3 months was up, and then re-evaulate the interest rates after this expired? was this hassle free? any fees involved?

General theme here from people is suggesting I should look for lower arrangement fees or fixing longer term. I can shop around a little but maybe it's worth just settting up a meeting with my local HSBC branch who I bank with anyway, by all accounts they give pretty decent rates anyway. Good idea?

 

[HungryHippos]

Thanks for the continued advice everyone, I've called the broker I spoke to previously and asked about mortgages with lower/no arrangement fees, longer fixed terms (3 years), and of course they will have slightly higher interest rates as well.

Will see what they come up with. I will do a bit of on-line shopping as well, good advice to get a feel for the market and what I should expect for my LTV ratio.

I've also booked an appointment with HSBC for next week to go in and have a chat with them about it all, I doubt I will sign up for anything there and then, I would rather take a little time to mull over any offers I get before agreeing to anything.

I don't mind a bit of hassle but don't want too much, the easy way out usually does cost a little more. If it's a difference of a few £ a month I won't mind too much.

I will also speak to another broker as well as I don't want to keep all my eggs in one basket, see how they compare.

I understand to get a mortgage you need house insurance as well, can anyone give me any specifics on what I need for this precisely? I don't want someone flogging me some expensive insurance on top of a mortgage if I can get the same for less elsewhere.

 

[HungryHippos]

When I spoke to HSBC on the phone the other day they quoted me these prices, haven't any other specifics on them but I can do some maths when I go and see them next week.

Based on 60% LTV. Arrangement fees are in the brackets if applicable:

2 year fixed - 2.39% (1499)
2 year fixed - 2.79% (599)
3 year fixed - 2.79% (999)
5 year fixed - 3.29% (499)
5 year fixed - 3.49%

 

[HungryHippos]

I would also strongly recommend asking to speak to the site manager and asking if he can put you in touch with the spark. If your TW site are anything like mine they'll be wanting £50 a piece for halogen spotlights.

Speak to the spark, behind the sales team, give him plans for your lighting so he can do a first fix. Supply the fittings & units (I'd recommend LED - the initial outlay is more but will still be cheaper than what you were prepared to pay for halogen and will give you significantly lower bills) yourself and have him come and fit them once you've completed and moved in.

That's what I did and I saved a fortune (under £20 per light fitted with a decent LED bulb), down lights, power & light to garage, shaver sockets, TV points etc.

Of course if your site aren't as lax as mine then there's not much you can do.

Sounds interesting indeed - they charge £70 per spotlight in the development I'm on, everything is more expensive down south unfortunately.

I have an allowance I can spend on things before I have to cover extra costs myself, a good chunk of that would be going on spot lighting.

You can put LED bulbs into the spotlight slots though right? or does it need different sockets? I would need a lot of spotlights to be honest so LED may be the way to go as I would save a lot on electric bills.

I was reading the thread on the LED lights and they sound great for cheaper power usage, and also how long they last, but a lot of people said they also give a "cooler" temperature light, halogens give off a much warmer (more expensive) light.

Just follow the normal MSE guide for home insurance (basically using comparison sites plus a couple of extras). However be warned that many insurers won't let you get a quote for a policy start date more than 30 days in the future (some 90 days) so you could be jumping the gun a bit.
[This reminds me I need to get some quotes!]

In terms of getting flogged expensive insurance the key thing to watch out for is more likely to be life/disability/income protection insurance. Especially when going via a broker, they will probably try and push you down that road to try and get some commission. Home insurance is mandatory, you definitely need that, but personal insurance is entirely optional and if you do decide you want it again make sure you shop around.

Sounds like it will be easier to go with the Mortgage peoples house insurance first off, and switch after a year or so then. Does this include contents insurance or is that a totally separate thing altogether?

Not sure what to think about other types of insurance to be honest, I'd be the sole dependent on the mortgage so I would perhaps feel safer with some cover in case I couldn't work for any reason and still needed to pay the mortgage payments. Work would probably cover me for a little bit in this event but not forever.

 

[HungryHippos]

Just "eh?" at this post....

To be honest as well, I did push for more off the price but they said they couldn't go down further than they did, they gave me a bit more on my allowance to spend on white goods instead (costs them less). They're paying for most of the solicitors fees too (1k).

House prices may be falling, but in my area they've stayed pretty static from what I can tell, everyone i've spoken to recently who's purchased here has been able to buy for less than the sticker price, but not by much, a few K here and there

Might sound strange but I'm not buying as an investment as such, more as somewhere to live. If I wind up selling for a similar price 5-10 years down the line I won't lose any sleep over it! should be cheaper for me than renting, and at least my money is going towards "something".

 

[HungryHippos]

That sounds awful Transam! I must admit I did not get the impression that the people on my development are a bunch of cowboys, in fact they impressed me with the organisation I've seen so far, and have answered every question I've had for them too.

I have agreed a get out clause with TW in the event I Exchange, the 6 month period elapses, and then I can't get another mortgage for some reason, I will get my 10% Exchange money back. Chances are slim for this but better safe than sorry.

I have a question on the Building insurance if I may, people have said that it's easier to get Buildings insurance with the mortgage product for the first year or so, and then switch down the line. Does this generally include contents as well, or can I get the Contents insurance elsewhere?

Considering I would be buying alone and need to be paying for this every month, in the event I fall ill and can't work, would you guys recommend some insurance to cover this too? I wouldn't mind paying a little more on top for some security in this respect.

My job has been solid for the last 6 years and I can't see anything on the horizon to suggest otherwise, but you never know.

 

[HungryHippos]

I am down south! £70 is ridiculous. Seriously speak to the site manager. If they're unwilling you,'d still be able to get them done after your house is completed cheaper, you'd have to reskim the ceilings but that's crazy.

I think I bought around 50 fittings and down lights, strip lighting kitchen work tops and bulbs for porch lights all in for under £1k, all LED, drop me a PM and I'll send you some details and pictures to show you the colour and type of light they give.

10 lights will cost you £700, that's ridiculous!

I've sent you a email from trust.