Mortgage advice ?

Johnnytoxic

Johnnytoxic

Johnnytoxic

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13 Nov 2006
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I'm thinking about buying a cheap flat as I hate the idea of rent. How do I go about getting a mortgage and what do I have to look out for?

Anyone know where to get the best deals? I'm absolutely clueless in this area.
 
I am saving up and first thing is you need a deposit. it seems to get quite a lot cheaper the more you have. Mess around with money supermarket with different amounts, 10% seems to be the minimum for an ok deal.

I am no expert however, still saving and by god is it boring. i am itching like crazy to spend this money. I have never had this much before!
 
At the moment you won't get many "amazing" deals because quite frankly all mortgages (so long as you aren't currently tied into a high fixed rate) are good at the moment.
Many standard variable rate mortgages are between 3.5 & 4% which is a good figure to be on.
You can probably get yourself tied into a fixed for a couple of years at around 4% (levels have more or less reached rock bottom now).

Banks/Building Societies have learnt a little from their mistakes (more so banks, Building Societies always were a little more careful).
So you really need 10% deposit at least.
Obviously more deposit you have the quicker you'll pay off the mortgage or the lower it will be each month.
But aim for that 10% deposit and then you'll be there.
 
To get a fixed of 4% you seem to need a good 40% deposit at least, and it's rare/comes with hefty 'arrangement fees', with a 10% deposit you're talking more 5.5% to 7% fixed from what I've seen.

With the way house prices are going I personally wouldn't consider buying just yet, say you get a 10% deposit together, 8-12 months down the line that 10% will be gone, and that's a conservative estimate.

Saying that, if you've got a 40%+ deposit them buying can work out nicely, a good low fixed rate (interest rates will rise, and rise quickly 'soon' (read within the next 3-5 years, although probably sooner rather than later)) and very little chance of getting into negative equity.
 
So you think house prices are still going down? There is indeed much talk but there must be a big difference between a 170k detached in the north and a 1 bed flat in london. I don't think it matters quite as much up here.

Still, not for a few months or so..
 
starfighter said:
I am saving up and first thing is you need a deposit. it seems to get quite a lot cheaper the more you have. Mess around with money supermarket with different amounts, 10% seems to be the minimum for an ok deal.

I am no expert however, still saving and by god is it boring. i am itching like crazy to spend this money. I have never had this much before!
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Me and my GF are going to start saving soon, it's going to take us about 4/5 years to save up about £20k but you've got to start somewhere I suppose.
 
the key at the moment is the deposit, 25% is the minimum to get a reasonable rate.

I would avoid trackers, as they are tracking at 2-4% above base rate, just think when the rates do go up, probably in 2 years or less. best i think to get a 4-5 year fixed, then you know what you will be paying for the next 5 years. yes you will pay an initial rate penalty (as thay are higher than 2year fixed deals) but again 2 years time the base rate will be much higher.

where are you looking the buy? a one bed flat should not be that expensive outside of London. but don't expect killer increases in your investment over the next 10 years.

are you in a position to borrow money for you deposit? as embarrassing as it might be it can mean the difference between repaying 600PCM or 800PCM.
 
It's about 44k for this new flat and i'm on around 17k at the moment. So I would need around 4k savings to do this?

Also when you mention about 4% mortgages. How much would you have to pay back total for a 44k borrow?
 
Johnnytoxic said:
It's about 44k for this new flat and i'm on around 17k at the moment. So I would need around 4k savings to do this?

Also when you mention about 4% mortgages. How much would you have to pay back total for a 44k borrow?
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if its a new flat, there is the homebuy scheme, which would effectively give you a 30% deposit.

also if the new flat is advertised at 44K, you should be able to negotiate this down.
 
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I notice that a lot of brokers' online calculators now quote me 4x my salary when I check what I can borrow. If that's true then I'd say we still have price falls to come :)

I'm still jumping in around September though I reckon.
 
Johnnytoxic said:
It's about 44k for this new flat and i'm on around 17k at the moment. So I would need around 4k savings to do this?

Also when you mention about 4% mortgages. How much would you have to pay back total for a 44k borrow?
Click to expand...

:( As much as I love living in London, it's annoying that I'm gonna need £200k to buy a pokey 1 bed when I could get so much more for that money outside the capital.
 
You might hate the idea of renting, but buying a depreciating asset is a bit of a silly idea. Wait for a couple if years. Just now renting is the sensible option.
 
silversurfer said:
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:p
 
starfighter said:
So you think house prices are still going down?
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For sure... they are still falling at around 2% a month, Halifax reported one positive month but was negative again the following month, Nationwide have also shown one positive month but their own spokes people talked it down as 'a blip'.

Wait until both Nationwide and Halifax have reported two stable quarters - we're not even close yet.
 
you hate the idea of renting but like the idea of losing large amounts of money on a mortgage for a flat that is guaranteed to lose value - good luck with that.
 
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