Mortgages

NotAGolf

NotAGolf

NotAGolf

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I was just wondering if anyone could give me a quick overview of how the whole mortgage procedure works. Essentially I want to know how much money I'll need to save up for a deposit.

I'll be moving in with my girlfriend (we're both 22), we'd want a little 1 or 2 bedroom place somewhere in the South East of England. Hopefully by that time we'd both have jobs around the 20k each mark, a bit more if we're lucky. This wont be for another year or so yet.

I don't really know much about house prices but I'd imagine we could get something suitable for 200k. What kind of deposit and monthly repayments would be looking at in our situation? Just a rough guess would be great.

Thanks very much.
 
To get a mortgage you'll need 10-15%, so £20-30k - however you're probably looking at a 5.5-7% interest rate rather than the 3-4% adverts you see in the papers.
 
how much you repay will depend greatly on what percent of the total value you pay by deposit and the length of the mortgage.

typically if you can put down at least %25 of the total value as a mortgage and have a reasonable 25 year term then repayments wont be too bad.

I had to go for a 80% mortgage (I pay the other %20 as deposit), i was desperate to get in the 75% range for the better rates but i couldnt in time.

so for the next four years on a 67,000k mortgage iam paying £370 a month. then after that its £300 providing i dont switch/find a better alternative. going to be 4 hard years :-( but the only other option is getting mighty close to 30 while still living with my parents.

speak to a financial advisor, mortgage advice is often free as they are usually commission based.

btw, moving solicitors costs etc are twice as much as what you would expect.

so heres to me living off tesco value bread and heres to you heading for the great bank butt-raping, cheers.
 
When I remortgaged with HSBC a few days ago, the minimum deposit I could put down was 10%; but, if I put down 25%, I could get better rates. Since money in savings is practically pointless these days, I went for the 25% and lower monthly payments.
 
I'm in the process of buying a property worth 175k at the moment in the south. 3 Bedrooms, garage, garden, nice place and I'm really happy with it!

Here is the deal that I have found:

- 10% minimum deposit, I have 15%; that's 17.5k minimum and I'm putting down 26k.

- The more deposit, the better rates you get from the lender. Best rates are 25% and up.

- There are only a few lenders at the moment really who are worth going to as a First time buyer. I'd suggest doing your own research, but Abbey is who I am going with as they are best for me in my situation and from all the research I have found.

- Rates are typically around 5.5-6% at the moment on 15% deposit.

- I'm going on a Repayment mortgage atm, which means in 25 years (in theory) I'll have paid off all the money I borrowed plus the interest. Interest only mortgage is worth looking into if you can a) Get it with the lender b) Manage your finances well.

- Make sure you have a good credit rating, I suggest signing up for free with places like Experian, Equifax, etc. A good basis of this is do you have any existing loans, credit cards, etc. Do you pay them off in full?

- You will need the deposit if you are buying a property over 175k then stamp duty of 1% of total value of the house will apply (cheers government). I think there is talk of this going down soon but that's something to consider.

- Not only fee's for stamp duty, but you will have to pay a solicitor/conveyancer which depending on who you go with, is going to be anything from £600-£1400 (from quotes I found).

- You will also have to pay for a mandatory building insurance which can be costly but again, shop around and do research. I've got buildings and contents with Abbey for the first year (saves on paper work and more fees) for around £40 a month. When they first quoted me it was higher and I said it was a bit steep and they almost imediatley gave a better offfer.

Best advice I can give is to heavily research everything. Moneysaving expert website is excellent as are other sites.

It's a costly business and I would stress you research everything, plan your finances accordingly, ask lots of advice from anyone you can and be smart with it all. It's a big commitment.

Good luck with it all, I'm happy to answer any questions you might have to the best of my ability :)
 
40% deposit: Opens up pretty much the full market
25% deposit: Good range of deals
10% deposit: Minimum you should aim for to avoid getting completely screwed over on rate/fees

HSBC have some great discount deals lately if you have a large deposit. But obviously, do your own research closer to the time.

Regarding stamp duty, while the threshold is currently £175k as pointed out above, this will have dropped to £125k by the time you buy your house next year.

To be honest my advice would be to sit back and just learn how things work for a few months, the rate the housing market / mortgage is changing at the moment the chances are the situation may be a bit different when you finally come aorund to buying a house in a year or so. Most mortgage applications are only valid for 3 months or so, so not much point digging too deep now.

Knubje: £40/month seems a helluva lot to pay for insurance on a £175k property, do you have a lot of high value items / low excess / dodgy area? Could be your lender trying to pull a fast one by offering you an overpriced insurance product (they often do the same for life/redundancy insurance too).
 
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HangTime said:
40% deposit: Opens up pretty much the full market
25% deposit: Good range of deals
10% deposit: Minimum you should aim for to avoid getting completely screwed over on rate/fees

HSBC have some great discount deals lately if you have a large deposit. But obviously, do your own research closer to the time.

Regarding stamp duty, while the threshold is currently £175k as pointed out above, this will have dropped to £125k by the time you buy your house next year.

To be honest my advice would be to sit back and just learn how things work for a few months, the rate the housing market / mortgage is changing at the moment the chances are the situation may be a bit different when you finally come aorund to buying a house in a year or so.

Knubje: £40/month seems a helluva lot to pay for insurance on a £175k property, do you have a lot of high value items / low excess / dodgy area? Could be your lender trying to pull a fast one by offering you an overpriced insurance product (they often do the same for life/redundancy insurance too).
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It is a little higher than I have seen by shopping around. But taking into account I'm only doing it for a year to make things with the house tie up easier I'm not too fussed.

It saved extra fee's with solicitors and will be a bit smoother going through "the process" of getting it signed/sealed/delivered :D

After a year I'm clearly shopping around.

Didn't go with any of their mortgage protection plan/life insurance crap, shopped around for that and found some deals ;)
 
Fair enough, I did have one problem with our current house in that it was a new build and as such a lot of online insurers didn't recognise the house number (you know, those annoying forms where you have to do postcode search and then select the number, no option to enter manually). Hoping to get a bigger market this year :)
 
Me and the wife are also thinking of taking out a morgage, although getting 20 grand will take us years! you can't buy anything for under 180k these days round here too, which sucks
 
I imagine by the time you come to buy something, the mortgage market will have completely changed anyway!!
Just something else to consider - even with minimum 15% deposit, many lender will still not lend more than 3 or 4 x joint income.

oh yeah, with 15% deposit on a £200k property at the moment will mean repayments of about £1k pcm
house insurance (building / contents / life + critical illness cover) is an additional £100ish
council tax, utilities, general maintenance are all other expenses to consider without even thinking about luxuries like internet, sky tv and food!!
 
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Just in the middle if buying my first buy! It's priced at 160000 with a 15% deposit of 24000 so a morgage with London and country brokers. It's a 2 bedroom ground floor maisonett with front garden and rear with shed plus share of freehold! What do people think? It's in the Sutton/wallington area and I drive to work so no cost to get to where I work which is Wimbledon area. Any areas that there are bargains to be had? Thanks for looking!
 
Thanks for the help all.

I realise that a lot of things will probably change between now and then but it's good to know at least a rough idea of how much money we have to get together, and to have a rough idea at the monthly payments we'd be looking at.

Think we'll try to save a little longer to get nearer the 25% deposit bracket. That'll take some serious work though!

Once you have a mortgage, how difficult is it to change? Say we only had a 15% deposit but after a year or so of living we both got better jobs and could afford to pay more a month (or even if we went the other and couldn't afford as much), is it possible to just alter your payments with your mortgage provider or would you have to move to another company?

Thanks again.
 
it depends who your mortagage is with, and the type / term
some lenders will let you 'overpay' by up to 10% per year, which comes straight of the capital (i.e it's not all going towards interest)
if the probablity was that you knew you were going to come into a lot of money not long after you bought, maybe a shorter fixed term mortgage would suit you better
if you withdraw from a fixed term mortgage early, there is a release fee (on our 4yr fixed for example, the fee is £6k!!) so it's worth putting some thought into it at the start!!
 
HangTime said:
Knubje: £40/month seems a helluva lot to pay for insurance on a £175k property, do you have a lot of high value items / low excess / dodgy area? Could be your lender trying to pull a fast one by offering you an overpriced insurance product (they often do the same for life/redundancy insurance too).
Click to expand...

home and contents insurance for me is £175 a year.
 
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