Online Mortgage advisors/rates? plus some other questions

jonneymendoza · 30 Oct 2012 at 14:09

yea thats my plan, get a mortgage first then do contract work.

can a solicitor help calculate my potential outgoings based on the property i made an offer with?

for a 25 year mortgage i pay around 1.4k

u reckon its worth it? 25 vs 30/35?

what do i benefit from it besides paying off my mortgage 5/10 years earlier?

edit, 25 year mortgage with natwest:

Lender NatWest FTB
Product Name FTB 5 year Fixed rate
Type of Mortgage Fixed
Initial Rate 4.79%
APR 4.40%
Max LTV 90%
Actual Cost Over 5 Years £80,299.00
Monthly Repayments £1,287.95
Scheme Duration To January 2018
Lender's Base Rate 4.00%
Portable
Cashback £0 paid to you on completion.
Early Repayment Charge 5% of outstanding loan before 31/01/2014, 4% of outstanding loan next year, 3% of outstanding loan next year, 2% of outstanding loan next year, 1% of outstanding loan for scheme period
Number of Monthly Repayments 63

35 year mortgage with natwest

Lender NatWest FTB
Product Name FTB 5 year Fixed rate
Type of Mortgage Fixed
Initial Rate 4.79%
APR 4.30%
Max LTV 90%
Actual Cost Over 5 Years £69,357.40
Monthly Repayments £1,105.59
Scheme Duration To January 2018
Lender's Base Rate 4.00%
Portable
Cashback £0 paid to you on completion.
Early Repayment Charge 5% of outstanding loan before 31/01/2014, 4% of outstanding loan next year, 3% of outstanding loan next year, 2% of outstanding loan next year, 1% of outstanding loan for scheme period
Number of Monthly Repayments 63

Crizzy · 30 Oct 2012 at 14:23

Right:

So borrowing £225k over 25 years will cost you £131,597.35 in interest with the rates you quoted. (Initial rate of 4.79% reverting to 4.0% base rate after 5 years).

Borrowing the same amount over 35 years will cost you £177,141.28 in interest.

So aside from finishing your mortgage a whole 10 years earlier, you'll be saving £45,543.93

Overpaying the 35 year deal by £182 (bringing it in line with the 25 year deal) a month every month will see you pay £131,660 in interest so only £60 more and will finish your mortgage in just over 23 years.

(all figures calculated by MSE Mortgage Schedule Calculator, I do not claim they are 100% accurate!)

NotAGolf · 30 Oct 2012 at 14:27

jonneymendoza said:
u reckon its worth it? 25 vs 30/35?

what do i benefit from it besides paying off my mortgage 5/10 years earlier?

Can you afford the monthly repayments for a 25 year mortgage without struggling to get by/living like a hermit? If so then yes it's worth it.

The advantage of paying it off quicker is that you'll save 10's of thousands of pounds in interest, and own your house sooner, meaning you'll have lots more cash every month to play with (after you've paid of the mortgage ofc)

. Use the calculators mentioned above to see just how much you'll save.

jonneymendoza · 30 Oct 2012 at 14:33

i earn 2.3k after tax per month. missus earnes around 1.2k after tax

PapaLazaru · 30 Oct 2012 at 14:49

How much deposit do you have?

How much you can borrow is determined by both of your gross annual salaries, less any financial outgoings you may both already have. Not your net incomes.

Most lenders will go to 4x both of your incomes.

Keep the mortgage as short as possible but do not make it barely affordable.

If you do contracting work this may play against you when you come to remortgage. Most lenders view this is being self-employed (because it is) and most want you to have been self-employed for two years minimum, in order to make a comparison of more than one years income.

As firned of mine has recently become self-employed and even though his income is clearly higher than before, he cannot get a mortgage.

http://moneyfacts.co.uk

Crizzy · 30 Oct 2012 at 14:53

jonneymendoza said:
i earn 2.3k after tax per month. missus earnes around 1.2k after tax

How much you earn is all relative compared to outgoings, affordability is what you need to be looking at, what is coming vs what is going out.

Sounds like you need to sit down with your partner and list every outgoing you have. Try to include everything such as saving money for xmas, birthdays, holidays and clothes etc.

You can try to budget for utilities but it will depend on the type of property you get, a small top floor flat will cost a lot less in heating compared to a detached larger place. We pay around £100 for gas and electric for a 3 bed semi and £50 for water. Council tax will depend on the band the house is in and insurance will depend how much it's all worth (our building insurance is £30pm and contents £15).

Hope this all helps somewhat.

NotAGolf · 30 Oct 2012 at 14:56

jonneymendoza said:
i earn 2.3k after tax per month. missus earnes around 1.2k after tax

What you earn doesn't really come into it. You need to work out what you can afford to pay. You could earn 10k a month, but if you've got various loan commitments, expensive hobbies, child support or what have you you may only be able to save a few hundred a month.

Also, your deposit will be a big factor in what you can afford.

Edit - Doh, beaten!

jonneymendoza · 30 Oct 2012 at 15:05

i've listed most stuff besides hobbies . Will need to do that too mate

cm1179 · 30 Oct 2012 at 21:59

Crizzy said:
Right:

So borrowing £225k over 25 years will cost you £131,597.35 in interest with the rates you quoted. (Initial rate of 4.79% reverting to 4.0% base rate after 5 years).

Borrowing the same amount over 35 years will cost you £177,141.28 in interest.

So aside from finishing your mortgage a whole 10 years earlier, you'll be saving £45,543.93

Overpaying the 35 year deal by £182 (bringing it in line with the 25 year deal) a month every month will see you pay £131,660 in interest so only £60 more and will finish your mortgage in just over 23 years.

(all figures calculated by MSE Mortgage Schedule Calculator, I do not claim they are 100% accurate!)

so, which deal would you take?

Crizzy · 30 Oct 2012 at 22:24

cm1179 said:
so, which deal would you take?

I took the 25 year deal. I can see how the 35 year deal is more flexible but you have to be extremely committed to make those overpayments every month for the entire period of the mortgage!

cm1179 · 30 Oct 2012 at 22:31

Crizzy said:
I took the 25 year deal. I can see how the 35 year deal is more flexible but you have to be extremely committed to make those overpayments every month for the entire period of the mortgage!

same as you have to be extremely commited to the 25 yr deal or any deal for that matter? (as you know) a mortgage is a big responsibility but with a 35 yr deal, you get lower repayments plus you get the added flexibility of overpaying if you can, this is why they are seriously worth considering.

each to their own but i see nowt wrong with a 35 yr deal.

Crizzy · 30 Oct 2012 at 22:41

cm1179 said:
same as you have to be extremely commited to the 25 yr deal or any deal for that matter? (as you know) a mortgage is a big responsibility but with a 35 yr deal, you get lower repayments plus you get the added flexibility of overpaying if you can, this is why they are seriously worth considering.

each to their own but i see nowt wrong with a 35 yr deal.

I agree that there is nothing wrong with the 35 deal if you intend to overpay to offset the extra interest, but surely if you intend to do that then why not just take out the 25 year deal to begin with? If you need the comfort blanket of not having to pay the extra in case things get tight then surely you're borrowing very close to the limit of what you can afford?

We went with a 25 year term as it was a monthly payment we were both comfortable with, the amount saved on a monthly payment over a longer term didn't really seem beneficial to us. (We haven't borrowed anything like OP is looking at).

cm1179 · 30 Oct 2012 at 22:43

for me, it came down to flexibility.

Crizzy · 30 Oct 2012 at 22:47

cm1179 said:
for me, it came down to flexibility.

Yep and that's why I said earlier mortgages are very personal things and what works for one person doesn't necessarily work for others. Who knows I might have a change of circumstances at some point and have to reassess the whole thing, hopefully not though.

Edit:

I just think its important to let people know who don't have much experience that longer term mortgages suffer significantly higher costs unless you make that regimented overpayment to equal it out.

HangTime · 30 Oct 2012 at 23:52

For what it's worth I do slightly regret taking out a short term mortgage, in hindsight maybe a slightly longer term with overpayments would be better. Other bills have increased a lot over the past 5 years so even with a fall in interest rates we can't live a luxury lifestyle at the moment.

jonneymendoza · 31 Oct 2012 at 11:15

Thanks guys for the responses. i need to draw up all expenses and hobbies to see if i can afford a 25 year mortgage.

made an offer for a property and got it accepted but will go for a second viewing plus read and research as much as i can before then just to make sure,.

Can always pull out until i sign on the dotted line!