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    • Bobadinga
    • By Bobadinga 12th Jun 17, 11:55 AM
    • 1Posts
    • 0Thanks
    Bobadinga
    Remortgaging after one year
    • #1
    • 12th Jun 17, 11:55 AM
    Remortgaging after one year 12th Jun 17 at 11:55 AM
    First time buyer, not well versed in mortgages at all apologies for my ignorance:

    I'm plan to sign up to a mortgage using a 10% deposit for a shared ownership new build. This is on a 25% share.

    Not surprisingly the interest rates are high (around 4%). At 15% deposit the interest rates get much better but I unfortunately cannot afford this deposit now. Therefore I plan to take a mortgage on a one year fixed term, and remortgage with a different lender at that point.

    My question is:

    Is one year fixed term feasible?
    If so, is it better to take out a 35 year term, and save the money towards paying to reach 15% equity after one year when I remortgage (so I will pay lump sum to reach the 15% deposit necessary);
    Or take out a 20 year term so after one year I will be at 15% equity?

    Many thanks.
Page 1
    • zx81
    • By zx81 12th Jun 17, 1:56 PM
    • 12,013 Posts
    • 12,156 Thanks
    zx81
    • #2
    • 12th Jun 17, 1:56 PM
    • #2
    • 12th Jun 17, 1:56 PM
    You won't pay off another 5% of the equity after just 1 year of a 20 year term.
    • kingstreet
    • By kingstreet 12th Jun 17, 2:23 PM
    • 31,459 Posts
    • 16,813 Thanks
    kingstreet
    • #3
    • 12th Jun 17, 2:23 PM
    • #3
    • 12th Jun 17, 2:23 PM
    I know of no one year fixed rates.

    Many lenders will still class the property as a newbuild after one year, so the lower max LTV will still apply.

    The newbuild premium may see the value fall in the first couple of years, so rather than seeing the property value increase to reduce your LTV you may see it fall, increasing your LTV and making a lower rate impossible in the short-term.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • smem18
    • By smem18 13th Jun 17, 11:40 AM
    • 27 Posts
    • 8 Thanks
    smem18
    • #4
    • 13th Jun 17, 11:40 AM
    • #4
    • 13th Jun 17, 11:40 AM
    You really need to go for at least a 2 year term unfortunately. As the person above said, it is entirely possible that your LTV will actually fall initially and then you will be in an even worse position. We just purchased a new build flat and went through Skipton, who were literally the only mortgage lender who would even consider giving us a mortgage offer with a 10% deposit. With this in mind, we decided to go for a 5 year fixed, because even though our fixed rate (2.95%) is higher relative to some of the great offers on the market, we want reassurance that we know what we'll be paying for at least 5 years and improving out LTV
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