First Time Buy - Mortgage help

A.Richardson_2

I have seen a house for £100,000 which I hope to buy. I have a 10% (could possibly raise 15%) and I am a first time buyer.

I have seen a financial adviser, he has recommended a self cert interest only. The interest rate is 5.9% (fixed for 2 years, you can change mortgage then) and has a £1000 fee for borrowing a high amount. To me this seems quite high.

Can anyone recommend anything?

Many thanks.

HGLTsuperstar

Why self cert? What is your income, occupation status etc?

A.Richardson_2

Employed, currently low income, £12,000 hence the self cert. Im renting at the minute, so buying would make sense. Help appreciated!

KTF

Thats a very high rate compared to whats available at the current time.

herbiesjp

Self cert mortgages have income multiples also - now without knowing what the other adviser has recomended it is difficult to say what he has done or why.

Not sure if the figures stack up (being polite here) - do you get bonuses, commission at all?


I would be a little wary of going ahead with the mortgage on that basis

A.Richardson_2

Currently no bonuses/commision. £12,000 only, I don't have any loans or any debt. The house is new, an identical house to the 1 I rent.

Does the rate sound high, is there any better deals about?

Thanks

tomstickland

90/12=7.5 income multiple.
I'd not bother!
Self cert is just a way of allowing you to borrow "too much".
Interest only means that you're not touching the borrowed capital, so all your payments (which would be around £550 per month?) would be only paying interest.
Edit: £550 per month (£6.6K PA) would be for a repayment loan, not interest only.

All the same, what you are doing is not advisable.

payless

Will you be asked to state your income.... what level will this be at ??

A lender will usually need proof of your income, but sometimes, they will rely on your own assessment of income (‘self certification’). Self-certified mortgages were designed to cater for people who are self-employed and have difficulty in showing that their earnings are enough to make the payments on the mortgage they are applying for. This could be because they have not been trading for long enough, they have more than one job, or they rely on bonuses for a large part of their total pay.

Don’t let anyone persuade you to overstate your income in order to get a very large loan. If you lie about your income, you could end up with a loan you can’t afford. You’ll also be committing a fraud and could get a criminal record.

Don’t be tempted to overstate your income. If you end up with a mortgage you can’t afford, you could lose your home.

http://www.fsa.gov.uk/consumer/07_MORTGAGES/getting_started/selfcertification.html

mummytofour

Sorry but that is classed as fraud!

Also how do you plan on paying the mortgage each month?

At £550 payment that gives u very little to live off.

canny_yorkshireman_2

in my honest opinion its not the rate that is scandalous but the advisor.Why he should suggest this product is beyond me as all the above has stated. I would go and see a good F/A who will give you good advice and a realistic loan offer. Also you are in the territory of 85-90% loan which may include a MIG depending on mortgage provider.Have you thought about buying with another party which would make better financial sense but brings other problems into the equation only other way is to set your sights lower

AndrewSmith

Self certify does NOT change te amount you earn. Nor is it a license to print money.

Self cert exists for people who are not able to prove their income (ie newly self employed), have income that they do not declare as drawings or net profit (i.e private cash work, builder, mechanic etc) or are employed and get paid high levels of commission or bonus which make up a large proportion of their income thus most lenders on a full status application would not take all this income into account.

If you go ahead with this deal knowing that your income is a flat 12,000 and manage to obtain the mortgage on a self certify basis you and the advisor will have obviously falsified your declared income.

An ex Estate Agency Broker collegue of mine did this about 5 years ago and got caught. He and the client are now serving the remainder of a 10 year prison sentence (you may have seen him on a hidden camera recording on watchdog back at the time).

It is fraud and is also obtaining money by deception. The new FSA rules mean that Lenders and the Law take this very seriously and will usually prosecute to the full extent of the law in every case where it is proven. Trust me, after 12 years in this business I have seen it happen !!

Underwriting criteria and income multiples are put in place by lenders for a reason, not just as an incovenience. They are there to ensure the mortgage you take is affordable, and for your protection as well as theirs. Consider - six months from now you have taken this mortgage, cannot afford it and the property is repossessed. Who will you be blaming? The lender probably without a thought for the Irresponsible broker who manufactured the deal for you. Remember the lender can prosecute even after the loan has completed, and the mortgage can become null and void if the money was obtained illegally. And believe me they will !!

Walk away from the deal now. I would even consider reporting the broker to his Compliance Department as it is this kind of blatant stupidity (7.5 times income!!!!!!) that gives self certify the unjustified reputation of being a way to borrow too much. It Also does nothing for the reputation of the majority of brokers who use the available products in a responsible manner and when appropriate.

Sorry to rant but this tyoe of thing really does wind me up.

Andy