First Time Buy - Mortgage help

A.Richardson_2

My income has been declared. The mortgage works out at £440. I pay £410 rent at the moment.

I am basically trying to find out if there is a better rate out there.

AndrewSmith

Have you made any other mortgage applications recently?

tomstickland

OK, I've had a quick look at the Natwest mortgage pages and there are fixed rates down to 4.9% and discounted rates down to 3.8%. So, go and do a Google search and see what you can come up with.

mummytofour

In answer, yes there are better rates. However as u require a high multiple, then you are limited, so maybe that is why you have been offerd the rate u have been.

Have you used a whole of market broker? They have the choice of the whole market (as name states) if this is the case then its unlikely that there is a cheaper rate for u.

mummytofour

Why are you going self cert? if you have proof of all income.

AndrewSmith

I still think that the main point here has been missed.

You will be committing fraud if this case goes ahead, you are obtaining money by deception which means you and the broker have broken the law.

If you are found out you will not only leave yourself open to a prison sentence up to 10 years but the lender also reserves the right to immedistely repossess your home as it was obtained illegally !!

Lenders use a system called HUNTER. Basically they all talk to each other and do actually share certain information about applicants with each other purely to stop this sort of thing happening. This is how most people get caught.

If you have made any kind of credit application where you have stated your employment type, income and length of employment, this information will be available to other lenders to see using HUNTER. If you have (which you clearly must have done) overstated your income, or put yourself as self employed etc, this will clearly not tie in with the information currently held on HUNTER. You may be lucky and it slip through the net however I personally would never put anyone in that situation, or want to take the risk of being prosecuted for fraud myself.

I am not saying all this for my own health, I am telling you this as I think what the broker has advised you to do is dispicable, and the threat of prosecution is real and does happen.

Even on self certify cases the lender reserves the right to verify any information it wishes prior to completion of the loan. Some will want to phone your accountant to verify your status of self employed (if you have stated you are self employed). If you have stated you are employed and are self certifying your income (eg saying you get paid mainly commission) I have known it where a lender has asked for a copy of yur employment contract to prove that you are paid commission as well. This still does not mean they are verifying income, just verifying your status. As you are a First Time Buyer with only a 10-15% deposit I would think that some kind of employment verification is quite possible.

PLEASE give this serious thought, if I were you I would cancel the application and walk away before you get found out. It's not as if it's a slight stretch of your income, it's a blatant case of deception.

Is the new property really worth the risk of up to 10 years in prison? (remember the lender can apply this retrospectively and take the property from you)

herbiesjp

All the advisers on here get shivers down their spine when they see these type of self cert questions.

Self cert is a valid option for the correct people when used in the correct way.

In this occasion, again without knowing all your details it is difficult to say, it would appear that eveyone is coming to the same conclusion which is that the broker is trying to pull a fast one, and he will be getting you involved in fraud potentially if you go ahead. Fraud and defaults and missed mortgage payments do not go well together.


There are potentially ways of getting the mortgage agreed for you, away from self certs, with lower rates - however it needs a decent adviser, who does not look for short cuts, to be able to use their expertise and knowledge to run your case past lenders to see what they will agree for you.

However, whilst maybe getting the mortgage agreed, you would need to make sure that the loan amount is affordable to you - as the last thing you want, is to end up with a huge credit commitment you cannot pay.

sarah_elton

To the original poster:

I'm skipping all the points above about fraud - you've said you've honestly stated your income. The reason the rate is so high is that you're borrowing 7.5 times your salary. 99% of lenders wouldn't dream of going this high. I'm borrowing from HSBC - to graduate first time buyers they will offer 4.25 times, and less to non-graduates (don't ask me why but anyway). Which company is this mortgage through that's agreed to this rate?

You'll see that HSBC for instance are doing 4.99% fixed and other lenders are even cheaper. However, I'm borrowing 4.2 times my salary and had to stick with HSBC as they're even more generous than most, so there's no way you'll get an offer from someone else.

If your repayments are £440 a month, this must be an interest only mortgage. At 5.9% the repayments on capital repayment would be £550. Bear in mind this means you won't be repaying any of the £90,000 mortgage at all, you'll only be paying off interest. This has two implications:

1) You've got to be VERY confident the house will go up in value.

2) Please do bear in mind that you've also got to be confident that you'll be earning a LOT more at the end of the fixed rate period, as after that the interest rate could go up - if interest rates nationally have gone up after that time, you'll find your repayments jumping. Your advisor should have run through what the repayments will be after the fixed rate period. Can you afford them on your current salary? Go here:

http://money.guardian.co.uk/calculator/form/0,1456,603156,00.html

and put in some slightly higher rates on 90k (after all, you'll still owe this much after the fixed period), and you'll see how much of a difference it makes. Even just 1% rise...

I'm earning £27k and borrowing £115k, and I'm nervous enough about that. *If* you proceed just be very certain that (a) it leaves you enough to live on each month now, and (b) you can afford it after the fixed period ends, if interest rates have gone up.

The market right now is pretty static, and in just a few years it's unlikely to have gone up in value much at all. You should only proceed if you're looking at this as a very long term investment, and you're in a career where your salary will increase significantly in the next few years.

I know the advisor said you can change it after two years, but if you're earning the same, and still owe £90k, you'll have just as much trouble getting another mortgage. Plus as I said, if rates have gone up you'll be looking for a new deal when they're all considerably more expensive. I think that particular point he made was incredibly irresponsible.

AndrewSmith

Which lender have you been recommended to?

AndrewSmith

The original poster:

I advise you to read this post here

http://forums.moneysavingexpert.com/showthread.html?t=116707

to give you an understanding of why we decent advisors are so against what you have been advised to do.

At the end of the day I know the advisors on here will agree with me as , if they have been around for a while , they will have seen the effects this can have in the long term of when things go wrong.

As professional advisors we are only trying to protect your interests and help you make the right choice.

Andy