Help please

getmore4less

Pink_fluff wrote: »

thanks getmore4less

It is a 35 year re-payment mortgage, I would never take an interest only mortagage. House was bought for £116,000 if that helps any.

What did you mean in your last post

"You say the loan is 35 years, is this also interest only? if it is and this is a stretch I would think you have bought a place you cannot afford since it is dependant on too many things going in your favour over the next 5 years"

too many things going in my favour over next 5 years? What does that mean!?

Thanks for all your help.

Now I am confused, 95% mortgage, £18k deposit, £116k purchase one these 3 must be wrong.

Anyway the point was that IF you were streched on the fixed rate and it was an interest only 95% loan with a high follow on rate that you would have difficulty paying. Then when it come to a remortgage in 5 years to be in a good position you would have needed a few things to go your way,
prices to have gone up at at a minimum not gone down,
For lenders to still be offering 95% loans
Still needing some way to repay the loan usualy this means pay rises and keeping a job.

The first two are unlikely who knows for the job/pay.

Allthough a lot can change in 5 years having a plan for when the 5 years is up is a good idea, the only option you can safely asume is that you will be paying the follow on rate, could you afford that today? if not what would have to change so you could.

A 35y loan will give you around another 5% equity in 5 years but who knows where prices will be then I would plan for the case where you are onto the follow on rate and review to see if there are other better options as you get closer to the date in the mean time make sure you keep paying the mortgage and avoid other more expensive debts.

Pink_fluff

Officially the house was £116k. Builder gave it to us for £110k (some kind of discount). But the mortgage advisor said to tell lender £116k and not mention the builders discount. mortagage is roughly £93k. so that's where the £18k comes into play - 95% mortgage. Does that all make sense? Hope I've explained it well enough. I could afford the follow on rate today, but I would be alot more tight for money than I am now. I earn a good wage, but I guess everybody with fixed rate is in the same boat. And I'd hope that in 5 years time I am earning more!