First Time Buyer

Alwyn27

Hi All,

I am looking into buying a new house on Anglesey with my girlfriend. Luckily we did manage to secure an acceptance in principal from Nationwide before all the stock exchange and economic crisis became even more front page news. We were offered a 6.24% mortgage with a £999 setting up fee at the time and our broker explained that this would be guaranteed for 3 months. We have now spoken to the broker again and we must find another few hundred towards the deposit, we currently have £20k for a £136k house. We where thinking of going ahead with this offer, I am however slightly concerned that we could get a better deal if we waited a month or so, since the cut in the Bank of England's interest rate. I was just wondering if anybody could give me some advice on what we should do?

Thanks
Alwyn

opinions4u

The BofE cut didn't have a major impact because the cost of mortgage funds is primarily driven by the LIBOR rate.

Although LIBOR has eased a little, it isn't down as much as 0.5%. Longer term funding is almost unchanged. Indeed, one impact of the BofE cut has been to see the differential rates from BofE built in to tracker mortgages actually increase, negating any benefit of the rate cut for new borrowers.

Logically, the recent government actions to support lenders should reduce mortgage costs a little. But these are not logical times. I could probably more confidently predict the value of the stock market in 2015 than I could predict next week's mortgage offers across the market.

Before you commit your fees and start paying solicitors, I suggest you research mortgage rates currently available across the market at a site like https://www.moneysupermarket.com to see if the deal offered to you is reasonable. Slightly higher rate with lower fee may be a better deal. It might also be worth pricing up the best home insurance deals this way too.

Then I suggest you assess the local housing market. If prices are falling, are you actually paying over the odds? Should you be renegotiating with the seller to save money?

Then take the plunge on the mortgage deal that's best for you (re-check this with your broker based on your own research) at the time and make a vow not to regret it! The mortgage market is in turmoil at the moment, and across a typical 25 year term there will always be extremes.

My key words of advice are to work out how you would pay your mortgage if rates doubled - perhaps to 12%. It may not happen in the next couple of years, but it could certainly happen during the life of a home loan. What economies could you make yo ensure you keep your house?

Hope all goes smoothly!

koexelek

If you decide to do a different mortgage, don't do it with Nationwide, as they will make you pay the £995 fee on the old product, as well as the fee on any new one.
If you do it elsewhere, you won't be obliged to pay Nationwide any fees.