First Time Buyer....I don't have a clue!

moneymoneymoney83_2

Hi All,

I am new to MSE so applogies if I say or ask anything out of line!

I am 25 and looking to buy my first property with my partner ASAP due to ongoing family issues! We want to spend around £175,000 and have looked at mortgages available and all are around 6.50% plus....and all say fixed for the term of the mortgage.

So firstly, does that mean we would be tied in for the full 25/30 years at such a high rate or would it be possible to change mortgages (I assume there would be a penalty in doing so, so would it be worth it?)

Secondly, I know no-one can say for sure but would anyone advise to wait until end of dec before we buy...are mortgage rates likely to be lowered?

Appologies if these are really basic questions but I thought I should ask on here first before speaking to a broker.

Hope someone can help!

mr_mortgage

moneymoneymoney83 wrote: »

Hi All,

I am new to MSE so applogies if I say or ask anything out of line!

I am 25 and looking to buy my first property with my partner ASAP due to ongoing family issues! We want to spend around £175,000 and have looked at mortgages available and all are around 6.50% plus....and all say fixed for the term of the mortgage.

So firstly, does that mean we would be tied in for the full 25/30 years at such a high rate or would it be possible to change mortgages (I assume there would be a penalty in doing so, so would it be worth it?)

If it says fixed for the term, yes ... it would be fixed for the 25/30 years. However, you must have been looking in some funny places, because it's more normal to have a fix for 2, 3 or 5 years. Term fixes are not usual (in the UK, anyway).

You could, of course, redeeem the mortgage at any time - but there may be something called an ERC (Early Redemption Charge), which could be a lot or could be a little. It all depends on the small print!

If you are looking for fix, you need to decide over what period you would like a fixed rate knowing that if you want to get out of it sooner you would have to pay a penalty. Realistically, how long are you planning on staying in this place? 3 years? 5?

Secondly, I know no-one can say for sure but would anyone advise to wait until end of dec before we buy...are mortgage rates likely to be lowered?

In my opinion (and pretty much everyone else's) the Bank of England rates will be lowered, but that does not necessarily mean there will be a much cheaper deal available. The banks are already factoring in rate drops into their prices. There will be diminishing returns on the rate drops passed on to consumers.


If you want, you could post a little more about yourself (any adverse credit history? are you both full-time employed? salaries? how much deposit saved up?) and this way you will be able to get better help from people on this board.

Sorry can't be of more help - but just on the way in to see some clients and had only a moment to reply.

Cheers,
Mr M.

SachKav

mr_mortgage wrote: »

If you want, you could post a little more about yourself (any adverse credit history? are you both full-time employed? salaries? how much deposit saved up?) and this way you will be able to get better help from people on this board.

I'm moneymoney's husband and we are both employed our combined income is £47,500, we have no adverse credit and based on the price range we are looking we have 10%

I have been looking round and have seen that Cydesdale offer a 4.74% variable rate but they only deal directly, I'm not sure about variable rates as it is completely decided by the bank, but I don't think we have the luxury of choice.

Any advise anyone can offer will be very much appreciated.


Thanks in advance.

brit1234

As a portential FTB myself I'm holding off to well after Christmas not because of the banks rates but all the massive price drops.

What you have to remember is you may get a slightly better interest rate in January but the long term interest payments would be a lot lower say if you bought a property in June with all the price falls.

So say you get another 15% of the price in June that reduction in mortgage borrowing will save you tens of thousands of pounds over a 25 year mortgage life. Far better than a 0.25% interest deal in January.

morg_monster

I have read predictions that LIBOR will fall after christmas as banks start to let go of the cash reserves they have been holding on to to present as good an end-of-year balance sheet as they can. If this does come to fruition, we can probably expect mortgage rates to fall - hopefully particularly in the lower deposit end of the spectrum where at the moment rates are high and have not really dropped since the 1.5% BoE rate drop this month. On the other hand, I read yesterday that there are only 66 mortgage products left available to people with a 10% deposit, compared to 600ish this time last year. And you really pay over the odds for them.

Got to be honest guys, with a 10% deposit, if you really need to move out, I'd rent. Rents are generally coming down, so you could hopefully get a good deal, and then spend a while building up your deposit. Probably you'd be on a 6 month contract, then reassess things in 6m time. Prices will have dropped further, you'll have a bigger deposit, and hopefully there'll be better mortgages available to you then. Good news for you all round!
Whatever you decide, good luck.

sarahs999

If you were looking at foxed term mortgages for 25 years then it's quite likely that 6.50 is a good rate over that whole time - however, it's not that good at the moment. There are deals out there for 3.99 (need a big deposit) so I would keep looking if I were you. As FTB the better deals will probably be off your radar, but I would have thought you could find lower than 6.5. You don't mention the size of your deposit - that's quite important.