90% Mortgage!!!

poppy10_2

downhiller wrote: »

Where did the poster say they could only afford a 10% deposit?

He asked about a 90% mortgage. He didn't say if he could or could not put down a bigger deposit.

Again, this is a case of assumption before knowing all the facts, and countless posters offering advice on that basis.

Ask more questions.

Get more facts.

Offer advice.

Stop sniping. It's a perfectly reasonable assumption to make.

HousingBear

Hi Stuart,

Thank you for coming back with more information. I can appreciate that you are in a significantly better position to buy than many people and the house you are looking at sounds very nice.

However, you are going to struggle to get anything below 6.25% with the LTV you want. As has been pointed out, a specialist mortgage broker may be able to help you but the best I can see is C&G at 6.29%. As you work in insurance, I'm sure you know why this is - the lender is pricing in the probablity of future price falls at these high LTVs. Basically, they really don't want to lend to anyone at this LTV and the rate is how they let you know that.

I would echo the advice of other people here. Wait and save for another year. For every £10,000 that comes of the price of the house you eventually buy saves you the equivalent of £30,000 of your gross salary. Even waiting six months will make a big impression in the amount you will pay over the lifetime of your loan.

If you save another £30,000, you would get 4.29 from the Woolwich. OK, I accept you may not get the house you have currently set your mind on, but there will be other nice houses for sale at lower prices.

I hope it works out well for you either way.

beefio

Thanks for the advice people.

I have approached several brokers, and at 90% they can't tell you anything that Fool/Money Supermarket can't, in fact they have less, because direct deals aren't available to them.

I have found one deal that is competitive at 4.74% with no exit fees BUT it's an SVR so is open to fluctuation, which obviously has risk attached.

We think this house does represent a good opportunity. The HBOS tool is a huge generalisation, and we've used more advanced tools (Hometrack) to 'estimate' that a realistic value for the property which is in outstanding condition and location is £315K. You may say something's only worth what someone pays for it i.e. £290K and normally I would agreed, however among all the doom and gloom there are opportunities out there, the vendor recognises this and they need a quick sales to a chain free buyer, so they can upgrade and pass on their 15% reduction to a £700K property i.e. £100K, but they must release the capital to do this.

We fully expect 'average' house prices to go down a further 10%. However the stats banded around are a) guess work by historically inaccurate sources and b) huge generalisations.

If the value reduces 10% in a year to £284K, we will have made capital payments (£456 x 12 = £5,472) and overpaid the difference between the SVR and Fixed Rate (£241 x 12 = £2,892) of £8,364, reducing our debt to £253K which is still circa 90% LTV.

The truth is...it's all if's and but's...

However we could just take a 5 year fix at 6.29% which we can afford and it all becomes a irrelevant. We would have a home that we love and the market should have stabilised in that time.

Does anyone know of any other 90% mortgages out there?

HelpWhereIcan

Hi Stuart

The fact that

beefio wrote: »

My partner is 25 and an English teacher at a good school, on a basic salary of £30,000 so her job is secure.

means that she is likely to be a graduate - are Britannia being so picky as to insist that the main earner is a graduate or are they saying that both of you have to be graduates.

Might be worth checking with them. As you will know (especially if you deal with commercial lines ) underwriters are sometimes unable to see beyond their own noses and the letter of the underwriting manual until someone helps them see sense.

It may just not have occured to them that the second applicant is a graduate so qualifies. Change the 1st & 2nd applicants around and you never know.

You may get issues with how they calculate the maximum loan (Scottish Widows Bank for example will not use a joint income multiple when only one party is the professional and will revert to an 'old style' 4.5 x professional plus one x the other person's - but they no longer do 90% so I am only using this as an example of how the approach can change) but it is worth a try.

If that's not any good, she could still qualify you for graduate/professional schemes elsewhere.

Being a teacher it could also be worth her while checking out the Teachers Building Society but I do not know a lot about their schemes only for teachers so it is only a suggestion to ask them.

All in all I would say to have a chat with a whole of market adviser who can sit down with you and go through the options they can get to compare with the likes of Teachers B Soc

Edited to add: I see you have already spoken with some brokers

beefio

Yes she's a graduate and I've pushed them, but they're having none of it.

Makes me wish I'd taken up that 'Leisure & Tourism' course!

We will however pursue the teachers BS route, thanks for the thought.

Conrad

Beefio, you have all the 90% options covered, so it's decision time.

You are not going to get lower rates when 90% is considered such high risk by lenders. In the event of repossession the evictee may wreck the property and that coupled with say another 10% price fall generally, plus balif and ocksmiths, court fees, legal fees etc could easily mean the lender makes a substantial loss.

You mentioned 4.74% variable. Thats the one I would go for if it were me. My first mortgage was at 9% in the early nineties.

HelpWhereIcan

beefio wrote: »

Thanks for the advice people.

We think this house does represent a good opportunity. The HBOS tool is a huge generalisation, and we've used more advanced tools (Hometrack) to 'estimate' that a realistic value for the property which is in outstanding condition and location is £315K.

If that figures is accurate and one that would be supported by surveyors it could be worth taking the Yorkshire Bank/Clydesdale deal you have seen (I assume that is the 4.74% scheme you refer to) as it has no early repayment charges other than a £195 deeds release fee.

That means you may be able to use that deal to buy the house and then when you have owned it for 6-12 months remortgage to a new lender using the 'true' market value of £315000.

£260000 would then be 82% which would open up a few more deals and lenders to you as many of the major lenders like the Abbey, A&L, Nationwide etc come in or improve their deals at 85%.

A risky strategy depending on the accuracy of your valuation, what happens to house prices over the next 6-12 mths and what happens to the availability of funds in the mortgage market but a risk that you may consider worth taking.

woody252506

pixiepie99 wrote: »

That's fine but don't say I'm right and then say something that completely contradicts what I said. Good luck whatever you decide to do.

Explain please?!?!?

I never contradicted what you said. I said now was a good time to buy if you can comfortably afford what your planning on spending and if you can get a house with a good percentage of the price knocked off (Which i described as a bargain buy).

All i did was agree with you that things such as affordability on the buyers part need to be considered and how they budgetting financially ie: are they lending close to the max? etc.

Sparkkee

Beefio - my broker has managed to come up with a lot of deals that I couldn't find direct. This may have changed over the last day or so, but on Saturday he was finding about 15 or so 90% deals, most of which were no better than the one you found.

My advice would be to go and see AT LEAST one more broker as the market is now changing again because of the new rate cut.

Also, does your partner qualify for a key worker scheme? They're not always the best way to finance your home, but they're certainly worth considering.

pixiepie99

woody252506 wrote: »

Explain please?!?!?

I never contradicted what you said. I said now was a good time to buy if you can comfortably afford what your planning on spending and if you can get a house with a good percentage of the price knocked off (Which i described as a bargain buy).

All i did was agree with you that things such as affordability on the buyers part need to be considered and how they budgetting financially ie: are they lending close to the max? etc.

Oh ok. It's just that the way you wrote it, it sounded like I had said it was a good time to buy houses when I'd actually said the exact opposite. If you'd said "Pixiepie is right. However, I think..." it would have made more sense.

I had posted twice and you were referring the the second post. If you had quoted this, it would have been clearer exactly what it was I had said that you were agreeing with.

If you read through the thread I think you will see what I mean