FTB Needs a 90% LTV Mortgage

Gareth83

I'm looking to put a few offers about this week, circa £100k with a 10% deposit

If the house needs a little bit of work I may offer a bit extra and see if they are willing to do a vendor gifted deposit say 2.5% or 5%. Is this still possible? How does one go about this?

Could I ask for this in my initial offer (87.5% of asking price)?

I am trying to work things backward, I would like to pay no more than £550pm (price of rent in local area)

What mortgages are available before I go and see a broker?

I guess a fixed 5yr deal is probably best? Although I may look to resell in 2-3yrs.

Having played about with:
http://moneyfacts.co.uk/money/mortgages/default.aspx?TabID=0
and using purchase price of £100k and mortgage of £90k over a 25yr repayment mortgage it is coming up with various options.

Should I be looking at shorter term mortgages say 2yrs? Or is now a good time to lock in at 5-6% for 5yrs?

Should I base my figures on true cost over 5yrs or monthly repayment?

providing my offer is accepted I would like one with the cheapest valuation (possibly free??) just in case in today's climate the property gets down valued.

Credit rating is excellent and due to start a job next month on £24k and have an employers reference ready to assist in my application.

Suggestions please

Gareth83

any responses?

VortexSteve

The thing for me here is that you are just about to start a job, will you be on probation for a certain amount of time? What is your current earning history?

I'm also trying to decide how long to fix for. I like the idea of knowing what the cost is going to be each month, but in 5 years time when interest rates could be right back up again it could mean a huge jump in repayments when I come off the fixed. I'm tempted to go for a 2 year and then judge where rates are going and at that point then fix again.

Are you able to build much more at all on the 10% deposit? A lot of the better deals require more.

Gareth83

I wont be able to get more than 10% deposit as I'm setting aside £5k for remedial works etc.

Advice appreciated

beecher

Personally I'd save more until you have at least a 15% deposit - rates are really poor for 90% LTV and you run the real risk of being in negative equity pretty quickly. If you have a 2 year deal and a 90% LTV you're probably going to be stuck on the SVR once it comes to an end, unless you're able to overpay.

Gareth83

where do you look for these rates?

because putting £5% (~£5k) extra as a deposit will only save me around £20-£30 a month, not exactly loads over say 2yrs...

or am I missing something?

Gareth83

If I were to offer higher on a house but ask for them to pay 5% deposit, how does that work?

Is it something we sort out of the mortgage or what?

Trying_to_be_good

Gareth

There are a number of issues here, I think.

The rate you can get on a mortgage depends on the Loan to Value ratio - so the more deposit you have, the lower the LTV and the better the rate you can apply for.

Income multiples are also important - that you haven't started your job, let alone completed any probation period will go against you. Also, borrowing more than three times salary is a lot at the moment, so borrowing of £72k is more likely to be accepted than the £90k you want.

Gifted deposits are a developer trick - if you offered £100k but they returned to you £5k, your lender is going to know it's only really worth £95k. Keep things simple, offer what you're prepared to pay - you're paying the current owners of the house, not them paying you.

Like others have said, if I were you I'd save a bigger deposit and wait for house prices to fall further.

Gareth83

Yeah, I've discovered using moneysupermarket that if I lend more but are able to put down a 85% deposit then the monthly rates are better than just using a 90% deposit on a cheaper house.

The thing is I cannot save a further 5% as I need to move out in July from my parents and renting will just eat away any savings

The only way I can see it working is if the house seller could agree to do a 5% towards deposit or 5% cashback after completion.

But how is this arranged? through solicitor or the mortgage company?

Trying_to_be_good

It's arranged with any buyer daft enough to give you money - in short, you're unlikely to find someone who will give you 5% back - they'll just agree to the price you're willing to pay.

Gareth83

would the mortgage company need to know about this?