100% mortgage in SE London now or wait?? 27 February 2006 at 4:51PM in Mortgages & endowments 7 replies 1K views

beanzine

My partner and I are FTBs. Joint income of approx £63000. £3000 savings (growing). Credit card debt totalling £7000. Loan of £11000 (five years, four left to go). We are considering buying a property in SE London soon as are utterly sick of renting. Property would probably be around 160-180K.
Given the market the way it is, our large debts and the fact that the price of property seems ridiculously high here, I would appreciate any advice on going for a mortgage now.
We are considering 100% (only option really) but are unsure if we will get this due to our debts. Do we just go for it anyway? Or wait and pay of more of the debts before applying (risking a rise in proerty prices pricing us further out of the market)? Is it sage to put oneself up for such a large mortgage as FTBs with debts??

Any help or consideration of our situation would be most appreciated. We feel we need to make a decision soon and are finding it difficult.

thanks

ukbondraider

First see a Mortgage Broker but I am pretty sure from looking at what you have said that there will be a lender who will lend to you given the amount you want to borrow and your joint income albeit at a higher rate.

As for your second question, the truth is no-body knows what is going to happen to the market and I would advise that you take any advice here with a pinch of salt.

Having said that my personal opinion is that you get on the property ladder asap and only when you can afford it. Monthly renting costs are almost the same as monthly mortgage payments especially in the SE so in my view renting can be a serious waste of cash if you can afford to buy. Lots of people have been talking about a crash for around about 5 yrs now yet one hasnt happened. Instead the market has continued to move ahead and I have seen £100K rise in the house I bought 3 yrs ago.

The fact is that people can still afford to buy (although less people than before) especially given low interests rates and the fact that lenders will lend for longer periods e.g a 40 yr term. The bank of England has learnt from the previous housing bubble mistakes and will never raise rates abruptly as we saw in the last crisis. Any change in interest rates will be smoothly done but to protect yourself you should seriously consider a fixed rate mortgage.

In any case only proceed if you can comfortably afford the monthly payments. You will then be able to weather any storm in the housing market and in the 30 to 40 yr long term see favourable returns on your investment. In summary dont let the worry about a housing market decline prevent you from getting on the ladder as no one knows when or if there will be one. In fact if a decline does happen, use it as an opportunity to acquire more houses.

Good Luck

beanzine

Many thanks for the post ukbondraider.

I have been in touch with L&C brokers today (extremely short call, kind of thought the guy was in a rush) who say I should go for the Portman BS 100% mortgage at 5.29% fixed for 3 years. On looking, I think the Co-Operative 100% at 5.14% looks like a slightly better deal, but didnt have time to argue the point with the guy (well, he didnt have time, not me). Left me with a "call me when your offer is accepted" and off he went. While i trust L&C (from the amount of positive feeback they have received on this site), the call was so short I didnt feel reassured that he had done the best searching. Am I just being picky here or is that the way they operate, all quick and no nonsense???

Any thought or experience of any of these mortgage deals people??

As I am FTB possibly about to start a potentially large mortage (well, in my eyes anyway) ,am anxious to get the best deal.
Again, any advice welcome!

HGLTsuperstar

Wait a minute, who's money are we talking about here, yours or his? Exactly, dont feel pressured into anything unless you're 100% sure. As a FTB in the near future, I'd also be interested to hear from others re: the L&C approach. In the meantime, is the Co-op's offer only available through brokers, if so call them back to discuss it and ask why he feels the Portman option is better, if not perhaps it might be better to sort it yourself. All I know for sure is you need to act like you're in control and wont let them take you for a ride.

HelpWhereIcan

If you feel that the information you have received is incomplete or that you need further assistance, I would arrange to see a local fee free whole of market broker who will arrange a face to face appointment where you will have the time to ask all the questions you need.

Martin gives the appropriate questions you should be asking to find out about the status of a broker.

A mortgage is a huge commitment and should not be entered into unless you are entirely happy with the advice you have received. If in doubt, get further advice and use the person who gave you the most help and best deal. A good adviser will also be able to help you work out how much you can actually afford and help point out the disadvantages of any mortgage you take out. They will also be able to show you why they reccommend one particular deal over another.

If you are unsure about whether to pay off debts or not I would ask myself if that means you are secretly worried that you may not be able to afford the mortgage aswell - big warning sign. Get some proper advice before going any further.

lynzpower

Dont agree amortgage if you are feeling rushed

Id get to Alexander hall. They're free, and whole of market i found them excellent

HGLTsuperstar

Any further developments from the OP?

beanzine

Many thanks for all your input, very much appreciated.

No more develpoments as yet; have emailed Alexanderw Hall to get an appointment to speak to them (advice free, £399 if you go for one of their mortgages that they advise (ie through them and not by yourself)). Will keep you all posted. Again, thanks!

more soon....