6.59% is it too much

JayneG

We are seriously considering a 5 yr fix at 7.29% (the only rate available where the lender wil accept a 5% builder contribution on top of our 10%). It seems an outrageously high rate, but this house has been reduced by 23% from last year's asking price and we really want to secure a particular plot (backing onto woods and fields with sheep!) so am so torn about whether to go for it or not.

So 6.59% looks good to me - its all relative!

Seriously though, do make sure you are happy with the price you are paying.

And who knows, these rates may not seem so astronomical in a couple of years time when those who take out the HSBC 4.99% 2 yr fix now begin to come to the end of their term.

Cozworth806

Wouldn't a £200k house mean you had proportionally lower LTV? Is there a reason you need to be looking at £300k properties?
No idea where you live or what that buys you, hope it is not a new build flat in a city centre.

The interest on that is about £1500pm. Is that about where you are looking at?

ollyfarrow

Cozworth806 wrote: »

Wouldn't a £200k house mean you had proportionally lower LTV? Is there a reason you need to be looking at £300k properties?
No idea where you live or what that buys you, hope it is not a new build flat in a city centre.

The interest on that is about £1500pm. Is that about where you are looking at?

Totally agree.

What would a £200 - £215k property get you?

herbiesjp

Can you let us know what kind of property it is?

As if it is a new build flat/house you may have two kinds of problems:

1) Valuation will come in lower
2) Lenders having strict criteria on deposits for these properties

luckyfool

JayneG wrote: »

We are seriously considering a 5 yr fix at 7.29% (the only rate available where the lender wil accept a 5% builder contribution on top of our 10%). It seems an outrageously high rate, but this house has been reduced by 23% from last year's asking price and we really want to secure a particular plot (backing onto woods and fields with sheep!) so am so torn about whether to go for it or not.

So 6.59% looks good to me - its all relative!

Seriously though, do make sure you are happy with the price you are paying.

And who knows, these rates may not seem so astronomical in a couple of years time when those who take out the HSBC 4.99% 2 yr fix now begin to come to the end of their term.

So you are putting down the full 10%? Why not have the builder reduce the price by 5% instead and get a 90% mortgage possibly at a better rate. Of course you will face the problem of sourcing a deal from a lender offering 90% on new build properties.

luckyfool

Lenders don't really want to lend at 90%. Due to the Basle 2 rules on capital adequacy/strength, banks have to hold 5 times as much capital on hand for 90% mortgages that they write, compared to loans at 60%. i.e. They can choose to lend to 1 risky 90% customer, or write 5 low risk 60% loans.

JayneG

Thanks luckyfool, turns out that is exactly what we are doing. However, as you say, are extremely restricted by the no of lenders willing to lend 90% on new build. I know why they are doing this, but it is frustrating as these new build properties are now competitively priced compared to other 'second hand' properties, rather than priced at a premium.Oh well, you pay your money, you make your choice

System

There are better rates available according to http://www.fsa.gov.uk/tables/