First Time Buyer

Bonnietwoabodes

Morning All,

I know you can't give me specific advice on actual products but I would like a 'sense check' from those in the know!

I am looking to buy a property valued at £85000. I want to put in a 5% deposit, as whilst I have the money for 10% I would rather keep some cash for furniture etc.

I also feel that things may change in about 2 or 3 years so I wish to get a fixed rate for two years, rather than 3 just in case.

I have read evrything about early repayments etc and on my searches on the net I have found 2 products that look appealing.

One is with Skipton, the other with first active( or tesco and get clucbpoints also)

Can ayone give me any advice other than seeing a broker, which is proving difficult as I live in London but property in Scotland. I know this shouldn't make any difference to the mortgage but local firms don't seem too interested in helping me!

Thanks

herbiesjp

As long as your income is suffient for the loan amount you should have the pick of the market. What rate shave you found with those two lenders?

Most lenders offer schemes that have no extended tie-ins, so no penalties to pay after the rate expires.

Do you need to make overpayments hence the question about early repayments?

Have you seen that a lot of lenders will charge a Higher Lending Charge over 90% borrowing? There are lenders that do not charge this fee albeit with slightly higher rates

Bonnietwoabodes

Skipton 4.45% fixed for 2 years then variable 5.89% typical apr 5.7%. tesco 4.59%, variable 5.6% typical 5.6%.

The only difference I can see in the two are the set up costs?

Skipton upfront £195, added £449, completion £100 ERC3%( won't happen in 2 years!)

Tesco upfront £135, added £499, completion £100 ERC 2% then 1%

Should there be other companies I should be looking at?

Thanks

herbiesjp

Bonnietwoabodes wrote:

Skipton 4.45% fixed for 2 years then variable 5.89% typical apr 5.7%. tesco 4.59%, variable 5.6% typical 5.6%.

The only difference I can see in the two are the set up costs?

Skipton upfront £195, added £449, completion £100 ERC3%( won't happen in 2 years!)

Tesco upfront £135, added £499, completion £100 ERC 2% then 1%

Should there be other companies I should be looking at?

Thanks

Is that at 95% borrowing - as I think you will find that you will incur a Higher lending charge also.

MORPH3US

TBH OP, if I were you, if I could possibly afford it, I would squeeze myself and put a 10% deposit down.

Have a proper look at your figures and see if its possible (don't forget about legal fees, mortgage fixing fees etc in your calculations).

If you can stretch to the 10% deposit, you should be able to get a better rate which means in the long run you'll be much better off. Plus if the market does begin to crash as some are predicting, the less debt you have the better.

Furniture is over rated! If you can get by on a £20 second hand futon and some old pots and pans from your gran to start with, it'll be much better in the long run. Some of the old timers on this board will tell you how they used to get by sleeping on milk crates and watching tv sat on the floor etc. Young people today want everything straight away (brand new furniture, plasma tv's etc). Its not worth risking losing your house!

Just my opinion, some will agree, some might disagree but thats always the case!

BTW, background - I am not as old a fart as I make myself sound. I am 25, am currently buying my first house. We are having to get a 100% mortgage unfortunatley but I have still managed to scrape a few thousand. Doesn't get us a better rate but still means less debt = happier me!!! If it was left down to the gf, she would have put zero deposit down and instead used the cash for a new kitchen, bathroom, lounge etc. Nothing at all wrong with them as they are (that a lick of paint won't fix) but thats just the way she is!

Sorry, that went on a bit!!!

M

Heth_2

We tried to apply for a skipton mortgage and they wouldn't lend us enough money (mortgage advisor thought they would, encouraged us to apply cos they had a great rate, we lots 100 quid paid on application). Check before you apply that they will give you enough based on your income.

If you can avoid the higher lending charge by paying 10% deposit then I would do that. Morgage advisors in my experience then to gloss over the hlc by saying you add it to the loan, but it is a fairly large amount of wasted money that you are adding to the mortgage.
We have got loads of furniture from in laws cast offs...far more than I would like and than we need, and most of our second hand stuff is horrible. But we are buying the house first and then saving up gradually to replace with stuff we like. I think we'll feel we've earnt it more that way.

matto

Just check that the early redemption penalty period isn't longer than the fixed period.

Bonnietwoabodes

Thank you for all your quick responses. I thought I was quite savvy too! wow

Number 1: The issues I have is unique to Scottish property. Basically it is marketed with an o/o price( offers over). The property in question is o/o £83K. It will most likely value at £85k. However! In Scotland you have to bid anything up to 20% more than asking to get it. Hence the part over valuation is funded by the buyer alone.

I want a fixed rate mortgage for 2 years because I need to get into the market now before I am priced out and intend to reasess the mortage and overpay some or offset or whatever is suitable then, when I expect to change some financial circumstances for the better.

It is important therefore for me just now to get a decent monthly rate, no tie in after 2 years, and 95% because I need all of my moeny for the offers over part and the basics of furniture( not plasma tvs etc lol).

The two deals i looked at didn't have the higher lending fee included so I'm back to square one!

Who should i look at that doesn't charge it OR who gives the best rates with it included.

Heth, it never dawned on me that the upfront was an application fee and they kept it if they turned you down! Thanks for the info.

Cheers

Heth_2

Bonnietwoabodes wrote:

Heth, it never dawned on me that the upfront was an application fee and they kept it if they turned you down! Thanks for the info.

Cheers

Well they didn't turn us down as such...but we obviously couldn't buy the house with their mortgage. I think actually they keep it if they turn you down as well. Just something to beware of.