First time buyer - mortgage advice

DJNicol

Hi folks, first post :hello:

I am a first time buyer - i have bought a flat for £85k (valued at £90k)
I am looking for the best mortgage rate i can get - I would like as high an LTV as possible as although i have good savings (about £19k) i think i will have to use the vast majority (about 13-15k) on doing work to the house. Essentially I need someone to lend me 95% of the purchase price or 90% of the value. the problem is most places only lend on whichever is the lower - does anyone know of any bank/building soc that lends based on value alone?

The best deal I have found so far is with the Scotwest Credit Union who are offering me 90% of purchase price @ 4.99% with no arrangement fee.

All advice welcome.

beecher

That's a variable rate Scotwest have offered you, isn't it? Be wary as when rates rise, your LTV may be too high to get a deal elsewhere. Rather than looking at what it is the cheapest option now, you may want to be looking a bit more long term and taking a longer term fixed rate.

Do you really need to spend £13-15k on doing work to the house? Remember to factor in fees out of your £19k too - after paying your 10% deposit plus fees you'll have less than £10k left.

Thrugelmir

DJNicol wrote: »

Hi folks, first post :hello:

I am a first time buyer - i have bought a flat for £85k (valued at £90k)
I am looking for the best mortgage rate i can get - I would like as high an LTV as possible as although i have good savings (about £19k) i think i will have to use the vast majority (about 13-15k) on doing work to the house. Essentially I need someone to lend me 95% of the purchase price or 90% of the value. the problem is most places only lend on whichever is the lower - does anyone know of any bank/building soc that lends based on value alone?

The best deal I have found so far is with the Scotwest Credit Union who are offering me 90% of purchase price @ 4.99% with no arrangement fee.

All advice welcome.

Sounds like a lot of work. What's the nature of it? You may finder that your lender will withhold funds until some of the work is completed.

Always advisable to find a mortgage in principle before buying.

DJNicol

beecher wrote: »

That's a variable rate Scotwest have offered you, isn't it? Be wary as when rates rise, your LTV may be too high to get a deal elsewhere. Rather than looking at what it is the cheapest option now, you may want to be looking a bit more long term and taking a longer term fixed rate.

Do you really need to spend £13-15k on doing work to the house? Remember to factor in fees out of your £19k too - after paying your 10% deposit plus fees you'll have less than £10k left.

Yeah its a variable rate, however If I take the variable rate with scotwest I don’t have to pay any early repayment fees after the 1st year (although there is a £125 repayment in full fee) and I hope to re-mortgage after I have carried out the work – hopefully this will mean my LTV will drop significantly (to 70%) and allow me to get a better fixed rate. I understand why you are recommending looking at the bigger picture, but I feel I should spend as little as possible in the way of arrangement + repayment fees as I intend to be in and out of this mortgage in a year.

The house does require a significant amount of work - a few walls need to be knocked down (some load bearing) and a new kitchen + bathroom are necessary, plus some other general repairs. I have taken about £1000 off for fees, (lawyer, architect and engineers report) although I guess this may be nearer 1500.

I am confident after the work has been carried out the property will be worth a fair bit more – there is a similar one round the corner going for 126k, whilst I’m not budgeting on it being worth as much as that I think it could easily be worth £110-115k .

Thanks for the reply.


The house does requirer a significant amount of work - a few walls need to be knocked down and a new kitchen + bathroom are necissery.

DJNicol

Thrugelmir wrote: »

Sounds like a lot of work. What's the nature of it? You may finder that your lender will withhold funds until some of the work is completed.

Always advisable to find a mortgage in principle before buying.

Thanks for the reply - I have a mortgage in principle from Scotwest and the Nationwide, I purchased on this basis, I am not just trying to establish if there is anything out there that might suit me better.

I am also looking at lloyds 'lend a hand' option - any thoughts on this?

p.s. apologies for the double post.

Thrugelmir

DJNicol wrote: »

Thanks for the reply - I have a mortgage in principle from Scotwest and the Nationwide, I purchased on this basis, I am not just trying to establish if there is anything out there that might suit me better.

I am also looking at lloyds 'lend a hand' option - any thoughts on this?

p.s. apologies for the double post.

Is the value of £90k the price it was on the market at and £85k what you offered for it? The mortgage advance will be based on the lenders surveyors valuation which could yet be another figure!

The Lloyds product fills a niche in the market. Means family members can advance funds without tying them up in the property directly. As you are looking to turn the property round (and hopefully make a profit) may be a route to take.

DJNicol

Thrugelmir wrote: »

Is the value of £90k the price it was on the market at and £85k what you offered for it? The mortgage advance will be based on the lenders surveyors valuation which could yet be another figure!

The Lloyds product fills a niche in the market. Means family members can advance funds without tying them up in the property directly. As you are looking to turn the property round (and hopefully make a profit) may be a route to take.

Yes,
90k is the value it was on the market for.
85k is what I paid
90k is the value in the home report.

The Lloyds one seems pretty decent, only problem is finding the 20% to put into the savings account – my folks have suggested I put my savings into that account and that they pay to do up the property in the short term, then when the funds are released from the savings account I just transfer them to my parents. This is an ideal solution except that it may cause a bit of frustration from all parties in terms of getting things done to the house – I’m sure there is an old saying about never entering financial arrangements with friends and family!

laura2877

hi, i'm currently going through an application for a lend a hand mortgage with lloyds.

there are early repayment charges:

Before 01/11/2010
3%
01/11/2010 - 31/10/2011
3%
01/11/2011 - 31/10/2012
2%

We found a repossessed house that was advertised as offers around £69950, we offered £65k and this was accepted.

They have based the deposit on the asking price not the purchase price.

They have also changed their lending criteria recently (apparently) as both me and my partner were accepted on 11/06/09, but when we went to do the formal application last week 23/06/09 they wouldn't accept me.

All that is on my credit report is a default of £274 from 2004! I told the mortgage advisor about this and she credit checked me on the first visit.

As a result we have had to up the deposit to 10% and just have the mortgage in my partners name.

The savings have to be in someone else's name and they have to get independant legal advice regarding the legal charge on the funds and lloyds will not progress the mortgage without proof of the legal advice.

I paid £495 product fee, £275 valuation fee and £99 application fee.

As we are already paying 10% deposit the savings money can definately be released after the three years because the ltv must decrease to 90% for the funds to be released.

I'm not sure this is right for your situation but on the plus they have processed the application very quickly and the valuation has already been done.

good luck!

DJNicol

laura2877 wrote: »

They have based the deposit on the asking price not the purchase price.

thanks for the info laura - i am interested in the bit i've quoted above - if they are basing the deposit on the asking price( the value i assume?) are they basing the loan on the value too? i.e 95% of the 90k valuation in my case (i.e 85500)?

good luck with the rest of your move!

laura2877

sorry i just re-read what i've wrote and its wrong. sorry!

They have based it on the purchase price.

our purchase price is £65k,
10% deposit is £6500

we are borrowing £58,500.

sorry to cause confusion!