Hi all...

Gerrym1984

first post on MSE although been a follower for quite a bit now. Myself and my gf are in the process of purchasing a house in Northern Ireland. Basically everthing is in place and we are only awaiting some documents in relation to the builders gurantee?(as the house is only 2 years old) and the deeds. I was wondering what actually constitutes a good mortage deal in this sort of financial climate. We are borrowing 117000 (90%) over 40 years (will lower this at some point ) through halifax. Now our initial product included rates paid for 1st year up to £1000 however due to complications we were unable to secure that product and as a result we opted for a product without the rates paid for us and a slighlty higher interest rate.

Any brokers we met with could not find any 90% mortgage products with the interest rate we have now (5.74%). I guess i would like peoples thoughts on this deal. Please bear in mind im a ftb and much of this is all very new to me however i have learned so much already from this site and many of it's well informed users.

belfastgirl23

It sounds to me like you've got the best deal possible for you in the circumstances. If you've spoken to brokers and they can't do any better then I don't think you could do any more. Is it a fixed rate you're going on to?

And welcome to the board!

Thrugelmir

Hi,

Is the rate mortgage fixed?

With a 40 year deal , personally I would be looking to make overpayments however small as soon as possible. The interest you'll pay over the term of the mortgage will be horrendous.

If you look to move or remortgage in say 5 years time. You'll find that you have paid off little capital of the mortgage and therefore insufficent equity to obtain a better rate mortgage.

Gerrym1984

Thanks for the quick reply and warm welcome folks. The product is over a 5 year period beginning on 5.74% for the 1st year. The 2nd year it goes to 6.4% or there abouts and gradually falls the next 3 years until we need to go about looking for another mortgage deal. The difference per mth between the 1st yr and the following year is around £60-70 (doing this from memory).

As for the overpayments i have latched onto the savings that can be made ie i think if we knock £50 per mth (which is do-able) extra off the mortgage it takes 8 years off the mortgages lifetime. We were thinking of saving anyway and i think its better to forego the savings to put off the mortgage. In relation to overpayments, are they the same as repayments ie charges attached? I may have to look over our mortgage offer to check on this

Thrugelmir

Gerrym1984 wrote: »

Thanks for the quick reply and warm welcome folks. The product is over a 5 year period beginning on 5.74% for the 1st year. The 2nd year it goes to 6.4% or there abouts and gradually falls the next 3 years until we need to go about looking for another mortgage deal. The difference per mth between the 1st yr and the following year is around £60-70 (doing this from memory).

As for the overpayments i have latched onto the savings that can be made ie i think if we knock £50 per mth (which is do-able) extra off the mortgage it takes 8 years off the mortgages lifetime. We were thinking of saving anyway and i think its better to forego the savings to put off the mortgage. In relation to overpayments, are they the same as repayments ie charges attached? I may have to look over our mortgage offer to check on this

You should save and keep cash available as an emergency fund.

Check you mortgage details for making mortgage overpayments. We pay our normal mortgage repayments by direct debit. Alongside this we have set up a monthly standing order to make overpayments. This allows us to be flexible and keep everything under control.

belfastgirl23

For my mortgage, overpayments are put aside as a reserve fund and I can draw them down whenever I want. I know though that some people have been stung a bit with this since they discovered that the minute they went into negative equity their reserve fund disappeared! It's worth checking your terms and conditions on this, I'm happy to throw spare cash in there knowing I can claw it back at any stage but I'd be less happy if I was locking it away for good.

Thrugelmir

belfastgirl23 wrote: »

For my mortgage, overpayments are put aside as a reserve fund and I can draw them down whenever I want. I know though that some people have been stung a bit with this since they discovered that the minute they went into negative equity their reserve fund disappeared! It's worth checking your terms and conditions on this, I'm happy to throw spare cash in there knowing I can claw it back at any stage but I'd be less happy if I was locking it away for good.

In that case its worth using it as your savings account as well. As you are unlikely to better the interest rate.