Overwhelmed, Help required

bamboozledgal

Hi There,

Am currently looking to buy my first property. Its a council house which I am buying under the right to buy scheme. I am a single parent with an income of £25,500. I recieve child benefit/ tax of £32 per week though this is set to end within the next 6 months.

Value - £78,000
Deposit Available - £10,000
Mortgage required - £30,000

Ideally I'd like to pay off the mortgage asap however I am looking to sell up soon after I have qualified for full discount with no penalties - 3 -4 years.

I then intend to take out a larger mortgage.

My dilema

I would like to know roughly what I have to pay each month. There are so many options and special deals out ther I am overwhelmed.

I would like not to have to pay fees up front but at the end of the day I'd go for whatever worked out cheapest overall.

Is it worth me keeping the £10,000 in the bank + other savings of £5000 and getting an offset mortgage of £40,000 to ensure future security.

The fact I want to move by year 5 latest means I have to concider repayment charges.

Using some mortgage sites I roughly get quotes of between £310 and £325 for the 10 year mortgage, some with fee free and some longer fixed terms.

Have spent the last two weeks trying to sort this out but now I am getting more and more confused.

Concidering my situation what is the best way forward for now?

Help

roswell

if you know your going to move n 5 years why not make the term longer meaning a lower monthly outlay but a bigger capital repay when you sell up ??

WiseInvestor_2

The Right To Buy system is intended to give low-income families the security of their own home rather than allowing tennants to make a quick buck out of my taxes. Selling your home privately in 3-4 years merely denies other low-income families a permanent roof over their heads.

mamaoba

http://www.moneysupermarket.com has some calculators which tell you the monthly payment. You can also sort o flexibility and no redemption fee if this is important.

I'm also a SP who bought under the right to buy and will be selling up in the next 12 months (I need a bigger place before anyone gets on their high horse! It's not about "profiting" from your taxes). It'll mean doubling my existing mortage amount so i'm being very careful and taking my time.

My aims now I'm a little wiser -
1. Is the mortage portable? (this means you can take it with you when you move - my current one isn't). I wish I'd known to ask about this when I took out my existing mortage as now I have an additional hassle factor of changing mortage companies when I move.
2. Is the minimum monthly payment for 6 months coverd by my savings in case I or my child is seriously ill or I lose my job? (As a sp you don't have the "insurance" of a partner's earnings) Or would the mortage co give me a 6 month payment holiday without my having to beg & plead for it?
3. Is the monthly payment affordable without my making huge sacrifices (kids always come with unexpected expenses;)
4. can I afford the buildings insurance, council tax etc too?
http://www.onvisual.com/oft/debt/planner.htm is a great tool to help you work this out. don't forget to allow a margin for council tax increases.
5. Can I easily make overpayments?

Do remember if you hit hard times in the 1st 3 years you cannot sell or switch mortages as the rules of right to buy and the banks own rules prevent this. With this in mind go for the minimum compulsory monthly payment you can to allow for an emergencies & then overpay to meet your personal targets.

My current mortage has 17 years left but I'll go for a standard 25 year one next time to keep the monthly payments low and make overpayments to keep to my current pay it off schedule. The risk is much greater for you as a sp so always err on the side of caution, if necc go for a higher apr but lower monthly payments/flexibility. Keep in mind it's the kids home rather than a money spinner 1st and foremost and you'll be ok.

PoorDave

WiseInvestor wrote:

The Right To Buy system is intended to give low-income families the security of their own home rather than allowing tennants to make a quick buck out of my taxes. Selling your home privately in 3-4 years merely denies other low-income families a permanent roof over their heads.

Surely it is more important that the OP keeps a roof over their own + children's heads, and can then make gains financially to support their family.

How many decisions do you make that will be to the detriment of your own family, yet will benefit the system?

villabadger

WiseInvestor wrote:

The Right To Buy system is intended to give low-income families the security of their own home rather than allowing tennants to make a quick buck out of my taxes. Selling your home privately in 3-4 years merely denies other low-income families a permanent roof over their heads.

Hi,

New here - just thought I should mention that you can't really blame people for taking advantage of The Right To Buy offer. Surely a certain lady Prime Minister and her Conservative Government have to shoulder the responsibility for that clever decision!

Mind you, the Labour Gov also have to take on some of the blame. After all, they have created bigger problems by allowing such ridiculous growth in house prices that makes using The Right To Buy as one of the only ways of getting on the housing ladder today. Unless, of course, you are lucky enough to be earning a huge salary;)

villabadger

MortgageMamma

As a mortgage advisor I come across these situations daily, and I have to say that buying a right to buy property can be even more confusing and stressful for a FTB than a straightforwad purchase, as there are two sets of "rules" to consider.

What you do with your property at the end of your pre-emption period is up to you, and don't listen to all that socialist twaddle about families in need. If council house stocks get sold up, new homes will emerge to address this, either the the council or housing associations. Luck after your own brood, as in this life you have to do what you can to make sure you are alright, if you don't look after your own interests nobody else will! You are doing the right thing.

As for the mortgage itself, well, there are hundreds of them, all with different features and restrictions. The most important thing is to get the right mortgage for you. By speaking to a whole of market mortgage advisor, you are putting yourself into the hands of a dedicated professional, who can search the whole of the UK marketplace and ensure you get the correct mortgage to match your needs. Not only that, but they will help co-ordinate your mortgage to completion and advise of protecting your dependents, property, and mortgage payments.

Don't struggle on by yourself. Find an advisor who can help you. Preferably one that doesn't charge fee's, as if you place all your business through her/him they should make enough money from that.

One last thing. be wary of submitting your details through sites such as moneysupermarket.com, as they don't really have a team of advisors that are sat there waiting to address your needs. They actually just sell your details to the highest bidding company, and the company they are sold to may not be reputable. You have to question why they are buying in your details in the first place!

HTH and GL

MM

Martinslovechild

I quite like the look of the Woolwich Tracker mortgage product which has a long term interest rate of base rate + 0.49% (currently 4.99%).

There are no fees upfront and no early redemption penalties down the line.

Good luck.

dips_3

bamboozledgal wrote:

Hi There,

Am currently looking to buy my first property. Its a council house which I am buying under the right to buy scheme. I am a single parent with an income of £25,500. I recieve child benefit/ tax of £32 per week though this is set to end within the next 6 months.

Value - £78,000
Deposit Available - £10,000
Mortgage required - £30,000

Ideally I'd like to pay off the mortgage asap however I am looking to sell up soon after I have qualified for full discount with no penalties - 3 -4 years.

I then intend to take out a larger mortgage.

My dilema

I would like to know roughly what I have to pay each month. There are so many options and special deals out ther I am overwhelmed.

I would like not to have to pay fees up front but at the end of the day I'd go for whatever worked out cheapest overall.

Is it worth me keeping the £10,000 in the bank + other savings of £5000 and getting an offset mortgage of £40,000 to ensure future security.

The fact I want to move by year 5 latest means I have to concider repayment charges.

Using some mortgage sites I roughly get quotes of between £310 and £325 for the 10 year mortgage, some with fee free and some longer fixed terms.

Have spent the last two weeks trying to sort this out but now I am getting more and more confused.

Concidering my situation what is the best way forward for now?

Help

I would check out the new rules on right ot buy because they have changed. From what I recall you now need to keep the property for five years before you can sell without paying back any discount BUT if you sell within ten years you have to offer the house back to the council first at the market value (unlikely they will buy it back but if they do it could tie you up in red tape). Second point - if you sell within the first five years you pay back a percentage of the pofit on the house not just the discount you were given.

If you intend to sell within five years you need to check out these new regulations carefully before you tie yourself up in a mortgage. Keep in mind that as a single parent you are potentially more likely to fall on hard times if you are made redundent etc and if you are forced to sell your home within the first five years this could be financial suicide.

This is my understanding of the new regulations but you need to check these out for yourself.