Help with FTB Morgage please ???

mi-key

I know you prob cant give a definitive answer, but would appreciate some input from people to point me in the right direction.

OK, rough situation - me and my wife are looking to buy our first house :

Her - employed, earns £31K per year, has debts of £15K total
Me - self employed - earn £38K per year ( only have 1 year accounts, but do have proof of income in form of bank statements etc.. ) - no debts.

We are looking to borrow around £150K, and have a deposit of £15K - £20K available, but would prefer to use around £10K of it.

Have gone through and done an approx affordability calculation and after all monthly bills ( not including current rent ) we have somewhere around £1900 - £2000 a month left over.

What would be the best avenue to getting a mortgage for what we need ? I know with some self cert ones you need to pay a higher deposit and can get stung with a higher interest rate, but is this the case if one of you is employed and one self employed ? Would we be better trying traditional lenders on a FTB type or mortgage ?

Also have the idea that we would like to pay off the mortgage as quickly as possible, rather than taking 25 years - what is the best way to do this ? should we be putting all the spare money into an account, then paying off all the outstanding mortgage once we have saved enough to clear it, or making a lump sum payment each year ? Dont want to be tied to saying 'we will definitely pay it off in X years', and having higher repayments from the start, but would like to have the option of paying it quicker.

Thanks for any help

EagerLearner

Hiya - we were FTB a few months ago and to cut a long story short, had to pull out as the current properties we can afford are all affordable for a reason - ie something wrong with them...

Anyway, we learned some valuable lessons - the first one is to see an Independent Financial Advisor that covers the whole of the market and does not charge you a fee. They will be able to advise you on the best mortgage to go for in your circumstances. You may well benefit from an Offset mortgage if you want the flexibility to pay off the mortgage whenever you want, but also keep in mind that many traditional mortgages also allow you to make payments against the mortgage. We were going to go with Abbey National and they allowed up to £500 extra a month.

Once you have had a chat with the advisor you will get a better idea - good luck!

EagerLearner

herbiesjp

You would always look at other options before looking at self cert - as there may well be a lender that could be flexible enough to take bank statements as proof of income.

In terms of the overpayments - i agree. You do not want to say lets do a mortgage over 10 years because our surplus income allows to at the moment - you never know what is around the corner.. You could look at taking a "normal" mortgage term but with the facility to make capital overpayments as and when you want to If you choose this option then make sure you look for a mortgage that calculates its interest on a daily basis to get the full benefits of the overpayments.

I think you situation could well be do able - as I have had a couple of similar clients, which were place with status lenders. HOwever it will depend on your whole scenario.

Have a word with a whole of market mortgage adviser and let them guide you on this.

HTH

mi-key

Thanks, OK next questions - where is the best place to find a good IFA local to me ( Cardiff ) ? are there any lists of recommended ones ?

With the paying off early scenario, based on the current situation ( my original post covered the last financial year for my earnings ) would be looking to pay off around £15K - £20K extra per year as a lump sum.

If we did this after the first year ( for example ) would the monthly payments on the mortgage then come down in the second year, or would they stay the same, just the term of the mortgage becoming shorter ?

Rafter

No idea about Cardiff IFAs but hope someone can help out.

For a self-cert mortgage you are probably going to need a bigger deposit - at least 15%.

Your wifes existing debt may also be taken into account in your borrowing calculations.

Lump sums can be treated in a number of ways depending on the mortgage package. If it was an 'interest only' mortgage by paying off some of the balance, the interest comes down and so do your payments.

If it is a 'repayment' type mortgage, they can either adjust your payments downwards so the mortgage still repays over the same term (usually 25 years) or you carry on paying the same but just pay off the mortgage that much earlier.

Good luck.

R.

herbiesjp

Do you really want an IFA or a fee free whole of market mortgage adviser?

IFAs can be found at https://www.unbiased.co.uk

If you have a lender charging daily interest, then your payments should change straight away, unless you want to leave them unchamnged and thereby make further monthly overpayments

mi-key

Think a whole of market mortgage adviser would be better, is there a link to a list of those ?