Can someone check this out?

Athlete

I posted a message on moneysupermarket message board asking for some advice about mortgages. Is the advice received correct and the best deal?
There are more users on this forum so I'm asking for a second opinion...

Can't add a link:mad:

Hello
I'm a ftb and an offer I made has been accepted. The offer is £109,750, I'll have a deposit of £70,000 which will give me a ltv of 36%. I was given an aip of £40,000 a few months ago when I first started searching for a house, I could of got more but I didn't want to over stretch myself. Anyway I am looking for a good mortgage offer, I'm thinking a fixed rate of 5 yrs - I'm hoping to pay the mortgage off within 8-10yrs. My monthly net income is £1800.
Could anyone please advise me on what are the best offers for ftb's with such a small ltv, also including that I want to pay the mortgage off with the next few years.
Thanks

With markets in their current state, a 5-year Fixed Rate is unlikely to offer best value for money, incidentally. You would likely be better off with a shorter-term tracker deal (you can get around 2.5% for that) which should lead on to a longer-term fixed rate in a couple of years time. With UK interest rates set to remain sub-1% for at least the next 12 months, possibly 18, typing yourself up long-term into something above 4% isn't particularly cost-effective.
Consulting an independent mortgage adviser would be your best bet. He/she should take account of all of your personal circumstances and recommend a product which fits your affordability and attitude to risk profiles.

So is it best to go for a tracker for a couple of years, overpay massively, then go on a 5 year fix. I aim to pay of the mortgage asap for personal reasons.
Can anyone recommend a good mortgage deal, taking in account the figures in my original post?

Northern Rock 2-year Tracker at 2.59% has a £595 arrangement fee. Many other deals have a £995 fee these days, so this would be good for a smaller mortgage. You can also get an option of around 3.19% with no arrangement fee with Woolwich. The Woolwich deal will likely work out better due to having no arrangement fee at all, and also because it doesn't revert to a higher rate in the future. At Bank of England Base Rate + 2.69%, it will remain at that tracking differential for the term of the mortgage, so that if rates stay low longer-term, you won't need to change it in the future, avoiding further costs.
Given your monthly income, these deals should both be quite easily available provided you don't have massive amounts of outstanding credit elsewhere.
A lender will want to know the source of your deposit, as it would be unusual to be a first-time buyer with such a large lump sum to put down.

Thanks for finding them deals. I have such a large deposit because I have saved for years, easily to find out from checking my isa's and savings account, plus I am in my late '30's. I have no furniture as I have split with my girlfriend, but rather than paying a lesser deposit my parents have lent me some money to buy some.
So to sum up, you are saying to go with The Woolwich on a 2 year tracker (as interest rates are so low) I will massively overpay, then maybe switch to a fixed rate afterwards as interest rates rise so I will have the security of knowing each month the payments. As I said before I hope to pay off the mortgage asap, hopefully 8 years.

Explanation ref your deposit will be perfectly adequate for a lender.

The Woolwich deal is a lifetime tracker as opposed to a 2-year one. I'll explain. The Northern Rock equivalent, for example, is a two-year tracker at 2.59%. This is Bank Bae Rate +2.09% for two years. It then reverts to NRock's SVR which is currently 4.79%. The Woolwich deal is a lifetime tracker at 3.19% currently. That's BBR + 2.69% for the whole life of the mortgage. The only thing that is "2-years" about it is that you would have to pay an early redemption charge if you were to clear it within the first two years. There are no added fees on this deal. If you were borrowing in excess of £85,000 you would be better off with the NRock deal with the £595 arrangement fee, as the lower rate would offset the fee. For borrowing such a small amount, you would be better off with Woolwich's fee-free 3.19% option.
And yes, quite right, it would be beneficial to pay off as much as possible, then in a couple of years (at the end of any penalty period) grab a 5-year fixed rate (I anticipate you should be able to get one of these at around 3.5% at the time) and you should be set for the long term.
The deals quoted, incidentally, are those available to us professionals as mortgage advisers. They may or may not exist if you go to the lenders directly.
EDIT - just checked Woolwich website for direct deals - this one is avaiable direct to them also. Without going through all of your affordability, circumstances and profile, I would go with that deal at 3.19% on a lifetime tracker with 2-year tie-ins.

Wutang_2

Athlete wrote: »

I posted a message on moneysupermarket message board asking for some advice about mortgages. Is the advice received correct and the best deal?
There are more users on this forum so I'm asking for a second opinion...

Can't add a link:mad:

Are you looking for advice about your advice?

What will you do then???

poppy10_2

The advice you've been given sounds fine

dimbo61

Check out offset deals !
first direct have some of the best rates and you can pour all your savings into the offset account !
Picking a fixed deal or a tracker deal is your choice but who said " you will get a 5 year fix for 3.5% in a couple of years " should be in charge of the country !!

dimbo61

Have you looked at offset mortgages ?
Check out First direct and pour all your savings into offset accounts!
No one knows what rates will be in 2 years so " grabbing a 5 year fix at 3.5% " might never happen

Athlete

Wutang wrote: »

Are you looking for advice about your advice?

What will you do then???

I was after an opinion on the advice I was given, I know a lot of people on this site are knowledgeable about mortgages, while I am not, so their opinions would be greatly appreciated.

Whats wrong with asking an opinion on something you know little about, yeah I might get people saying the advice I was given is wrong, but they might give me an alternative?

Thanks to the others who have given opinions and advice:beer: