First Time Buyer's Guide To Mortgages

dangermouse83

I hope someone can advise me,

My partner and I are looking to buy our first home. I have had bad debt in the past, but this was over 7 years ago and have paid a lot off.
I earn £35k, my partner earns £25k. The house we are looking at is £100k.

The problem is, that we don't have a great deal of savings even though we could afford the mortgage repayments easily. We have roughly £6k saved.

We have no debts at the moment. Am I barking up a non existent tree? We have had enough of housing association as they're rubbish!

Any advice would be warmly taken in!

_Andy_

dangermouse83 wrote: »

I hope someone can advise me,

My partner and I are looking to buy our first home. I have had bad debt in the past, but this was over 7 years ago and have paid a lot off.
I earn £35k, my partner earns £25k. The house we are looking at is £100k.

The problem is, that we don't have a great deal of savings even though we could afford the mortgage repayments easily. We have roughly £6k saved.

We have no debts at the moment. Am I barking up a non existent tree? We have had enough of housing association as they're rubbish!

Any advice would be warmly taken in!

You'll need £10k for the deposit, in addition to money for legal fees, valuation, cost of moving etc.

jiggy.jay

i am in the process of buying my first property ( woo hoo:T) and have made a basic costing sheet that helps me see how much i need for legal free, valuation etc

with all this said i know how stressful it is, and as it helps me a bit i would like to share. you can always add items onto or take them off.


all i need is for some one to tell me how to add them here, or if you want it please message me with your email address.

gmatthews73

Would anybody be able to give me some advice on submiting a offer in for a property.i recently put a offer in for a flat however i was told by agent that i needed a morgage agreement first to prove funds were available.however in the meen time i have been getting harassed by the agents morgage advicer trying to get me to take out a morgage with him.i have told him i am using my bank ,now he is saying if i am not getting a morgage through him my offer will not be submitted even though i have produced a morgage agreement to prove funds are available until i now produce bank statements,pay checks etc.is this normal as this is the first time i have tried to buy a property.i would be grateful for any adice many thanks g matthews

jiggy.jay

What a nasty character, im also currently going through my first buy .

If im not mistaken an offer should be submitted with out the need to prove funds. If you have a mortgage in principle certificate from your bank, then that should be good enough for them to take you serious and put the offer through to the seller.

You need to know if you offer is accepted by the seller before you go ahead with the mortgage! If you get a mortgage, and the seller refuses your offer then your in a bit of a pickle!

Good luck

Holly2kbabe

Hi,

Myself and partner are first time buyers and are currently going through the process of buying a house. Purchase price of £125,250.
Deposit of £20,250, and have just received our mortgage offer on 105k.
Our monthly payments are (repayment and interest) of 519 a month - fixed rate for 2 years.
The arrangment fee is added to the mortgage so that adds 900 to the amount
The Valuation was added free of charge (£260)
Cashback of £250
Add the usual CHAPs payment of 30
Did we get a good deal?
This particular lender was very picky and our adviser said we were very lucky to get this deal. Any advice/opinions would be much appriciated.

Also our solicetors charges are almost £1000 with no extra hidden costs - I though this was average costs

One note of advice for First Time Buyers - Ensure you do you sums - the conveyencers tried to add the stamp duty fee - which is exempt as we are first time buyers.
They also did their sums wrong - calculating VAT!! This did put me off using them but they were best amount quoted to what we can afford!

Doshwaster

jiggy.jay wrote: »

What a nasty character, im also currently going through my first buy .

If im not mistaken an offer should be submitted with out the need to prove funds. If you have a mortgage in principle certificate from your bank, then that should be good enough for them to take you serious and put the offer through to the seller.

You need to know if you offer is accepted by the seller before you go ahead with the mortgage! If you get a mortgage, and the seller refuses your offer then your in a bit of a pickle!

Good luck

I would agree. It's nothing to do with the vendor where the money is coming from. It's between you, your mortgage advisor and the mortgage provider. As long as you can' get a mortgage together within a few days of making an offer then it's non of the vendor's concern.

Having said that I gave my vendor's EA a copy of a agreement in principle certificate (even though I ended up going elsewhere for the mortgage)

donnasmall3

payless wrote: »

EXPENSES

There are a number of expenses that are payable when buying a property. For example (but not limited to)

1. You will be require to have a valuation or survey conducted on the property(some lenders do not charge for basic valuation report)
   (figures in brackets give example costs for a £150,000 property if lender’s surveyor is used.)
   There are 3 main types :
   Mortgage Valuation - This is the most basic form of survey and is the minimum required by lenders in order to ascertain the suitability of the property as security for their loan. Although you will normally receive a copy of this report it should not be relied upon as a comprehensive report on the condition of the property (£300)
   Home Buyers Report – (RICS)A type of survey report which is more detailed than a Mortgage Valuation. A Home Buyers Report can be carried out by the lender’s surveyor at the same time as he prepares the Mortgage Valuation. This is usually less expensive than having 2 surveyors. The surveyor is generally deemed to be acting as a detailed report for the borrower. You can of course instruct a separate surveyor (£475)
   Structural Survey - This is the most detailed type of survey report normally undertaken in connection with a House Purchase. If a Structural survey is opted for then the lender will also need to have a mortgage valuation- sometimes this can be the arranged by the same firm –again cutting some of the costs.(£700-£1000)
   Additional "surveys -You may be asked to pay for specialist reports if recommnded by the surveyor.
   
   
   
2. Mortgage Processing Administration Fee - This is a fee charged by some lenders which is not refundable if the mortgage application does not proceed. The Administration fee will often form part of the valuation fee but will be retained by the lender even if the valuation has not been carried out.

3. Lender’s product fee, known under different names, often but not exclusively applied to fixed and capped products – varies - example £0 - £695. Sometimes payable upfront as non-refundable booking fee.

4. Brokers charge- some advisers chargea fee for their advice and processing the transaction, this may or may not be refunded on completion

5. Higher Lending fee ( sometimes known as Mortgage Indemnity Guarantee MIG, Additional Security Fee) -. This is a fee that is payable if a high percentage loan to value is required. The fee is charged by the lender to cover the extra risk associated with higher percentage borrowing and they may use it to purchase insurance to cover them in the event that you default on the mortgage and they make a loss on possession and resale of the property, any policy has no benefit to the borrower and offers no protection - indeed if your property is repossessed and the lender claims on the any Insurance then the insurance company that has paid out the claim to the mortgage lender can still pursue you, the borrower, for repayment of that amount. The terms of the this fee will vary from lender to lender and if you are told that this will apply you should check the details. Some lenders will impose this additional fee if you wish to borrow more than 75% of the value of the property, however most no lend upto 90% without charging this fee. Some even lend over 100% without a fee.
If payable , premiums are usually calculated as a a percentage of the amount you wish to borrow over 75%. Some lenders add the premium to the loan (and charge interest), other require it on completion or over the first few years.

Solicitors costs- if you aretaking a mortgage the lender will insist that you use a solicitor or licensed conveyancer (usually the solicitor will also act on the lender’s behalf, but in some circumstances you may need to for the lender’s separate solicitor). Some mortgage deals include "free or refund legal costs"
-Example costs £150,000 property , based on low cost solicitor and will vary with property value , loction and between different solicitors.
CARE PLEASE ASK YOUR CHOSEN FIRM IF THE FEES QUOED INCLUDE WORK FOR THE MORTGAGE -
SOME DO, SOME DETAIL IT SEPARATELY- BUT A FEW HIT YOU WITH THIS FEE AT A LATE STAGE.
Buying;
Solicitors costs £500 plus vat = £588
Local search fee 105
Land registry 200 (rises with value)
Bank Transfer(tfr funds to seller) 25
Minor expenses 30
£948 plus Stamp duty – see below
If you are also selling a property – allow another approx £550 solicitors costs for properties around this same value.
Many solicitors now charge a scale, so fees can rise depending on property values , so always get a quote.

Estate Agent Fees – Paid by the vendor, so if you are also selling a property, don’t forget this, unless you are arranging a private sale. Costs vary – often 1 to 2% often with a minimum of £1000-£1500.
Stamp duty - This is a tax which is levied on the purchase of property. The tax is paid by purchasers and is currently levied at the following rates:
Upto £125,000 Nil
£125,000 - £250000. 1% (Although some areas are now exempt upto £150,000 please ask for further info.)
£250001 - £500000 ….3%
£500001 and above 4%
Duty is paid on the whole purchaser price and not just the excess applying to that band.

Leasehold - often extra legal fees / costs apply to leasehold properties

Early Repayment Charge / Redemption penalty: If you are repaying an existing mortgage your current lender may charge you this fee . Plus many lenders charge fees for closing your account (£0 - £300 common0 . Check to see if it is beneficial to use any portability option that may be available.

Other costs- Allow for removals, immediate repairs, redecoration, furnishings, utility connection, initial interest (see below) etc…

EXTRA MONTHLY COSTS

Insurance

It is wise to ensure that adequate cover is in place to protect your mortgage:

Property Insurance (Building and Contents)- Mortgage companies will require the property to be covered by a suitable building insurance plan, for a amount no less than their valuer specifies. On certain leasehold properties this may be arranged via the freeholder. You may find it cost effective to take contents cover via the same policy. It is generally worthwhile looking at alternative quotes before just accepting the lender’s option – however they may charge a small administration fee if you go elsewhere.

Life cover- some lenders used to make it a condition that life cover is in force, although thats now rare. Endowment plans include life cover, but for most other interest only methods, and repayment method it is a separate mater. It is prudent to consider life insurance to protect cover your mortgage debt, especially if you have dependants. An independent insurance. financial Adviser should be able to advise on a suitable and competitive plan.

Critical Illness Cover- often arranged as an optional add on to endowment or life cover policies, but can be standalone. Pays a lump sum ( to clear your mortgage) if you are diagnosed with one of the specified illnesses.

Mortgage Payments Protection Insurance (MPPI) – also known as A.S.U. - Accident, sickness and unemployment insurance This is an insurance policy which is taken out by the borrower and protects against the borrower being unable to work for these reasons. The policy will usually pay monthly benefit, usually calculated around the mortgage repayment (plus insurance) if the borrower is unable to work due to accident/sickness or unemployment/ redundancy. These payments will normally only be made for a limited period of time - typically 9/12 months or until the borrower returns to work. The terms of these policies and the cost vary considerably from company to company. Also see PHI in general section.

It is your responsibility to ensure that any cover required is in /remains in place.

Extra monthly costs- Other

If you have not previously owned or rented a property, please do not forget that there are other expenses involved in being a property owner. For example (but not limited to):

Electricity , gas and phone bills, water rates and council tax, as well as non property related expenses.


ADVERSE CREDIT

If a borrower has a history of poor credit usage then this is described as Adverse Credit. Poor Credit history can include County Court Judgements(CCJ), Bankruptcy, Mortgage arrears or any late payments on credit arrangements. Some traditional and niche lenders will consider clients with adverse credit history, but rates may not be as attractive those available to clients with a clear credit history.

GLOSSARY OF SOME OTHER TERMS
Annual Percentage Rate - This is meant to show the true cost of borrowing and adjusts the notional interest rate to take account of all the initial fees and ongoing costs to reflect the real cost of borrowing throughout the entire mortgage term. Unfortunately there is currently some disagreement over how this rate should be calculated and some distortions occur. Whilst this could be a good way to compare relative deals care should be taken to ensure that the rates being compared have been calculated on the same basis
Buy to Let - A term used to describe the purchase of a residential property for the sole purpose of letting the property to a tenant (or for investment) Whilst the majority of lenders will not provide mortgage finance for this purpose a number do specialise in this niche area of the market
Centralised Lender - This refers to the group of lenders, other than high street banks and building societies, who operate without a branch network, normally from one location.
Completion - This refers to the time at which the legal ownership of the property changes hands. This date will usually be agreed upon at exchange of contracts. This will also be the date at which the mortgage becomes effective
Conditional Insurance - This refers to insurance products which some lenders will impose as a condition of their mortgage offer. This could mean that the lender insists that accident, sickness and unemployment cover is taken out or that combined buildings and contents insurance is taken. If looking for a fixed or discounted product then these conditions should especially be watched for.
Equity - The difference between the value of the property and the outstanding mortgage(s).
Initially this is your deposit, but it will change as capital is repaid or house prices alter.
Exchange of Contracts-The point when the purchase of the property becomes binding. The solicitor will normally expect a deposit to be placed at this stage. The completion date is usually set – this can then be immediate or up to some months later. Insurance should be in place from this date.
Existing Liabilities - This term is used by lenders to define all other finance commitments apart from the existing mortgage. This will take into account such items as bank loans, HP, credit cards, maintenance payments (to ex-spouse) etc. Most lenders will take these items into account when assessing how much they are prepared to lend and will usually deduct 12 months payments from gross annual income before applying their normal income multipliers
Fast Track- Lenders may be preapred to speed thro' applications if depoist and credit score are favourable
First Time Buyers (FTB) - lenders differ in their definition of a First Time Buyer, some lenders offer "special terms to First Time Buyers, however most lenders now offer incentives to all new mortgage customers.
Freehold This describes the tenure of a property where ownership of the property and land is held indefinitely. This compares with leasehold property where the property is held for a limited period of time
Further Advance - This is an additional loan made by the existing mortgage lender and secured by the first charge on the property.
Guarantor - A guarantor is a person other than the borrower who guarantees the mortgage repayments. A Guarantor can sometimes be used to support a borrower who has insufficient income to qualify for a mortgage in their own right.. The Guarantor becomes responsible for the whole mortgage repayment if the borrower defaults.
Initial Interest - This figure is usually shown on the mortgage completion statement and refers to the amount of interest charged from the date that the funds are drawn down to the first repayment date. This has the effect of increasing the first mortgage payment and the amount of the initial interest payable will depend on the time in the month when the mortgage is completed.
Leasehold - This is the tenure that applies to many houses and most flats and maisonettes in the Engalnd & Wales. As opposed to freehold property the rights to the property are owned only for a fixed period of time, with the freehold being held by a third party.
Mortgagee - The Lender
Mortgagor - The Borrower
MIRAS - Stands for Mortgage Interest Relief at Source. The withdrawal of MIRAS was announced in the 1999 budget and took effect from April 2000, for new and existing mortgages.
Non-Status - Some lenders used to l offer non-status facilities which allow them to lend without proof of income – rates usually reflect the higher potential risk, and are rare these days
Permanent Health Insurance (PHI) - This is a type of insurance which will pay a proportion of normal income in the event that the policyholder is unable to work due to accident, sickness or disability, until a return to work or normal retirement age These policies are normally used to replace a percentage of full income. This type of cover should not be confused with MPPI/ASU policies which will normally only cover the mortgage payment for a limited period of time.
Remortgage - This is the process by which a mortgage on a property is moved from one lender to another whilst remaining in present property. People often remortgage to raise extra cash (maybe for home improvements) or to change rates. If a remortgage is being considered then attention should be paid to the costs payable.
Repossession: If the borrower is in default with their mortgage payments, the lender may apply for a court order to take possession of the property, usually to force a sale. Extra costs are also incurred.
Vendor- The person selling the property.

Hi i am completly new to this have just signed up in fact...
Ok i have a question... I have a credit score of 750, but have 3 defaults on my credit report one from 2008 and the other two from 2006, i am currently looking at shared ownership and have found a house. I am still to have my appointment with the HA, (i am based in Nottingham by the way) the 50% share is £50,000. Firstly what is the likely hood of me even getting the mortgage if at all! and if i can what sort of deposit am i looking at... would really appreciate some clear and precise information before i go getting excited without good reason... please help thanks

nicnak01_2

Hello Everyone. I have a mortgage but it is in neg equity. When that house is sold I will have nothing for a deposit. When I come to get a mortgage again will I be classed as a first time buyer if I have nothing for a deposit from the sale of the house etc etc...The reson I ask is that I have seen a lot of the government schemes, Shared ownership but to qualify you need to be a first time buyer. Is there a way around this or not? Thanks everyone.

TinyTink

Hi all

I shopped around alot when my fiance and I started looking for our mortgage (FTB) We originally thought we would only have 5% deposit and found the only place that would give a 95% mortgage was Yorkshire bank.

When we shopped around after finally scraping together 10% deposit for a house valued up to £90k we did find alot more options and payments reduced alot.

One of the things we did come across was the fact the the bottom line figure we were going to pay pretty much stayed the same, some gave a free solicitor or free surveyor and No applications fee but in the end it would end up costing around £600 whichever way we chose to go.

We ended up with a good deal (well one that suited us)

All i would say to anyone is shop around for the deal that suits you and one you are happy with and you can't go wrong :T

For people out there that think it is never going to happen for them, keep your eye on the goal and you will get there in the end and it will be worth it.

I had my doubts and thought it was never going to happen but we now have our first home together and it's all paid off.

Sorry for the long reply and good luck everyone x