Buying a house - big mortgage...

Cardinal-Red

Hi there - I've had some advice on here before so hopefully you guys will be just as helpful this time!

My partner and I want to buy a property for around £250,000. Our combined salaries are in the region of £55,000 - £60,000. These will escalate though as we are both on fast track management schemes - me with HMRC, and her within the teaching profession. In 3 years, our salaries should combine to be £75,000 - £80,000.

Anyway, I was thinking of ways to finance this. My current best estimate is an interest only mortgage until we get to the above salaries, and then a capital/interest remortgage when the tie in period is up.

Is this sensible in the first instance, and/or likely to be possible?

We have £10,000 deposit (cash) and a likely 'profit' on our current home of £15,000, if that helps... no 'debts' as such but £13,000 owed on Cahoot flexible loan, for cars, currently being paid off at £400 a month. No cards, loans etc.

MortgageMamma

how old are you both?

Cardinal-Red

Hi, I'm 26, she is 25....

MortgageMamma

Then it is feasible what you suggest, but have you thought of taking a repayment mortgage, initially for a term of 39 years? this would reduce how much you will be paying in the early years. Also as you have predefined and structured career paths, a fixed stepped could also work very well for you. You budget for the mortgage on salary multiples alone looks realistic. Have you had someone check out your options and how much your monthly payments are likely to be?

As you are first time buyers it even more important you get the right mortgage first time, I would recommend you seek the advice of an independent whole of market broker as this is the biggest financial commitment you will ever make - it therefore important you understand the process, the mortgage product, and exactly what you are doing. Professional advice will leave you informed and confident you are doing the right thing, getting the best mortgage, and more importantly, that you can afford it.



MM

herbiesjp

As far as interest only is concerned, it is possible to do what you are looking for. HOwever you have to be disciplined to then change back - I have come across many people who have started off this way, get used to the low mortgage payments and then hold off changing to repayment mortgage for a long time - by which point the new monthly repaymenst on the current term are too high and then the term has to be extended all over again.

Ability to get the mortgage seems to fit the criteria of a lot of lenders.

I would suggest having a word with a whole of market mortgage adviser and let them see what they can find for you, in terms of rates, flexibility, and fitting a lender's criteria.

HTH

Cardinal-Red

Thanks to both of you for your advice. Mortgage Mamma, we're not quite first time buyers... this will be our 2nd property - not sure if that makes any difference.

The longer mortgage sounds interesting - roughly what sort of mortgage payment per month would that reduce to? Though discipline isn't a problem for us (we currently pay mortgage of £720 and £300 into a savings account every month), I think my partner would be much happier with a capital repayment mortgage from the off.

I appreciate both of your advice though - thanks!

herbiesjp

£250k mortgage less £25 k deposit = £225k mortgage needed

Over 39 years on a repayment mortgage basis = £1020 pm on a 4.5% tracker rate

HTH

Cardinal-Red

It certainly does help - that's great news.

Just tried to look up some lenders for longer periods, and I could only find HSBC who were offering quotes upto 30 years.

I was also wondering what sort of provisions these longer mortgages have for overpayments in general?

herbiesjp

There are quite a few lenders that offer these longer mortgage terms

Overpayments facilities would be the same if you took a 25 year mortgage or a 40 year mortgage - it will all depend on the particular scheme you choose.

MortgageMamma

Cardinal-Red wrote:

It certainly does help - that's great news.

Just tried to look up some lenders for longer periods, and I could only find HSBC who were offering quotes upto 30 years.

I was also wondering what sort of provisions these longer mortgages have for overpayments in general?

Hi There

I think you should consult a whole of market mortgage broker rather than look on the internet. This way you can be sure you will be getting the best deal for your mortgage, as they will have access to all lenders and what could take you hours or days, a professional could do a lot quicker. Try and find one that doesn't charge fee's and you are no worse off.

MM

MikeP_5

Sound advice - at last count there were well in excess of 15,000 mortgage rates and offers available - a whole of market adviser will filter these down to those which fit your requirements best.