Mortgage advice for a first time buyer

Big_Kev_3

I am just about to buy a house (I know prices may drop but I have to buy now!!) and would like some advice on what mortgage to go for.

I have roughly a 10% deposit of the property value but am just completely blown over by all the choice of mortgages availiable.

In light of the predicted crash in prices, can anyone offer some sound advice?

Much appreciated!

herbiesjp

Sorry but do you require help with house prices or with the mortgage scenario.

Sorry if its obvious, having a LOOONNG day!

hairy_cornflake_2

You have not given enough information to be specific - assuming your income, outgoings and credit history are all ok - with a 10% deposit the worlds your oyster (almost) !

My advice would be to speak to an independent mortgage broker who can carry out a full factfind on you and discuss all the options (good & bad) so you can make an informed decision about whats right for you ;D

dougk_2

NOBODY knows for certain what is going to happen with house prices!

Prices may drop, stay the same or may even rise.......

It will depend on lots of things and can be individual, depending on current price, location, size etc.

You need to expand on the details so people can give their own opinons. (i.e hopw much deposit have you in £'s, the area you are looking to buy, the reason why you need to buy, your income and size of property you want).

On ething to bear in mind is are you buying to live in a house or buying to make money!

Big_Kev_3

Thanks for you help so far, much appreciated!

We are looking to buy in Cippenham in between Slough & Windsor in Berkshire.

The property is on the market for £169,000 but the vendor wants a quick sale and as we are first time buyers I think I can get a good deal out of it!

The reason for moving is my fiancé is currently renting and her lease runs out in 3 months and want a place of our own.

We have £16,000 for a deposit (we have additional money to cover stamp duty, searches etc).

Our combined income is £41,000 and the reason we don't want to borrow more is because we are getting married next year and are paying for all that ourselves, we just want to get on the ladder!

Thank you!!! ;D

lisyloo

In light of the predicted crash in prices, can anyone offer some sound advice?

Yes.
If you are reasonably sure that there will be a crash or think there is a significant chance - then DON'T BUY.

Her lease runs out and you want to be together - well get a rental property together.

If prices do crash 40% then you will lose £68K on this house.
That doesn't bear thinking about does it.

Also bear in mind that with you own house you have to pay maintenance and buildings insurance.

Is there any special reason that you want this particular house?

Why not wait and rent?

There is no mortgage that will protect you from falling prices.

dougk_2

Being realistic prices are not going to drop 40%. I think anything beyond 20% is very very unlikely, and if it does the UK is in trouble .........

I think personally that things will stay fairly static for the next year or two a small drop here a small raise there.
Long term prices WILL rise.

You are looking at approx 3.75 your joint salary so obviously you have cut down your choice of lenders too (to those who base on affordability so lenders like Abbey, IF, Standard Life etc).

Knowing the area (I worked in Slough till 3 months ago) that seems a reasonable price and for those who don't know the area rental prices are not cheap! Slough is also going through a bit of a updating so attracting more companies to the area.

Again IMHO if you are looking long term at keeping the same house (7-10 years perhaps) then go for it and also look to see if you can get a fixed rate for that period so you know what you are paying and can budget.

What bugs me a little is that people always expect to make money from houses - but that is not the real purpose (unless you are an investor). Its for somewhere you want to live and be happy - somewhere of your own.

If your car looses £2k a year in value , you don't worry, if your electrical goods drop in value and wear out you don't worry...maybe people should consider houses in the same way. Personally I am happy not to make money on my house and think new cars are a waste of money!

hairy_cornflake_2

I agree with everything dougk says!

I am not that familiar with the area you are looking to buy in but based on the information you have given, a 2 year fixed rate mortgage based on a 25 year term is likely to cost around £885 per month.

What would renting a similar property cost?

Why pay someone elses mortgage by renting?

;D

Big_Kev_3

We really don't want to rent, its such a waste of money lining somebody else's pockets. And to be honest it would be no cheaper!

The price of the house is very reasonable which is why we are so keen. A friend of mine bought a very similar property half a mile away a year ago for £165,000 and I think that the vendors would be willing to drop to that as they need a quick sale.

We're not buying to invest, so I'm not too worried about making money but obviously don't want to lose money! I would like to move up the ladder quite quickly and expect my salary to increase by 10-15,000 over the next couple of years so would probably look to move in around 3 years!

Thanks for all your help so far, very very much appreciated!

hairy_cornflake_2

Go for it!!

Its a buyers market at the moment, so chance your arm with a low offer - they can only say no.

You are in a very strong position - if possible get armed with a decision in principle (DIP) - this is an agreement by the lender of your choice to give you a mortgage subject to survey & references - they will carry out credit references and most underwriting up front.

This will show the seller and the estate agent that you are a very serious buyer in a very strong position

Good Luck ;D

herbiesjp

If you have decided to buy, then why not, full steam ahead?

Looking at the figures, you tip the scales just over the 90% loan to value. Some lenders will at this point either offer a higher interest rate or charge a Higher Lending Charge. Making it a definite 10% deposit (if possible) will stop this.

Have you spoken to any lenders alreday and got the mortgage agreed? As already posted, estate agents like to know that they have got a quick sale, so if you make a low offer if may still be considered on the basis that you have no chain and the mortgage has been agreed.