Mortgage advice for a newbie! :)

babyfreckles

Hey all!

Me and my partner are looking into getting a mortgage. Going to go down a few banks ect tomorrow, but just looking for any advice you experts can give me? I am new to the whole mortgage thing, and dont really understand it all so would like to be able to understand a bit better for tomorrow.

Thanks xx

powerwin

I'm not an expert, but here are my thoughts:

- Most mortgages are repayment mortgages, which means when you make mortgage payments, some of that money is going to paying off what you borrowed. Interest-only mortgages are different in that when you make mortgage payments, it only pays off the interest on the mortgage loan, and none of the mortgage loan itself. You are supposed to arrange your own investment vehicle to pay off the mortgage loan at the end of the term. Therefore, most people opt for repayment mortgages instead of interest only mortgages, and repayment mortgages are safer for most people unless you are an investment wizard.

- Remember that when assessing a mortgage it is a long term loan, so don't get too easily seduced by short term offers, e.g. a low interest rate for two years.

- Choosing between a fixed rate mortgage and variable rate mortgage essentially depends on how much you value the security of regular payment amounts, and what you think will happen to interest rates in future. Currently interest rates are very low, so variable rate mortgages appear good value in the short term, but interest rates can always go up, so bear that in mind, and again, think long term.

- As with any loan, it's best not to overstretch yourself, and if necessary wait until you can comfortably handle the loan before taking it out.

Just my thoughts, I'm no expert.

Rgds

babyfreckles wrote: »

Hey all!

Me and my partner are looking into getting a mortgage. Going to go down a few banks ect tomorrow, but just looking for any advice you experts can give me? I am new to the whole mortgage thing, and dont really understand it all so would like to be able to understand a bit better for tomorrow.

Thanks xx

kinglewis

Here's what I would have a think about before you go mortgage shopping...

1.Check out the budget pages on mse and try to work out what you will have to pay out monthly.(ask family or friends for help)

2. Use this to decide how much you can afford to pay monthly.. comfortably.

3. Dig out 3 mths payslips / bank statements. Take passport & driving licence. (Best to take this info but not essential at this early stage)

4. Ask for all the costs involved.. life cover, critical illness cover, accident sickness cover, redundancy cover... this will help you to understand the total costs (you will prob get these insurances cheaper by buying via the internet / IFA but you should consider whether you need it & use the banks staff to explain what its purpose is)

6. Consider seeing an Independant Financial Advisor who deals with mortgages.. you might find a better deal than with the banks. (& they do the insurances usually and can search the market for you)

5. If you don't do any of the above... don't worry! Mortgage advisors.. if they are any good.. will explain everything to you so that you are clear what you need to do next.

Good luck!

herbiesjp

You have not given much to go on

What figures are you looking at i.e. house price, deposit, incomes, debts etc?

Based on that we will be able to see how feasible your situation is and some guidance on what to do.

Whatever you do, just make sure that you do not get credit searched by all the banks you visit, as this could damage your credit file, and cause problems.

Do you both have a good credit history?

blueberrypie

babyfreckles wrote: »

Hey all!

Me and my partner are looking into getting a mortgage. Going to go down a few banks ect tomorrow, but just looking for any advice you experts can give me? I am new to the whole mortgage thing, and dont really understand it all so would like to be able to understand a bit better for tomorrow.

Thanks xx

The first thing you need to know is that banks will only give you information on the mortgages they offer themselves - no bank will tell you about the much-better-for-you mortgage that the other bank down the street is offering. Mortages are "products" - in other words, they are something the bank sells. You wouldn't ask Tesco for advice on which supermarket has the best offers this week - think of the bank that way too.

Next you need to know what you can afford. How much of a deposit do you have? What are your incomes? How much are you hoping to borrow? Do you have any other debts, and if so, how much? How are your credit ratings?

I would suggest seeing an independent mortgage advisor - that is, someone who does not work for a bank or for an estate agency. And as you say you don't understand mortgages, ask them to explain, clearly, how it all works. Ask questions until you think you understand, then ask them to confirm you've understood correctly. Then go away and think about it for a while and make a list of any other questions that you think of, and go back and ask those. A good advisor will not mind this. Don't be afraid of asking a stupid question - if you are about to make what is possibly the biggest purchase of your life, and commit to paying something for two or three decades, you should ensure you know *exactly* what it's all about.

itsakidsworld

I agree with the post above. You say you know nothing about mortgages which is a fair point- so stay away from the banks! All very nice people when you first go in and you may even get a coffee!! But that free coffee will cost you alot of money in the long run-guaranteed!!!

Seek out a local "independant mortgage adviser" not an adviser who is "tied in" to certain banks and products. Do a list of questions as posted here and see what they can offer.

It is scary starting out as you are going into the unknown but with careful planning- which it appears you are doing- you should be ok and receive the best possible advice.

The very best of luck.

cakinwande

babyfreckles wrote: »

Going to go down a few banks ect tomorrow, but just looking for any advice you experts can give me?

Hi there!

Not really an expert but my partner and I (26 and 30) are were FTB's, completed the shared ownership purchase of our house in September. Here is what I learnt:

1) Look at ONLY what you can afford. Do a budget planner and see what your monthly expenditures are. The last thing you want is to lose your home due to non mortgage payments.

2) Choose a local solicitor who quotes between £700-£1000 (not including stamp duty, local search fees etc) The less money you pay, the more likely you are going to run into trouble...! (See the Wolstenholmes Solicitors LLP issue)

3) Use a no fee mortgage advisor. They can do a lot of the research for you and approach the mortgage lenders who are more likely to accept your application

4) If you chose to look for a mortgage yourself, make sure you go into a bank and dont do an application over the phone. I recommend Halifax, they were BRILLIANT for us, Abbey wasted 5 weeks of my life after approving a mortgage and then retracting it without telling me!

5) Make sure you have a deposit. There is no point in looking into a home if you dont have the money!

6) Dont rush into buying a home. They always say don't buy the first one you look at and its true. We looked at a few new build homes and almost bought the first one we saw. It turned out these particular homes had a HUGE number of defects.

7) You will be hounded relentlesly to buy Home Insurance! I would only recommended getting Life Insurance (around £10 p/m) and maybe unemployment cover if you feel like it would apply to you.

Good luck! xx

VIGILANT22

cakinwande wrote: »

Hi there!

Quote: 7) You will be hounded relentlesly to buy Home Insurance! I would only recommended getting Life Insurance (around £10 p/m) and maybe unemployment cover if you feel like it would apply to you.

It is good you shared your recent experience with the OP, however regarding Home Insurance you make it sound like a non priority! Why would a person not take out House Insurance? As for the "quote" of £10.00 for life insurance, premiums vAry depending how much cover you're taking, your age, health etc...So £10.00 is not a very good guideline for the OP to base this on.

hugheskevi

It might be helpful to recap where mortgages fit into the house buying process if you aren't certain about that to avoid any surprises.

Once you have decided which mortgage you want, you go through the application process. Assuming you have sufficient earnings and deposit, this is largely about paperwork, so getting employer references, identification, credit checks, payslips, bank statements, evidence of deposit, and such like. If there are no hitches, this will probably take a couple of weeks after which you get the mortgage offered to you.

The offer is likely to be valid for 3 or 4 months. If you do not complete a house purchase in this time you will have to reapply, and often lose some or all of the mortgage application fee.

The mortgage offer will be subject to the bank's surveyer giving a satisfactory valuation of the property you choose. This can be important, as if the mortgage is for 90% of the property's value and you agree a price of, say, £200,000 but the valuer only values it at £180,000 then the bank will only lend you £180,000*90%=£162,000.

You can arrange the mortgage before or after making an offer on a property. However, it would be prudent to at least make sure that you that you will be offered a mortgage before making offers, and many agents will be more interested if you have financing in place.

The key next steps are to have an offer accepted on a place, a solicitor appointed and satisfactory surveys done. That then leads to exchange of contracts, which in turn leads to completion of the sale at which the solicitor requests the mortgage from your bank and passes it to the vendor (that is over-simplifying things, but you get the idea).

Best of luck.

cakinwande

VIGILANT22 wrote: »

It is good you shared your recent experience with the OP, however regarding Home Insurance you make it sound like a non priority! Why would a person not take out House Insurance? As for the "quote" of £10.00 for life insurance, premiums vAry depending how much cover you're taking, your age, health etc...So £10.00 is not a very good guideline for the OP to base this on.

Sorry, I worded this wrong lol I hae Home Insurance myself and it includes Life Insurance plan, i.e if one of us were to die, our mortgage would be paid off. In my research I found that £10 was the average quote I recieved for my partner and I.