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Mortgage Advice - Complicated Situation!
Jim78
Posts: 2 Newbie
Hi All,
This is my first post so please be gentle. It’s a bit long winded but any help will be greatly appreciated.
About 4 years ago I bought a house with a friend to get on the property ladder (no deposit but seemed like a good idea at the time) and whilst not exactly in a bad position (I have read many of the other threads on here) things have not quite gone to plan with the downturn in the housing market and current new mortgage availability etc.
We now need to go our separate ways and the other party has offered to buy me out. Fortunately both our salaries have improved considerably over that time and we can both afford similar mortgages on our own. They are keen to keep the house and I would prefer somewhere with parking so in theory it suits us both if I go. The house is currently valued at about what we bought it for (185K) and we have paid off some of the mortgage. We have agreed a value for the buyout and I have some savings which gives me a deposit of £20K. I have had mortgage offers of £180K and can in theory afford property up to about £200K but I am not necessarily looking to spend that much.
So up to this point it all looks fine. However when I consider mortgage deals and how we will compare in terms of costs over the next 2-5 years it starts to go downhill in terms of fairness.
Our current mortgage deal is due to expire soon (C&G) and it will leave the other party paying a very much lower tracker rate than I can find for my potential new one and I am concerned that taking the offer at the moment will leave me considerably worse off. We could sell the house and split the equity but in that scenario we would both be worse off (other party would not have enough deposit to buy at all and my deposit would be slightly smaller but still viable).
Therefore I am keen to take up the offer, move out and get my own place, however due to the market and my situation I am having a few problems and have some queries that have been generated from my research so far - any answers or thoughts appreciated:
1. Despite the offer of a 180K loan I have hit the 25% deposit for new build flats problem that I was previously unaware off. I.e. they are willing to risk loaning me 180K for an old house but apparently I cannot get a 120K loan on a small new build flat that I had wanted to put an offer on! Is this likely to change in the near future (i.e. mortgages for New build flats at 90%LTV)? Is there any way around this? Are any lenders better for new builds than others?
2. As I have been on a mortgage and a deed I am not considered a FTB and therefore all the rates I can find are approx 0.5% higher or have higher fees than advertised FTB deals. Is there a strict definition of a FTB? Stupid question perhaps, but lenders seem to define first time buyer differently. Some say if you have never had a mortgage and some set a time limit for when you were last named on a mortgage or deeds. Also do lenders actually check if you are a FTB if you apply for a FTB rate and if so how? (I realise the last one is probably a non-starter).
3. Also, being a non FTB seems to restrict me to 5 year fixes on the deals I have looked at (10% deposit). Seeing as any rate I get will be much higher than the other party’s I was ideally looking for a 2 year tracker or fix to reduce the length of the disparity but competitive deals seem to have vanished for a non FTB with only 10% deposit. Any advice on where to look? I did find one but that was at over 7%!
Any way I do the calcs I end up thousands of pounds worse off over the length of my first deal by taking the offer. The obvious answer is to carry on as is until the market improves or I have a bigger deposit (parents unable to assist). The problem is the current living arrangements are not good and getting to 75% LTV will realistically take me the best part of 2 years at the current rate of saving. I have considered renting but I would not save any quicker doing this and (at least in my head) it seems a step backwards.
So does anyone have any bright ideas I have not thought of, or thought or answers to any of the above?!
Thanks in advance,
A very confused Jim
This is my first post so please be gentle. It’s a bit long winded but any help will be greatly appreciated.
About 4 years ago I bought a house with a friend to get on the property ladder (no deposit but seemed like a good idea at the time) and whilst not exactly in a bad position (I have read many of the other threads on here) things have not quite gone to plan with the downturn in the housing market and current new mortgage availability etc.
We now need to go our separate ways and the other party has offered to buy me out. Fortunately both our salaries have improved considerably over that time and we can both afford similar mortgages on our own. They are keen to keep the house and I would prefer somewhere with parking so in theory it suits us both if I go. The house is currently valued at about what we bought it for (185K) and we have paid off some of the mortgage. We have agreed a value for the buyout and I have some savings which gives me a deposit of £20K. I have had mortgage offers of £180K and can in theory afford property up to about £200K but I am not necessarily looking to spend that much.
So up to this point it all looks fine. However when I consider mortgage deals and how we will compare in terms of costs over the next 2-5 years it starts to go downhill in terms of fairness.
Our current mortgage deal is due to expire soon (C&G) and it will leave the other party paying a very much lower tracker rate than I can find for my potential new one and I am concerned that taking the offer at the moment will leave me considerably worse off. We could sell the house and split the equity but in that scenario we would both be worse off (other party would not have enough deposit to buy at all and my deposit would be slightly smaller but still viable).
Therefore I am keen to take up the offer, move out and get my own place, however due to the market and my situation I am having a few problems and have some queries that have been generated from my research so far - any answers or thoughts appreciated:
1. Despite the offer of a 180K loan I have hit the 25% deposit for new build flats problem that I was previously unaware off. I.e. they are willing to risk loaning me 180K for an old house but apparently I cannot get a 120K loan on a small new build flat that I had wanted to put an offer on! Is this likely to change in the near future (i.e. mortgages for New build flats at 90%LTV)? Is there any way around this? Are any lenders better for new builds than others?
2. As I have been on a mortgage and a deed I am not considered a FTB and therefore all the rates I can find are approx 0.5% higher or have higher fees than advertised FTB deals. Is there a strict definition of a FTB? Stupid question perhaps, but lenders seem to define first time buyer differently. Some say if you have never had a mortgage and some set a time limit for when you were last named on a mortgage or deeds. Also do lenders actually check if you are a FTB if you apply for a FTB rate and if so how? (I realise the last one is probably a non-starter).
3. Also, being a non FTB seems to restrict me to 5 year fixes on the deals I have looked at (10% deposit). Seeing as any rate I get will be much higher than the other party’s I was ideally looking for a 2 year tracker or fix to reduce the length of the disparity but competitive deals seem to have vanished for a non FTB with only 10% deposit. Any advice on where to look? I did find one but that was at over 7%!
Any way I do the calcs I end up thousands of pounds worse off over the length of my first deal by taking the offer. The obvious answer is to carry on as is until the market improves or I have a bigger deposit (parents unable to assist). The problem is the current living arrangements are not good and getting to 75% LTV will realistically take me the best part of 2 years at the current rate of saving. I have considered renting but I would not save any quicker doing this and (at least in my head) it seems a step backwards.
So does anyone have any bright ideas I have not thought of, or thought or answers to any of the above?!
Thanks in advance,
A very confused Jim
0
Comments
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Jim, track down a reputable whole of market mortgage adviser locally.
That should help work through some of the confusion and highlight exactly what you can / can't do.
(You're not a FTB, and FTB deals are rarely better than those available to the rest of the market).0 -
You are not a FTB
Lenders restrict the lending on new build flats and will now only lend what the resale value of the flat is and not what the purchase price is
Dont compare the rate your current mortgage will default to (SVR), this is no comparison against fixed, tracker etc0 -
Wow. Thanks for the quick replies!
opinions4u: I have spoken to an all of market mortgage broker (before Christmas admittedly) but they could not beat the advertised rate from a major bank I had already found. I will try another advisor to double check the first one's advice. The FTB deals I have looked at may be only slightly better but they often seem to have lower fees and/or are available for shorter fixes. Am I missing something?
VIGILANT22: I know why the lenders are not lending at 90%LTV on flats, but it is still anoying! You cant seem to get someone to make an individual assessment on the value of a new flat, they just apply the 25% deposit rule to all properties. I guess my real question should have been whether there is light at the end of the tunnel - when (if at all) will they lend higher LTVs on new flats (and houses)?
I know you cannot compare SVR to a fix. In my case though, unless the base rate jumps massively in then next year (possible I guess) then the other party will make a massive saving compared to what I will have to pay.
I was hoping not to "lose out" being the party to leave the house but that looks unlikely purely because of rates and deals!0 -
Wow. Thanks for the quick replies!
Again you're not a FTB....So move on from there....no distinction other than maybe 200 thrown in for a FTB...
New builds are not a good investment, why do you think they have reduced the lending on this.....
As for yr current house partner moving to the SVR...this is not something that comes into the equation if you want to move on....if it is really bugging you buy him out....However who is to say if the current lender agrees to the transfer of equity they wont "force" a new deal...
Dont get stuck in what have could been and what if.....focus on what you can do....and move on from there....that is kindness from me..0
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