FTB - dilemma

Patmanuk

Hi there. My girlfriend and I are in the early stages of buying our first property at 200k. It's a two bed place that doesn't need much work. We have a 10 % mortgage over 35 year period at 6.5% fixed for 3 years.

The problem is that my dad is now suddenly sceptical. He got my cousin to ring me. He is some kind of financial advisor and said you should wait, or at least buy much cheaper. He said at the end of the fixed period how will you ever get another mortgage or you will be screwed over by the lender whose variable rate will be high.

We had our hearts set on this place, want to be there for a while but there is now a seed of doubt. What do you guys think? My main concern is re-mortgaging in three years time, will this be a problem if the property doesn't rise significantly? :mad:

Many thanks.

beecher2

I don't fancy a 35 year mortgage of 200k myself - the fact that the term's so long strikes a warning bell about affordability. Only you know how affordable it is though - will you be able to meet the payments comfortably? If your mortgage allows you to overpay, then doing so would be a good idea, as otherwise you'll have paid hardly anything off the capital when 3 years is up because of the size of the term.

Conrad

No one can answer this on your behalf.

Life is a series of risks.

Most people do not get repossessed, less than 1% even in the last recession. So 99% of people come out ok.

herbiesjp

What is the mortgage amount?

What are your two incomes?

What deal/lender are you going for?

He said at the end of the fixed period how will you ever get another mortgage or you will be screwed over by the lender whose variable rate will be high.

This is not strictly true. Whilst there are a lot of unknowns between now and then, you do not have to go onto the SVR at the end on your deal. Even if you could not change lender, you should "normally" be able to get a new deal with your current lender i.e. another fixed.

Whether or not this rate would still be too expensive to you is unknown - but the theory of what you have been told is wrong.

I say "normally" - as if a lender gets into trouble i.e. NR or a lender closes a lending arm of theirs for business i.e. Nationwide closes UCB, the lender may not be able to offer a new deal.

Hence the question, which lender you are going with.

Thrugelmir

In 3 years you wil have paid little in the way of capital off your mortgage. So remortgaging options will be limited.

The term you are suggesting for the mortgage indicates that you are really stretching to afford this property. Maybe better to save for a higher deposit before attempting to get on the first rung of the ladder.

Patmanuk

Sorry, property is £190k - everything's getting very confusing now! @herbiesjp, we are putting 20k deposit into it. Mortgage will therefore be for £170k. Our combined incomes are £55k. Going with RBS 3 year fixed at 6.59% via a broker that is fee free (from work) who looks at whole market. tehn it's back to the SVR, which is curently 4% after this term.

beecher2

Why the 35 year term? I think I'm right in saying it'd only be about £100/month to keep it at 25 years - is this an option?

herbiesjp

beecher2 wrote: »

Why the 35 year term? I think I'm right in saying it'd only be about £100/month to keep it at 25 years - is this an option?

The OP could overpay by the £100 a month if they wanted - but having the flexibility of control over that extra £100 pm.

Also, is that the best deal the adviser can find you?

Patmanuk

yes we could pay that extra, but would like to be in control of it herbiesjp. Do you think there might be better deals then? He said that was the better deal? Do you know of better? He offered us tracker with lower rate, but we don't want to take the risk. I did see an offer with Nationwide but you have to move all your accounts with them?

herbiesjp

Exactly - that is what I said.

You set up for the longer term, but make the overpayments as and when YOU want to, which will have the same effect.

Also, by making the overpayments, you are reducing the LTV hopefully (as long as house prices do not fall) and could be in a stronger position in relation to getting a better deal in 3 years time.

You are right about the Nationwide deals as I had the BDM visit me yesterday. However off the top of my head I think think there may be some other fixed deals that could be better - your adviser has all your details though.