What are the big mortgage mistakes?

Elspeth

Thanks for starting this thread OP - we had an offer accepted on a house yesterday. It's my first buy - and I can't sleep for worrying that we've failed to account for something that will mean it's a massive mistake. That's not an uncommon assumption for me, so it's reassuring to read these tips and see that if it is a mistake, it's not being made for the want of sensible planning/action.

The only thing we haven't done is check out the neighbours. There hasn't been anyone around when we've viewed. We're thinking about going back to knock on doors, but can you really tell what someone will be like to live next door to by a 5 minute chat? Elspeth

JoolzS

My biggest mortgage mistake would be buying a "property" rather than a home. If you buy a home you can live in it through the ups and downs of interest rates; you can love it when the loo leaks or the boiler breaks or the cooker doesn't work - simply because it's home.

Julie

VIGILANT22

Elspeth wrote: »

We're thinking about going back to knock on doors, but can you really tell what someone will be like to live next door to by a 5 minute chat? Elspeth

pls tell me this is a wind up!

dwsjarcmcd

One thing many forget to budget for is the 1st payment, where interest accrues from completion until the end of the month and that, plus the normal monthly payment are taken at the same time.

Obviously the amount of the 1st payment depend on the date during the first month you complete.

barrybarryr

dwsjarcmcd wrote: »

One thing many forget to budget for is the 1st payment, where interest accrues from completion until the end of the month and that, plus the normal monthly payment are taken at the same time.

Obviously the amount of the 1st payment depend on the date during the first month you complete.

Could you explain this?

I am looking to exchange in the next couple of weeks on my first house and nobody has mentioned anything about this.

VIGILANT22

barrybarryr wrote: »

Could you explain this?

I am looking to exchange in the next couple of weeks on my first house and nobody has mentioned anything about this.

Depending on what date in the month you complete your mortgage, initial interest is charged from the date of completion to the end of that month. This is because you are paying in advance rather than arrears

Your mortgage advisor should have explained this.......

dwsjarcmcd

Lets say you complete on the 15th March. The lender charges interest from the day you complete for the remainder of the month. In this case 16 days. If your normal payment is £400 per month interest (I think the first payment is accrued interest not capital but could stand corrected) then on top of your normal monthly payment, the lender will charge an additional interest charge of around £206 (£400/31 x 16) so your 1st payment would be £606.

I am sure someone will be able to give a better description but that is the theory.

As I said, I have seen people unaware of this although it will be in the docs you receive from the lender.

VIGILANT22

dwsjarcmcd wrote: »

Lets say you complete on the 15th March. The lender charges interest from the day you complete for the remainder of the month. In this case 16 days. If your normal payment is £400 per month interest (I think the first payment is accrued interest not capital but could stand corrected) then on top of your normal monthly payment, the lender will charge an additional interest charge of around £206 (£400/31 x 16) so your 1st payment would be £606.

I am sure someone will be able to give a better description but that is the theory.

As I said, I have seen people unaware of this although it will be in the docs you receive from the lender.

You are correct.......

dannymccann

We are taking our first mortgage next week, we believe we have covered all the bases but probably havent!

We are 30.5k gross (2k net a month) earners. We have a 5% deposit for our newbuild £138k house, the housebuilder puts up 20% of the deposit as an interest free loan to us which needs repaying in 10 years. The stipulation with this is that when we come to repay the loan 3 independent market valuations are made, of which the average is taken as the valuation and we pay them back 10% of this. If the price (god forbid!) has fallen in that time we pay 10% of the valuation, regardless of whether it is less than the current £27600 or not, so we both share the risk and reward of the property market. We believe its worth it as we now effectively have a 75%LTV mortgage (2 year fix at 4.89%), monthly payment + life insurance is £530 (£20 less than the rent we currently pay on a bit smaller house!).

We are putting aside £150 a month each (£3600 for the year) into an ISA to cover this repayment. Is it worth putting more money aside to overpay straight away, or worth waiting and paying off the 20% loan quicker incase house prices rise quicker? My bond matures next year with a minimum of £6500 return as well so where should this go?

Dan_1976

dwsjarcmcd wrote: »

One thing many forget to budget for is the 1st payment, where interest accrues from completion until the end of the month and that, plus the normal monthly payment are taken at the same time.

Obviously the amount of the 1st payment depend on the date during the first month you complete.

Used to drive me mad, does not matter how clearly I explained this to people I still got the call asking why they have to pay more?!?!