100% mortgage best rates and income multipliers

maryjane01

Hi,

I was wondering if people had any ideas on what a good rate for a 100% mortgage would be?

Combined income £70,000
Amount wanted to borrow £235,000

We have had an offer in principle from Northern Rock and the rate is 5.99%, we got this offer through a broker (we were initially looking at borrowing a bit more) but my instinct tells me We should probably be able to get a better rate than that.

RBS has a rate advertised of 4.99, does anybody know what multipliers and amounts they go upto with that?

We are not first time buyers, the first house my partner bought he now has on a buy to let mortgage as we think it is a good investment to hang onto it.

We are also going to get an IFA to look into rates but I am also doing my own research of the market.

Thanks for all help.

MortgageMamma

RBS dont work off income multipliers they work off affordability calculations. IMO for 100% mortgages RBS are a good company to go with, but their service standards are slow at present. Make sure you get an Independent Mortgage Broker to show you he sourcing results, that way you will know which is the cheapest 100% mortgage and he/she will justify we he/she did not recommend the cheapest if that is the case. IMO any good broker would show you the sourcing results anyway.

MM

Joe_Bloggs

Existing mortgage commitments will affect affordability calculations unless these are considered self sustaining. For some lenders a buy to let it is self sustaining if income is greater or equal to 125% of mortgage payments.
This existing mortgage may have a bearing of how much and at what rate a future lender will lend.
That decision in principle from Northen Rock pobably cost you a credit search. Too many of these in a short space of time can harm your credit score. I'm sure you would not have gone ahead with the search if you knew it would come back with a 6% result. Take advice before further harming your credit record. Check your own credit record with the credit reference agencies.
J_B.

AndrewSmith

It is worth noting though that the 5.99% you have been offered is a 5 year fixed rate.

The lower RBS rates published are shorter term discounted or tracker.

Decide which type of rate you prefer before committing to another decision from a lender.

maryjane01

Thanks for all your comments. The reason we have the mortgage offer in principle is because we bid on a house at auction (which we did not get) so we needed a OIP and we needed it be organised quickly. It was a spur of the moment thing but with the mortgage offer in hand we looked around at other properties available and made an offer on the weekend which got accepted today. So now we are shopping around for quotes, not the ideal way around to do it I know, but that is what has happened.

Andrew, the Northern Rock mortgage is variable and there is no tie in (That is what we wanted as if we got the auction property it needed some work and we were hoping afer the work was done there wwould be equity in it and we would remortgage).

I looked a bit more closely at RBS and their higher lending charge seems quite steep. Calculated on the amount of the loan above 75% of purchase price, the higher lending charge rate is 12%. How is that applied? Is the interest rate 4.99% for the first 75% of the mortgage, then 12% for the remainder 25%? Or is it calculated as a one off fee? Seems like it makes RSB not such a good deal?

I think it might be better to stick with Northern Rock for 12 months or so, hopefully redecorating will add some value (it is a little shabby as it was a rental roperty), and the market in London my feeling will still go up so that in 12 months we might have 5% equity and be able to remortgage with a small deposit.

MortgageMamma

Have a look at co-op bank they had a good one about two weeks ago at 5.25% and I don't think it had a hlc. It was a 2 yr fixed with no early repayment overhang. not looked at co-op for a bit due to being on holiday, and they don';t sell through brokers.

MortgageMamma

Royal bank have a 5.39% tracker 100% with no early repayment overhang and no higher lending fee, as do Standard life, but their product is only available to professionals such as doctors, solicitors etc

maryjane01

Thanks mortgagemamma. We both have university degrees but we are not quite in the league of doctors or solicitors. I am going to get on the phone tonight to coop and wait to see what the IFA comes back with. The EA who we are buying from has also booked us in for a chat with their mortgage broker. It's all good, if we don't meet the criteria for other lenders we at least know for sure we have Northern Rock to fall back on, and I will also have felt I have looked at enough different options. Keep them coming though if you come across anything else! Thanks for your hard work.

MortgageMamma

Hi

Which estate agent are you using? have you checked if their mortgage broker is truly whole of market? Some estate agency brokers say they are whole of market when in fact they are not, its a silly loophole that allows them to do it. To be honest with you, I would stick with the options presented by your IFA, your own research and any input you get from MSE - too many cooks can spoil the broth, and too many credit checks will look bad to a lender.

maryjane01

At what point will a credit check be run? During a chat with somebody will they run a credit check?

MortgageMamma

NO they have an obligation to tell you and get your consent in advance before they credit check you. be careful applying for things online though as you will be prompted to agree to terms and conditions which will undoubtedly mean you will be credit checked.