First time buyer - mortgage query

makeup

Hello

I'm looking for some advice as I feel I have been a bit stupid in my actions.

I'm buying a shared ownership flat with a 10% deposit.

I went to the broker recommended by the Housing Association and they advised the only mortgage open to me was one with Leeds Building Society which has a poor rate (7.89%).

I got swept up in the momentum of it and filled in the forms and they put the whole thing in motion.

Since then everyone I speak to has been horrified with the rate and this prompted me to do some research and it seems like other providers are lending on 10% deposit on Shared Ownership with lower rates.

Of course it may be that I wouldn't meet the affordability requirements of the other providers or perhaps they don't, in reality, lend on Shared Ownership properties.

I haven't gone as far as ringing other brokers / lenders as I don't know what my options are? Can I cancel my application with the other lender if I find a better deal?

Maybe my broker is right and that is the best deal and that would be ok in the sense that it is affordable and I would be able to cover the repayments.

I'm really cross with myself for not researching this properly prior to my meeting with the broker - I just got caught up in it all and am now starting to panic that I've made a massive mistake!

Many thanks in advance for your advice

Regards

Makeup

VIGILANT22

It's the brokers job to research...that's why you use an "advisor"...however are they whole of market....What other mortgages do you think you qualify for?

Cannon_Fodder

What reason did they give for the poor rate? Just SO at 10%?, or is poor credit history also having an impact?

Have you instructed a solicitor re the purchase? Any mention of exchange of contracts being near to hand?

If not, don't panic. You might incur some fees here and there. But don't proceed until you have sat down, done the maths, and are certain it is affordable - not only now, but in a couple of years when the rate has changed - is it a Fixed or Variable deal?

A quick glance at your debt diary indicates a rapid turn around. Why not hang fire 6 or 12 months, save some more deposit, then see what rates you get for 15%-20% ? Also has the benefit of allowing some time to pass to improve your credit rating.

happybroker

Try and get a recommendation to a good whole of market broker from friends or family and ask for a 2nd opinion.

I think you can get a better deal though many brokers are doing their best to avoid a certain lender if possible because they are hopelessly unable to deal with their workload. Couldn't say who but as a clue the name begins with A and ends with bbey.

makeup

Hello

Thank you for your advice.

Vigilant22 - I looked on the FSA website and then checked on the individual websites and it appears that there is 5.99% on offer with both HSBC (£599 arrangement fee and £135 valuation) and Alliance & Leicester (Homebuyer Solution £495 fee).

It also seems like there are various offers with Halifax at rates of between 6.59% to 7.29%

I haven't researched further than checking the websites and there isn't a lot of stuff on there about their T&C's.

Cannon Fodder - I was under impression that was just SO with 10% deposit. I don't think I have a bad credit history. I did owe some money previously but I always paid on time. The deal I mentioned originally is a 3 yr fixed rate.

Very wise words about waiting.....

Happybroker - thank you for the tip!

herbiesjp

Shared ownership can be confusing, based on the rent payable, the share you are buying, staircasing potential to name just a few things .

So as you can see these is more criteria that needs to be looked at when looking to get such a mortgage agreed.

There indeed cheaper SO deals, but it would all depend on your eligibility for those deals.

Did the adviser show you his/her research and explain why other lenders may have been eliminated from the recommendation (should be in the suitability letter anyway).

If you want reassurance, get a second opinion. Put a hold on the survey that Leeds will carry out (even though it will be a free basic mortgage valuation) - have you paid the £199 booking fee?

makeup

Thanks herbiesjp - my broker said there was another deal with Kent Reliance which I would not be eligible for as they look for my fixed outgoings (mortgage, rent, service charge, loan repayments) to be 50% or less of my net salary.

I was just over. The rate wasn't hugely lower though (poss. 7.34%?) and did have larger arrangement fee. So seemed fairly similar to the Leeds deal.

I do understand that there are other things going on with mortgages and I may well not be eligible for these better deals out there, I'm just worried that it is such a big commitment and I've not done the right research so far.

Yes, have paid the £199 already.

To get the survey put on hold should I speak to the broker or Leeds direct or both?

pippac123

My partner and I are currently trying to purchase a property through L&Q and were told that Leeds were the only mortgage provider who would lend us the money with a 10% deposit.

We have paid the £199 application fee, the lenders have sent someone in to value the property and have valued it at £12,500 less than the selling price, so at the moment are not lending us enough money to purchase the share of the property. The housing association are now having to provide evidence of comparable properties to the Lenders to get them to adjust their valuation.

there were other providers which lent 90% however, because it was a new build property on shared ownership it was only leeds that met all of the criteria.

I hope you have more success with Leeds.

makeup

Hi Pippac123

I had been warned by my broker that Leeds were prone to that.

Luckily for me I've got my mortgage offer today and there weren't any issues over the valuation.

I did more research following my posts here and found that Leeds were indeed the only one available for me.

Good luck with the valuation issues, I hope they get resolved for you asap and that you get your mortgage sorted out.