FTB low earners, big deposit, best mortgage to go for

f1-fan_2

Myself and my wife are first time buyers with a 165k deposit from inheritance gifts. We are low earners so have to be careful about mortgage payment increases. Have rented for past 6 years, average £600 per month.

My parents have offered an interest free load of 10k for 5 years (£167/month), but the bank didn't like this when quoting for mortgage as it would mean we have debts. Mortgage will be in wife's name, as she has steady income (I am self employed), so could I receive the loan from parents, then give it to my wife to use as more deposit?

We're looking at houses at 250k, so need 75k/85k depending what happens with 10k loan. Looking at repayment mortgage 20 year fix for 5 years if possible at a good rate, especially as we'd have the extra 167/month payments for this time. Then we'd like to overpay and try to pay off in total of 16 years, in time for my wife's 60th.

As we're new to all this, how do we best compare say a 3.19 tracker with no fee to a 4.59 5 yr fixed with 999 fee? As affording our monthly payments is key is there anything else we should look at? ie. interest only, or starting with a longer term mortgage and overpaying if able?

Thanks for any help you can give to a newbie to mortgages!

danielley

Is there any important reason why you aren't buying something outright and eradicating the need for a mortgage?

Imagine how amazing it would be to be mortgage free!

f1-fan_2

Although mortgage free does obviously appeal, we don't have pensions, so want to get the best house we can so when we retire we can downsize and hopefully will have a retirement fund from the difference in cash.

Secondly, I work from home so need a garage and a decent sized 2nd bedroom, and finally we live in West Country so we think need to spend around 250k to get the kind of place we'd like - ie. 3 bed, garden, garage.

Henry_P_Chester

f1-fan wrote: »

Myself and my wife are first time buyers with a 165k deposit from inheritance gifts. We are low earners so have to be careful about mortgage payment increases. Have rented for past 6 years, average £600 per month.

My parents have offered an interest free load of 10k for 5 years (£167/month), but the bank didn't like this when quoting for mortgage as it would mean we have debts. Mortgage will be in wife's name, as she has steady income (I am self employed), so could I receive the loan from parents, then give it to my wife to use as more deposit?

We're looking at houses at 250k, so need 75k/85k depending what happens with 10k loan. Looking at repayment mortgage 20 year fix for 5 years if possible at a good rate, especially as we'd have the extra 167/month payments for this time. Then we'd like to overpay and try to pay off in total of 16 years, in time for my wife's 60th.

As we're new to all this, how do we best compare say a 3.19 tracker with no fee to a 4.59 5 yr fixed with 999 fee? As affording our monthly payments is key is there anything else we should look at? ie. interest only, or starting with a longer term mortgage and overpaying if able?

Thanks for any help you can give to a newbie to mortgages!

I'd go mortgage free and save the mortgage payments into pension/retirement savings. By buying a house to fund your retirement you are taking a risk. There is no gaurantee the value will rise in real terms over the next 16 years. The housing market goes down as well as up.

geoffky

mortgage free is a no brainer...house prices might not rise for twenty years as has happened in Japan...prices have fell and fell and we are in a worse position than them..

say you will be borrowing 100k and paying back 300k.....madness