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Some questions from a first time buyer with a decent deposit...
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Grofit
Posts: 20 Forumite
Hello there!
I will try and give some background before i start asking the questions so you have the full scenario.
I have been thinking about buying for a while, but never had a *need* to buy. My partner and I have been saving over the years and now have just over £65,000.
I am possibly going to be moving jobs soon, and although I dont mind commuting for a few months we were looking at buying a place closer to the area. There are a few nice houses that are around the £150,000 mark and a friend of mine lives a street over and has mentioned that it would probably go for about £135-140 if haggled down.
Now I understand fixed, tracker and to a degree variable mortgages (I dont really understand how they work out the lenders SVR), and will probably want to put £55000 down as a deposit, meaning if I got it for £140,000 I would owe £85,000.
We are currently debt free and dont like debt, so I like the idea of a 5-10 year mortgage so although im paying a higher amount per month I only pay a small amount of interest, lets say on the £85,000 mortgage @ an average 4.0 APR im looking at paying about £18,000 interest back in 10 years and a fraction of that if i did it in 5 years, which still makes me feel a bit ill but its far better than a 25 year one where my monthly payments are low but I end up paying the bank around £50,000 interest.
Anyway now to the questions.
- Is it even possible for me to get a 5 year mortgage as im a first time buyer? I do have over the 40% deposit, and dont have a bad credit history.
- Is it worth going for a 5 year mortgage with the lowest interest rate possible to pay off as much of it as I can as quickly as I can? Then lets say I hit a problem and need to reduce my monthly payments I can just ask the bank to extend my mortgage to a 10 year or further, but the bulk would be paid off anyway.
- What sort of fees am i going to get stung with other than the mortgage? I hear of surveyor fees and admin fees, entry fees and other things. Ideally i want to have as close to £10,000 stored up as possible incase worst happens, but i dont want to eat into the deposit too much..
- Lets say I am able to get my cake and eat it, get a 5 year mortgage with 2.5% APR and after 2 years I lose my job and get a lesser one and cant really do the whole £1,500 repayments a year. Lets say i owe them £50,000 still, can i realistically get the bank to extend it by another 2 years to drop the monthly payments?
- How does it work when you sell up your property before you have finished your mortgage payments? Lets say I still owed £50,000 but sold my house for £150,000 do I just tell the bank and they take £50,000 out of my account and we call it quits (sounds too easy) or is there some crazy process where the bank takes an extra cut for no good reason?
Im sure i will have other questions but thanks for any advice!
I will try and give some background before i start asking the questions so you have the full scenario.
I have been thinking about buying for a while, but never had a *need* to buy. My partner and I have been saving over the years and now have just over £65,000.
I am possibly going to be moving jobs soon, and although I dont mind commuting for a few months we were looking at buying a place closer to the area. There are a few nice houses that are around the £150,000 mark and a friend of mine lives a street over and has mentioned that it would probably go for about £135-140 if haggled down.
Now I understand fixed, tracker and to a degree variable mortgages (I dont really understand how they work out the lenders SVR), and will probably want to put £55000 down as a deposit, meaning if I got it for £140,000 I would owe £85,000.
We are currently debt free and dont like debt, so I like the idea of a 5-10 year mortgage so although im paying a higher amount per month I only pay a small amount of interest, lets say on the £85,000 mortgage @ an average 4.0 APR im looking at paying about £18,000 interest back in 10 years and a fraction of that if i did it in 5 years, which still makes me feel a bit ill but its far better than a 25 year one where my monthly payments are low but I end up paying the bank around £50,000 interest.
Anyway now to the questions.
- Is it even possible for me to get a 5 year mortgage as im a first time buyer? I do have over the 40% deposit, and dont have a bad credit history.
- Is it worth going for a 5 year mortgage with the lowest interest rate possible to pay off as much of it as I can as quickly as I can? Then lets say I hit a problem and need to reduce my monthly payments I can just ask the bank to extend my mortgage to a 10 year or further, but the bulk would be paid off anyway.
- What sort of fees am i going to get stung with other than the mortgage? I hear of surveyor fees and admin fees, entry fees and other things. Ideally i want to have as close to £10,000 stored up as possible incase worst happens, but i dont want to eat into the deposit too much..
- Lets say I am able to get my cake and eat it, get a 5 year mortgage with 2.5% APR and after 2 years I lose my job and get a lesser one and cant really do the whole £1,500 repayments a year. Lets say i owe them £50,000 still, can i realistically get the bank to extend it by another 2 years to drop the monthly payments?
- How does it work when you sell up your property before you have finished your mortgage payments? Lets say I still owed £50,000 but sold my house for £150,000 do I just tell the bank and they take £50,000 out of my account and we call it quits (sounds too easy) or is there some crazy process where the bank takes an extra cut for no good reason?
Im sure i will have other questions but thanks for any advice!
0
Comments
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My advice would be to take out a longer mortgage and overpay, if you took out a five year one you'd be paying back £20k a year.
You seem to have a lot of questions, take a look at the FTB guide on the main site
R0 -
Sorry to be a bit dim, but what is the FTB guide?
Most of the questions are more specific than the normal guides give information about, ive already scoured the internet trying to find exact answers to the questions...
As far as the 20k a year goes on the mortgage we can afford it between us, and we are both in fairly secure jobs, I just dont like the idea of giving the bank more than i need to.
I did initially think about doing a 10 year one with overpaying each month, but the mortgages that didnt penalise you for over paying seemed to have rubbish interest rates. So i thought why bother doing overpayments if i can just pay it as part of the mortgage.
Currently we spend about £600 on bills and food per month, the only thing that isnt included in that is petrol costs that are about £200 a month, so with the mortgage at £1600 (thats assuming 3% APR for 5 years on £90,000) with the 600 on top for necessities then £2200, which gives us enough left over for wear and tear costs and a small amount in savings each month...
Im expecting it to be a bit tough making such high payments but after 5 years im debt free and only had to pay the bank about £7k for it and own the house... just means there wont be any holidays for the next few years
However all of these decisions would be based on the answers to the previous questions, i.e if you can change the length later on if required and the other ones...0 -
Grofit, you might get more (sensible) answers to your questions about changing the length of your mortgage etcetera over on the "Mortgages & Endowments" forum.0
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oh, didnt see one first time round, there are so many sections...
Will move it there, thanks!0
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