Seperating - Buying another home - advice

glennhalstead

Hi folks,

I'm finding it hard to make a decision on the best way forward for my mortgage needs. I'm separating from my wife and looking to buy a house for myself. My wife and kids are staying in the current house.

The current house is worth around £200k and we owe £92k. Our mortgage is with the Woolwich on a lifetime tracker of 0.49% above base. The current monthly payment is £370. My wife will carry on paying this out of the maintenance payments.

I am taking a new (joint) £50k mortgage against the equity in the house to use as deposit on my new house. This is with the Woolwich and will be on a variable rate of 3.49% which at this time will cost £265 per month.

The new house is £127k
I don't have money for the legal fees so Add circa £1500 for the purchase costs.
I have a £8k debt on an interest free credit card (for a car). The minimum monthly payment is around £200 and I currently pay an additional £200 each month.

I've spoken to a financial advisor at who recommends a 2 year fixed rate deal with the Alliance and Leicester. He recommends paying off the credit card so I don't have that monthly expense in addition to affording the new house and the current one (which seems like a good idea). The monthly cost will be £368.

The down side is the adviser charges a £300 fee and this particular mortgage has a £1500 arrangement fee. This means the first 5 months payments will be paying for the mortgage set-up costs and then I'll need to do it again after another 18 months.

The upside is that I have a known monthly cost and will not have the monthly credit card payments. This seems like a good idea during this initial 2 year buying new house period.

In the past I've preferred trackers rather than fixed rate mortgages and have accepted the risk of increasing payments in preference to paying extra for a fixed rate.

I've shopped around a bit but find it difficult to compare all the different options and deals. I'd be really grateful to heart any advice anyone could give.

thanks

Glenn

jockosjungle

No the first five months are not paying the costs, they are paying a lot of interest and the costs I imagine you will be paying off for years.

Why not find a mortgage adviser who charges nothing? Or even go it alone? That fee seems high of £1500, I'm a FTB with a 10% deposit and am only paying £999

R

_Andy_

Wouldn't bother fixing for just 2 years with a £1500 fee - really bad value for money.

dimbo61

You need long term security if you are paying a mortgage and maintenance so 5 year fix at 4/4.5% would be a better idea.
Is EX wife happy to allow you to take £50K equity out of family home. Thats also 50% of the equity in the property and she would then have a mortgage on the property on £142K which she would be paying out of maintenance from you !!!
Dont know what you earn but having been there and done that I doubt the figures will add up. GOOD LUCK
I think you will end up renting so look for a house with enough bedrooms for the kids.

glennhalstead

jockosjungle wrote: »

No the first five months are not paying the costs, they are paying a lot of interest and the costs I imagine you will be paying off for years.

Why not find a mortgage adviser who charges nothing? Or even go it alone? That fee seems high of £1500, I'm a FTB with a 10% deposit and am only paying £999

R

Thanks jocksojungle, I am going to speak to another adviser.
I have also been speaking with First Direct directly who have said yes in principle to their variable rate 1.79 above base for the life of the mortgage £99 arrangement fee. This would not include paying off the credit card with mortgage money as that amount would take me over the 65% ltv on this deal. I think this is a better mortgage deal but found the current advisor's idea of not having the monthly credit card to pay in addition to the mortgages persuasive.

Glenn

glennhalstead

dimbo61 wrote: »

You need long term security if you are paying a mortgage and maintenance so 5 year fix at 4/4.5% would be a better idea.
Is EX wife happy to allow you to take £50K equity out of family home. Thats also 50% of the equity in the property and she would then have a mortgage on the property on £142K which she would be paying out of maintenance from you !!!
Dont know what you earn but having been there and done that I doubt the figures will add up. GOOD LUCK
I think you will end up renting so look for a house with enough bedrooms for the kids.

Thanks for your thoughts dimbo61,

The Ex wife is happy with me taking the 50K equity because I will be paying the additional mortgage payment on that part. She will continue to pay the original part of the mortgage.

I did initially consider renting but it seemed that it would cost much the same as buying.

Glenn