Big Deposit - What rate can I expect?

SilverSix

Hi there,

I've a few questions in regards to mortgage rates, I know a little but not a great deal if I'm honnest.

I'll outline my situation:

I'm 21.
I currently graduated and don't plan on going down this career path. I've trained to be a personal trainer to use as a second income and is something I'm quite passionate about.
I've landed a job elsewhere which is guarenteed for the next 2-3 years and giving me £21,000 before tax. At current this gives me £330 odd per week and once my student loan repayments are taken it'll be closer to £305 per week.

I'm currently living at home but would very much like to stand on my own two feet as living at home is stressing me out and something that needs to be done. It is also, from what I'm told, a buyers market.

My father died last August and I am due to recieve £115,000 next week, with a further £47,000 upon the sale of his house. This could be a few weeks or a few months, or even years! (hopefully not that long!)

I have been looking at flats near by for just under £200,000, 2 bed, 2 bathroom.

What I would like to do is put £105,000 as a deposit/capital into the flat, invest the £47,000 (when I eventually get it) into something that can give me a monthly return and take out a mortgage of roughly £100,000 to front the gap left outstanding on the property. The £10,000 left over from my inheritance I will keep as a 'float' should I need it for any emergencies or find myself without any income.

I'm aware of 'fees' in regards to purchasing/conveyance of a property. Being my first purchase and under £250k I should be exempt from stamp duty?

Now I'm aware you can only really get 3-4 times your salary but was wondering if having such a large deposit will work in my favour to allow me to borrow more?

And also what sort of rate I can expect with a 25 year mortgage? as in how much lower are the rates for those with 50% + deposits.

I've worked out that I could stretch to cover interest only repayments on £100,000 at 4%, without the help of any return from my £47k investment. My mother has some money invested giving her upto 5% monthly return should she need it, so I'm looking to do the same thing and hopefully fund £150-200 worth of my mortgage payment with this.

I do plan on renting out the second room probaly the one with the en-suite to either a friend or a lodger and using this money to help pay for bills/invest. I could potentially afford to repay the mortgage providing I have a tennant, with repayments of around £530 per month @ 4%. Failing having a regular tennant I thought about putting aside some of my recieved 'rent' and using it to repay parts of the mortgage or add it to my investment, which ever is the most preferable (the extra return form increasing my investment, may not outweight what could be saved from repaying the mortgage and vica versa)

I've worked bills out to be anything from £200-£350 per month for everything (gas, electric, water, council tax, phone, internet, insurance etc) so everything apart from food and anything in regards to my car. So I should have around £6-800 each month to live off after bills (varying on the return from the £47k investment).

Obviously the sooner the sale of my dads house happens the better as it will mean I can invest that money sooner and secure myself some extra income. Thinking about it, will this be taxable income? and also what happens in regards to income from renting out a room, I'm guessing the tax man will munch some of that away too?

I may have forgotten a few points which should I remember I'll post further down below!

I'd be very grateful for any advice you could give me and also your thoughts on the situation.

Many thanks and sorry for such a lengthy post!

Benny

Edit: In regards to my credit rating, I'm currently unsure as to what it is. I don't have any credit cards, I do have student loans to repay. I have some direct debits that I pay monthly and also had a few years standing order for rent whilst I was at uni. Though I'm not sure if DD/SO counts towards credit rating? A friend suggested getting a credit card and just not using it to build up some credit rating?

Mobility151990

Hi there, l've checked the nationwide BS affordability calculator.
Age 21/25 repayment term/FTB/£105,000 deposit/£21,000 primary income/£100 outgoing student loan per month = £88,000 roughly.......however if you manage to scrap together around £3,000 a year from your personal trainer job then the loan amount offered goes to £100,100.00 which is what you need.
Check other lenders affordability calculators online to see what they'd offer

I have looked at the products available to you VIA A BROKER and for 3 year fixed with £495 fee it is 3.89%, or 5 year fixed with £495 fee it is 4.49% and finally 3 year tracker with £495 fee it is currently 2.78% (BBR+2.28%)

l will update post with products DIRECT you in few mins....

UPDATE:
Products available direct to you:
2 year fixed + 3.19% + £895 fee
2 year fixed + 3.59% + no fee
3 year fixed + 3.89% + £396 fee
3 year fixed + 3.89% + £396 fee + free legal fees + fee valuation (REQUIRES flexaccount opening)
5 year fixed + 3.99% + £396 fee
2 year tracker +2.18% above base + £896 fee
2 year tracker +2.58% above base + no fee
3 year tracker +2.28% above base + £396 fee
3 year tracker +2.28% above base + £396 fee + free legals + free valuation (REQUIRES flexaccount opening)
5 year tracker +2.89% above base + no fee + free legals + free val + NO early redemption charges (REQUIRES flexaccount opening)

Mobility151990

BennyC wrote: »

I do plan on renting out the second room probaly the one with the en-suite to either a friend or a lodger and using this money to help pay for bills/invest. I could potentially afford to repay the mortgage providing I have a tennant, with repayments of around £530 per month @ 4%. Failing having a regular tennant I thought about putting aside some of my recieved 'rent' and using it to repay parts of the mortgage or add it to my investment, which ever is the most preferable (the extra return form increasing my investment, may not outweight what could be saved from repaying the mortgage and vica versa)

Obviously the sooner the sale of my dads house happens the better as it will mean I can invest that money sooner and secure myself some extra income. Thinking about it, will this be taxable income? and also what happens in regards to income from renting out a room, I'm guessing the tax man will munch some of that away too?

Edit: In regards to my credit rating, I'm currently unsure as to what it is. I don't have any credit cards, I do have student loans to repay. I have some direct debits that I pay monthly and also had a few years standing order for rent whilst I was at uni. Though I'm not sure if DD/SO counts towards credit rating? A friend suggested getting a credit card and just not using it to build up some credit rating?

1) With regards to tenant, you need permission to lease from the mortgage provider, which they normally charge EXTRA onto the interest rates advertised eg 1.5% + and yes income is taxable from your tenant

2) without credit cards then you're screwed. Standing orders and direct debits don't help at all. You need loans, credit cards, overdrafts. Without this stuff it is REALLY REALLY REALLY going to work against you...

GMS

You can rent a room out for up to £4250 per year without paying tax.

SilverSix

Thanks for the quick reply.

I currently have nationwide accounts e-savers & flex accounts.

'3 year fixed + 3.89% + £396 fee + free legal fees + fee valuation (REQUIRES flexaccount opening)
5 year fixed + 3.99% + £396 fee'

Either of these seem reasonable, I guess?

I understand the fixed term part of a mortgage agreement and I understand that at the end of this agreement it reverts to that particular bank/brokers APR.

Am I right in thinking that the APR will change according to the market, recession and any other economic growth/colapse? and that the the APR advertised isn't set for the remaining duration of the mortgage?

For example say 3% fixed for 2 years, then 4% APR is referring to what you would pay in 2 years time if the market stays as it is? and that 4% APR is guarenteed for the remainder of the duration? sorry if this is a silly question!

SilverSix

Mobility151990 wrote: »

1) With regards to tenant, you need permission to lease from the mortgage provider, which they normally charge EXTRA onto the interest rates advertised eg 1.5% + and yes income is taxable from your tenant

2) without credit cards then you're screwed. Standing orders and direct debits don't help at all. You need loans, credit cards, overdrafts. Without this stuff it is REALLY REALLY REALLY going to work against you...

Thanks.

I'll be sure to check their stance on renting out the second room.

I have a small overdraft EDIT: 'Overdraft Facility'of £100 on my flex account of which I have been overdrawn once by a very small amount of which the fee was paid. I'm vary rarely every in my over draft but is there as a safety net.

Mobility151990

Wait, you were overdrawn passed your AGREED overdraft limit of £100? That's going to look even worse this credit report is not shaping up to look too good here mate.

SilverSix

Mobility151990 wrote: »

Wait, you were overdrawn passed your AGREED overdraft limit of £100? That's going to look even worse this credit report is not shaping up to look too good here mate.

See my above edit. It's an overdraft facility as oposed to an actual overdraft.

slummymummyof3

HSBC have a 5 year fixed 'special' @ 3.95% for £595 + valuation costs. Signed up to it yesterday after initially choosing Yorkshire Building Society who omitted to tell us that their deal was going to cost in the region of £700 more than they had told us originally!

SilverSix

Just been approved for a basic Nationwide Credit Card. I currently bank with them. Was offered a £3200 limit and opted for £3000. I don't really intend on using it except for emergencies or convienience.

Mobility151990

Congrats. As an existing customer if the case is whats known as a "refer" so you may be on the borderline for being accepted etc etc, nationwide will refer the case to a specialist underwriter to take a look at it instead of letting the "computer says no" answer rule