FTB Mortgage £160k - House Value £350k

chick21

My parents have just moved abroad after selling their house in Cambridge which has released funds for a large deposit for me to buy a house. They already own a property in HK so the plan is that the additional rent from the house will provide them with a monthly income.

I'm a first time buyer and speaking to a mortgage advisor, based on my salary (£32k) I'd be able to stretch to £160k mortgage with roughly a £7-800 monthly repayment. Therefore the rest of the money would come as a significant deposit from my parents.

What fees and other expenses should I expect when making an offer?
Also what are the recommended mortgages available at the moment?

In understand that there is no stamp duty if I were to buy a property below £250k, but would would the rate be above this?

dimbo61

Stamp duty is 3% above £250,000 but I doubt you will get 5 1/2 times your income for a mortgage.
What rent ? are you buying a buy to let ?
Mortgage payments will not be £7-800 a month on a £160K mortgage ( use "whatsthecost" and put in say 4%)
Getting a mortgage in the current climate is hard enough without overextending yourself
Now a £250K property with a £90K mortgage would be a better idea!

chick21

I've been quoted these by a mortgage broker:

2.4% 2 year tracker (1.9% + base) / £1000 lender fee added to debt
3.4% 2 year fixed rate / £1000 lender fee as above,
4.7% 5 year fixed rate / £1000 lender fee as above,

That varies between 700-900.

I'll be buying to live in it and rent out the other rooms.

Cannon_Fodder

With such a large deposit, those fees are not very attractive. Shop around a bit more.

The 5-year Fixed would be sensible, as no-one has any real idea where interest rates will be in 2 years. You might have to re-fix just when rates are painful. And there's not much point incurring a £1000 fee on the tracker if you might ditch it in 6 months to take on a fixed deal, should rates rise in 2011.

A fee-free, easy-exit tracker might be worth a punt.

What happens if you get no/insufficient lodgers?

Are the parents gifting you the money, or expecting it back one day? That will influence the Lender's approach. If to be repaid, it will count towards affordability, and not be a true deposit but a loan...giving a £350k total debt, and £1800 a month repayments...

It may not matter if they are in HK, but deprivation of assets is an issue that needs to be considered, however briefly.

Inheritance tax would need them to survive 7 years, if a gift.

GMS

You need to be careful with regards to renting out rooms. Lenders may be ok woth renting one room out but no more than that. Otherwise you would need to get a Buy to Let mortgage and possibly need HMO (House of Multiple Occupancy) licences.

Not all BTL lenders allow HMO.

chick21

Just recieved this:

A&L - they would lend between £160,000 to £180,000. If you took it over 30 years they would be more liable to lend more.

Natwest
A fixed rate of 3.19%, until 30 November 2012.
From 01 December 2012 Personal Touch - NatWest's Standard Variable Rate, currently

4.00%, for the remaining term of the mortgage.

Alliance & Leicester plc

2 yr Tracker Product code: 15328
A variable rate which is 2.40% above Bank Base Rate currently 0.50%, for 2 years, to
give a current rate payable of 2.90%. Following a change in Bank Base Rate the
mortgage rate will be adjusted on 1st day of following month.
After 2 years a variable rate which is 3.74% above Bank Base Rate currently 0.50%,
for the remaining term of the mortgage, to give a current rate payable of 4.24%.
Following a change in Bank Base Rate the mortgage rate will be adjusted on 1st day

of following month.

somethingcorporate

chick21 wrote: »

Just recieved this:

A&L - they would lend between £160,000 to £180,000. If you took it over 30 years they would be more liable to lend more.

Natwest
A fixed rate of 3.19%, until 30 November 2012.
From 01 December 2012 Personal Touch - NatWest's Standard Variable Rate, currently

4.00%, for the remaining term of the mortgage.

Alliance & Leicester plc

2 yr Tracker Product code: 15328
A variable rate which is 2.40% above Bank Base Rate currently 0.50%, for 2 years, to
give a current rate payable of 2.90%. Following a change in Bank Base Rate the
mortgage rate will be adjusted on 1st day of following month.
After 2 years a variable rate which is 3.74% above Bank Base Rate currently 0.50%,
for the remaining term of the mortgage, to give a current rate payable of 4.24%.
Following a change in Bank Base Rate the mortgage rate will be adjusted on 1st day

of following month.

With your low salary (to borrowing) I would be tempted to take a long term fix. Short term and trackers will leave you very vulnerable to rises in the near future.