First time buyer mortgage query

MrChips

Hello!

My wife and I are thinking of putting an offer in on a house we have seen. I am now looking around at the mortgage market for possible products should our offer be accepted. I'd appreciate a bit of advice from some more experienced property buyers out there!

The best product I have found is HSBC's lifetime tracker which has only a £99 fee and is currently 2.19% pa. I know this will increase when the BoE finally raise rates, but I can't see that happening for a few months, and I think any future increases in base rate will be slow. Therefore I believe I will save more money now than I will lose when/if rates move above the level of current long term fixed rates (especially when the additional fees are taken into account) and more capital will be paid off in the early years this way.

Anyway, their website says that this offer will be withdrawn at the end of October (if not before). Assuming 31 October is the deadline, what actually has to happen by this date to secure this deal? An approval in principal? Offer accepted? Transaction completed??

I'm optimistic we could get them to agree the offer in this time, but 1 month is probably a bit optimisic to have contracts exchanged, especially as they haven't got anywhere to move to yet.

Anyway, if anyone knows the answer to this, or has seen a better deal out there please let me know!

Thank you

TrickyDicky

That will be the cut-off for new applications, or at least application accepted. We had one house fall through with HSBC as the provider and since we applied they increased the %, but we kept the old offer. If it's like it was for us, the Offer is valid for 6 months from the date of the acceptance letter.

MrChips

Thanks TD. Out of interest what rate did you manage to secure, if you don't mind me asking?

MrChips

I have another question! Where the deal quotes a LTV rate (e.g. 60%), what is the definion of Value? Is it the purchase price, or their own valuation of the property value? I would assume the latter, or they could be left with a nasty problem if I pay twice what the property is really worth?

dimbo61

Its the valuation that the surveyor places on the property and in the current market they look at the prices other properties ( of the same type!) have sold for.
check on upmystreet rightmove and other property websites

MrChips

Thanks dimbo. So in theory if I manage to get a good deal on the property, then a 60% LTV rate may actually be (for example) 65% of the purchase price?

That would be very helpful!

TMoose

MrChips wrote: »

Thanks dimbo. So in theory if I manage to get a good deal on the property, then a 60% LTV rate may actually be (for example) 65% of the purchase price?

That would be very helpful!

Unfortunately this is unlikely - it is standard that "valuation" is based on the lower of a) the surveyors valuation opinion or b) the purchase price.

Moose

MrChips

D'oh! That's a shame

GMS

MrChips wrote: »

Thanks dimbo. So in theory if I manage to get a good deal on the property, then a 60% LTV rate may actually be (for example) 65% of the purchase price?

No. The lender will base lending on the LOWER of either the valuation or the purchase price.

If you negotiate a lower purchase price than the value the lending will be lowered accordingly.

Only exceptions are generally for sitting tenant/family sales.

Thrugelmir

TrickyDicky wrote: »

the Offer is valid for 6 months from the date of the acceptance letter.

The offer period normally refers to the drawdown of the funds, i.e. completion.

MrChips

New query on a similar theme!

If I agree to pay £500k + £5k for chattels, does the 60% LTV constitute £300k or £303k? I was assuming that it would be 60% of £500k, but the mortgage advisor from HSBC that I spoke to just now said it would be the higher figure.

Is he right, or in need of some additional training?