First time buyer question

mlgt

My situation is this.
Im planning to buy a flat.
The value is around £230k. I have a deposit of say around £115k.

I went to the bank and with my income of £25k I am allowed to borrow around £115k but on a 33 year mortage period.

The mortage Ive been offered is a 2.75% fixed with no arrangement fee with Bank X.

Does this seem right? Only reason I question is because I have a larger deposit.

I assumed on a larger deposit, the risks involved is less so therefore the payment time would be far less.

THe montly mortgage is very low at £430 per month. Does this seem strange?

Please advise.

Riq

Ask them to increase your payments per month then? Remember interest rates are incredibly low at the moment so what you would have paid for that mortgage 5 years ago is much less than now.

goldbyron

The 33 year mortgage seems strange in this day and age. I am assuming you are relatively young to be offered this.... Is this a major high street lender? I would shop around as you have a 50% LTV which means you are low risk. You should be able to find a better deal in terms of the length. The monthly payments will be more but you will pay less interest in the long run. Shop around a bit more...

mlgt

Im 31. LOL, however I need to purchase the property on my own as my partner isnt on the application form. The property itself is an ex council property that we buying off.
I find it very strange as well. So an increase of payment is fine as I had calculated that I can afford around £650 each month at least and then the other remainder of the bills such as council, gas, water, electricity et al.

The lender is indeed a majot high street lender so I am wondering am I being sold something that I dont need?

firstaspect

It seems strange they say you have to have a 33 year term, I'd go back to them and say can't you do it over 20 years with increased monthly payments.

poppysarah

mlgt wrote: »

My situation is this.
Im planning to buy a flat.
The value is around £230k. I have a deposit of say around £115k.

I went to the bank and with my income of £25k I am allowed to borrow around £115k but on a 33 year mortage period.

THe montly mortgage is very low at £430 per month. Does this seem strange?

Please advise.

Why not just buy something for 115?


33 years is a long time.

housesitter

The rate seems reasonable enough. 2 year fix at Natwest ?
Cannot see why they put you down for 33 years.
Are you allowed to over pay without penalty (can do on Natwest to 10% of mortgage each year)?

In which case, don't worry about it.
Just overpay from the start to 25years (or indeed less) and think of it as a potential safety net should your salary and circumstances change for the worse!

mlgt

What I know is that I can overpay by 10% each year from the loan value which is around £11500. Putting together the current mortgage payment at £430 that comes up to £5160.
So if I work out an overpayment plan, that will be around £958 a month extra.

So in a way, because its fixed for the first 27 months I can pay that little bit extra. My maximum is around £700 per month which is an extra £270 per month, working out as an extra £3240 a year. Totalling £8400.

My wife is fully employed and will contribute possibly an extra £300 a month. Sorry Im just working this out as I type in my head. So I guess I am able to pay around £1000 a month for the first 27 months. This will total £27000. Which means in around the first 2 years I will only have under £90 to pay off.

Its all too confusing

ILW

The bit that gets me is £230k for a council flat.
I must be getting old.

mlgt

Yes it is with Natwest Very clever.
I have no fees for overpayment of 10% each year and after my 27th month I can pay another lump sum.

So in theory, the reason why 33 years is listed is to help me with my first mortage?

G_M

I went to the bank and with my income of £25k
Just the one bank? Shop around. Better still go to an IFA who will shop around for you.

Who is/will be on the house deeds? You'll need the names on the mortgage to match the names on the deeds.