100% mortgage or 95% + 6% cashback

mr&mrs

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A_Nice_Englishman

By my reckoning you should be taking home about £4500 a month between you and you need about £5000. On the face of it, saving the rest of the deposit before you need to hand it over seems do-able. When are you likely to exchange of contracts?

mr&mrs

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Sharpie

[QUOTE


Does the mortgage company need to see your proof of deposit before they agree to a 'normal' 95% 5 year fixed mortgage? If not then that may allow us enough time to get the deposit together (although we may have to tighten our belts!)

However, we would also need to save for the solicitor fees and stamp duty too. Any estimates on how much this would all be?[/QUOTE]

The mortgage company does not necessarily need to have a proof of deposit, but if your purchase is imminent, then it might not be enough time to save up the full 5%, and you will need to start shelling out fairly quickly!.

The costs that you would incur on a purchase price of £195,000 are approximately as follows:

Stamp duty - 1% of the total purchase price £1950
Solicitors fees approx £500-£700 plus vat including land registry fees etc
Mortgage valuation fee between £400-£1000 depending on the type of survey that you have
Mortgage application fee £400-800 on average.

I normally say allow £5000 for costs to be on the safe side on a first purchase. Some mortgages offer deals, such as a free valuation.

The Chelsea is quite a high rate at 6.59% (although I acknowledge your comments about being able to pay a higher rate), plus the fact that the term is for 5 years, which is quite long, especially for your first purchase. Not only that, there is a redemption penalty within the first 5 years of 5% of the amount repaid (so no chance of escaping, unless the mortgage is portable to a new property).

In addition, and more importantly, there is another charge on this mortgage called a higher lending charge. This applies to Chelsea mortgages where you borrow over 90% of the property price. I can't get into that part of the website at present, but this could add a charge of a couple of thousand onto your mortgage, which eats into your equity (and it's not for your benefit at all)..not good:mad:

I don't normally advocate 100% mortgages, but if you are sure you can afford to overpay, then thats a reasonable route (provided you have definitely done your proper sums).

Portman (3 year fixed rates at 5.69%) , Norwich and Peterborough (3 year discount (so variable inteerst rate) at 5.64% and Bristol and West 3 year discount at 5.64% all appear to have good quality 100% mortgages with no higher lending charge. I think you can definitely overpay with the Portman.

Maybe you could check those out instead? Some may not be available to first time buyers, but its worth a bit of research...or find a good broker- most will give you a first meeting free of charge.

Good luck!

Hope this helps!

herbiesjp

Proof of deposit is not needed when you get an agreement in principle. WHen applying for the mortgage some lenders will ask for proof of deposit and some will not (before issuing the formal mortgage offer letter). In my experience Chelsea has been one of the lenders to want the proof of deposit - it may be just down to the mortgage size and deposit size however)

Option1 = you could do this, but would need a deal that has no penalties to move asap, if your current provider could not offer a better deal

Option2 = I dont think this would work for you, as you would not be able to do this

Option3 = I think is the best option

As has been stated it may be easier to try and raise the extra funds by way of some quick saving.

This will mean far better rates available for you. Whilst al ot of lenders will charge the HLC, you will find other that do not. To compensate however, these other lenders will charge a slightly higher rate. You will need to look at the figures to see which option would work out better for you

It sound slike you should be having a conversation with a whole of market mortgage adviser to see wht your best course of action should be.

HTH