1st Time Buyer - Confused!!!

goneshopping

Hi all,

I am looking at buying my 1st house and am confused as to where to search for the best deal.

I am purchasing on my own and my income is £20k, I have a good deposit of approx £35k saved and am looking at a property at about £130k. (I think this makes my LTV about 75%)

I have a mortgage promise from my bank but only for 3year fixed deal. I can't help thinking a 5year deal would be better???

Can anyone recommend whwere these deals exist and if you think this would be a good move??

Thanks

cabbage

It really depends on the rate. Five year fixed will be at a higher rate than a 2 year fix and the 2 year fix will be more than the standard variable rate (SVR). If you want to know what your repayments are for two or five years then go for the fixed rate. Rates may go up or down. I've been on a fixed rate when rates have gone up and its saved me money. My recent fixed rate was more expensive than the SVR as rates tumbled last year so my payments went down when it finished. That's the risk you take.

to find a good mortgage deal you could have a look at one of the financial sites such as moneysupermarket.com or use a broker

originalmiscellany

130k-35k = 95k.
Your salary is 20k, you need to borrow 95k, a ratio of 4.75

Your bank have been generous to you if they're giving you 4.75 your salary.
You need to check that if you've been given a 3 year fix you'll be in a position to substantially overpay.

Why? House values are going to drop in the near future (possibly!?) so you want to ensure your LTV is improved so you can remortgage no problems.

If interest rates rocket to say 7% will you be able to afford your house in 3 years time?
It may be worth fixing for a 5 year to give you 2 more years to build up a pot of saving to overpay at the end of the fixed length.

goneshopping

Sorry I missed out that for the last 2 years I have earned approx £10k per year in bonus - as this is not guaranteed each year I think may bank have noted this but not used it to calculate the figures!