FTB Advise needed

decotime

Hi All,

Myself and my partner have had an offered accepted for a flat for £142,500 and now we have to go about getting a mortgage.

We have a 20% deposit and a combined income of £56,000 with potential to earn more through bonuses. No children.

Both have clean credit histories and no debt.

Can anyone please advise on what mortgage types we should be looking at? Fixed ot variable and over what time span would you recommend. Over payments on the monthly repayments wouldnt be a problem.

thanks in advance

firsty

Fixed - for piece of mind, i.e. knowing exactly what your monthly payments are going to be.
Variable - for lower monthly payments than Fixed.
Time - Prob over the usual 25yrs, depends on what you can afford monthly. The less time span you have (e.g. 15yrs), the less you pay overall.

As for specific products - you just need to put in the time and shop around to get the best deal that suits you...

decotime

Hello again.

We're after getting an offer from Santandar for a fixed 3 year mortgage at 4.15%. We've now got a deposit of 25%. Can anyone advise if this is a good deal or should we continue looking?

Thanks

ManicMum

Get a broker. Don't shop around yourself. They have access to deals that may not be available on the high street. There are fee -free ones like Charcol and London and County (they were last time I remortgaged).

I always go for 2 yr as 3 yrs too long for me to be tied in. If you want out before then, there will no doubt be hefty penalties. Have to think what you might be doing in 3 yrs - kids? If so, make sure rate is portable.

Doshwaster

decotime wrote: »

Hello again.

We're after getting an offer from Santandar for a fixed 3 year mortgage at 4.15%. We've now got a deposit of 25%. Can anyone advise if this is a good deal or should we continue looking?

Thanks

With a 25% deposit and a good joint income you should be able to get a very good deal. I think fixing for 2 years is long enough as a FTB - it will give you some certainty in your outgoings while you get the house sorted out.

Meeper

The decision on whether to fix for 2, 3, 5 years or even longer is a personal preference and people on this board shouldn't really be telling you how best to proceed.

What they should be doing is giving you sufficient information to be able to come up with the right answer yourself by helping you understand the thought processes around your options.

If you want a fixed rate (which it sounds like you do), then taking a two-year options will prove to be the cheapest monthly payment at the moment as it will have the lowest rate. However, there is the danger that you will be coming to the end of the two-year fixed rate period just at a time when interest rates in general are on an upward trend. This may mean that the deals that you are able to obtain in two years time will not be very competitive at all and may end up costing you more in the long-run. It would however give you additional flexibility and you would be able to change your arrangements in the short-term rather than being tied in over a longer period.

The longer the fixed period, the less flexibility you have in terms of making changes. Also, you will have a higher rate as 5-year money costs the bank more than 2-year money (technical info, don't worry about this part!). However, should rates continue their upward trend for longer than 2 years, you will not feel the effect of these increases as you will have your fixed deal intact. It doesn't necessarily follow that you are stuck in that particular property for the 5-year period as most mortgages will allow you to move the mortgage to another property (this is called "porting") and potentially borrow additional funds.

If you want stability for a longer period of time, take the 5-year fixed option. If you want short-term stability and you are happy to take a chance of there being some good options around in two years time, then take the 2-year option.

What is right for me isn't necessarily right for you, nor anyone else on this board. It's not for us to make up your mind for you. I just wish that more people would present some facts to help make up your mind rather than telling you what they would do. That is rarely helpful.

BadgerFace_2

Additionally, moving mortgage every 2 years takes the payment down, but most people don't think about the fees involved in moving their mortgage, which will increase the overall cost if paid every couple of years.

decotime

thanks for all the good advice.

we think 3 years is a good period to fix for so I'm going to continue searching for the best deals for this period

herbiesjp

It's good to see you have been doing your homework, and are clear in what you are looking for.

Based on the figures posted, you should have lots of options, and deals lower than the Santander one.

Burridge60

Really need to see your personal budget and what you "like" to spend around your normal week/month.

It is not a matter of what other people feel is good for you but what you are happy with.

A good and realistic budget is the best starting point. You might want to live like hermits and not go out at the weekend in which case you might have spare cash. If hitting the bars and nightclubs on a Friday and Saturday is your thing you might not have much left to pay your mortgage.

We all have lives and they need paying for unless you are going to be a slave to your mortgage!

herbiesjp

Forgot to say that ideally you would have sorted out the mortgage scenario before actually putting offers in.

Estate agents/vendors like to see movement in the sale, and can give deadlines for surveys to be carried - if nothing happens the property can go back on the market.