Percentages, deposits, nightmares and me...

mark212312

Hi all

Looking to do a part ex deal with Bellway for a 5 bed new build and need a bit of advice. We a currently have a repayment mortgage with Barclays and want to increase our borrowing on an interest only basis by 90k. Barclays have told us that in order to get an interest only mortgage of any type we need 150k down and be under 66% LTV so now the question:

Purchase price is 300000 and we have 150k = mortgage requirement of 150k however if the valuation comes in at say 275k will they only lend us 125k? I know having this huge deposit is fairly specific to Barclays but don't want to get hit by the exit penalty on my fixed rate repayment element to move it away.

Thanks all

getmore4less

we need 150k down and be under 66% LTV

if the valuation comes in at say 275k will they only lend us 125k

66% of £275k is £181500

opinions4u

Are you saying that to get an interest only mortgage with Barclays you need to meet 2 main criteria:

1) Minimum of £150k in equity and
2) Minimum of 34% in equity?

One other question: Why do you need an interest only mortgage?

mark212312

Hi guys

We need an interest only mortgage for two years as we have a private childcare bill of £690 a month at the moment that won't be their in two years time and we can convert to repayment.

Yes in order to get the product we need 150 down and the loan to be less than 66% - our worry is that they say 275k less our 150 equals 125k and ignore the % as it is 54% of the value.

Our issue is we have to pay list price for the new property as they have given us 45k more on the valuation of our property so no wiggle room developer side.

Wh05apk

It is very unusual for a purchase to be down valued, so I wouldn't worry too much, unless you feel the price is particularly high, if so why are you buying?

mark212312

Only worried by the comparable houses that have gone around it - Bellway have given some big discounts to cash buyers circa 40k so on a part ex they over valued ours i.e we give you your asking price if you give us ours which means we are both (Bellway and us) buying properties 40k more than they are 'rightmove worth'. Normally this wouldn't matter as it would have a net effect but I'm worried that we based our figures on this single product as we have such a high (50%) deposit and if it needed to go to another provider i'm in for a 3k kick in the proverbial for ending a fix early...

getmore4less

OK another angle, do you have any savings?

if you do, look at a repayment mortgage on less strick terms so borrowing more and and use the savings to fund the childcare for the 2 years.

Wh05apk

A sneaky person might want to put an application in with a lender such as Abbey who do free valuations, to give an indication of the value, don't know your ages or any other details, but if you were to do the mortgage over say 30 years, the capital repayment would be minimal, you could then reduce back to a lowere term in 2 years as finances permit.

Why are you using Woolwich? are you porting a previous deal?

Edit: Just re-read your post, see you have a penalty! why not do a repayment over a much longer term anyway? Woolwich base affordability on a repayment basis, so you would still be fine with them?

mark212312

Cheers guys

lots of food for thought, I think it may be worth seeing how it goes first it may well be that Woolwich will base a decision on house = £275k they want £150k customers problem if they want to overpay we are still only lending 54.5% as we would still be putting the £150k into the house which is the requirement.

Otherwise come to think of it if they don't do it like that we would be revaluing all the time to make sure we always have the 150k deposit on the current market value.

Do have some saving circa 18k but it's invested in a bond that doesn't mature until November

getmore4less

mark212312 wrote: »

Do have some saving circa 18k but it's invested in a bond that doesn't mature until November

Thats enough to cover the 2 years child care

How about a 0% purchace CC that you can used for day to day normal spends, food, petrol and anything else you use a CC for might cover the childcare and tide you over till Nov.

Wh05apk

Would it really be that much more if you took on repayment over the maximum term, even borrowing a little extra to cover childcare costs?