A Couple of Possible Silly Questions

**Amy**

Hi

I am looking at buying my flat soon and have a few questions, that are probably silly (so sorry for that in advance!).

1) Is there an "average" rate for mortgages (I am just trying to get a rough idea of figures, I was thinking 6% to base some things on? I know I could get a fixed rate for X amount of years at a lower rate, but wanted to over-estimate if that makes sense??)

2) Are there mortgages that you can overpay on, can you do it to most, are there penalties?

3) If i buy my flat, and then a few years down the line want to buy a house, could I use my flat as collateral:

a) if I still have a mortgage on it

b) if I dont owe anything on the flat

I know you probably cant answer the questions as they are quite specific and i dont actually have a mortgage in mind yet, but just thought I would see if anyone can give me an idea.

:beer:

xxxxxxx

SilverSix

**Amy** wrote: »

1) Is there an "average" rate for mortgages (I am just trying to get a rough idea of figures, I was thinking 6% to base some things on? I know I could get a fixed rate for X amount of years at a lower rate, but wanted to over-estimate if that makes sense??)

The rate you will get will depend mostly on the size of your deposit. The larger deposit and lower LTV (Loan to value) you have the better rate you will get. 90/95% mortgages will have the higher rates for what they are than say 60/70%LTV mortgages.

As a guesstimate trackers will be in the region of 3% for anything fixed 2-2.5% above BR for 2-5 years. (with baserate at .5%)

Fixed for 3 years comes in at around the 4.2-4.5% mark.

Fixed for 5 years anything from 5-6%.

Assuming a reasonably high deposit for a FTB. These are Nationwides current rates which I found to be the best.

2) Are there mortgages that you can overpay on, can you do it to most, are there penalties?

There are, ones I looked at had unlimited overpayments. Others had limited overpayment capped at X amount (£500 in this case) with a 5% charge on the total you wish to overpay if it exceeded this. There will usually be fees if you wish to switch mortgage from tracker to fixed or vica versa. However ones do exist without these charges and that allow unlimited overpayments as I have one, well will do shortly

3) If i buy my flat, and then a few years down the line want to buy a house, could I use my flat as collateral:

a) if I still have a mortgage on it

b) if I dont owe anything on the flat

I'm not quite sure what you mean by use it as collateral?

If you sell the flat still owing for the mortgage proceeds from the sale will have to be used to clear the existing mortgage and any charges for finishing it early. You can move and 'port' I think it is mortgages between properties if you wish to move but it's not something I've looked in to myself.

If you've paid the mortgage off then all the proceeds from the sale are yours minus any moving costs, estate agents and solicitors fees.

I'm not sure how your current debt will affect an application for a mortgage being approved. Your employment status and salary of course will determine how much, if any, you can borrow.

The more you can save for a deposit the better position you will be in. If you can borrow money from a family member to clear debt before applying and then put forward a smaller deposit to allow you to borrow enough to purchase the property and also repay your relative this could be an idea though you might end up with a higher rate (with a higher LTV due to the smaller deposit) and of course your repayments each month will be higher due to borrowing more.

Don't forget there are interest only mortgages too.

CloudCuckooLand

1) Historical average of base rate 5%. Mortgage rates above that, so do figures at 6% and 8%. Try moneysupermarket.com etc comparison websites for an idea of what is out there for you today. Read the MSE Mortgage guide.
2) Yes. Maybe. Some.
3) The equity left in the flat can be used against the next place, if you sell and buy.

If looking at new build flats, you may need 20% deposit...