1st time buyer - please advice

movilogo

Dear Experts

Can you suggest what mortage will be best for me?

I am a first time buyer with no debt and good credit history. My purchase budget is around £100,000-£115,000. I am looking for 2 bedroom flat.

I can pay £5,000 as deposit. I am interested in 25-30 year mortgage (as capital payment not just interest only). Usually I can keep around £2000-£3000 always in my current account - so do you think a current a/c mortage will be better for me?

I prefer a fixed rate mortgage (so that Bank of England will not foil my plan) - however, if you think I am wrong please advise.

Also, I am not from UK and may move out of UK after 5-6 years. So, I need a mortage where I can repay earlier without a heavy penalty.

Thanks in advance for your suggestion.

herbiesjp

To avoid Higher Lending Charges with most lenders you will need a 10% deposit

With some you can get by with a 5% deposit and not pay this fee, however the rates are higher to compensate for this fact.

As long as the deals you choose are not for longer than the period you want to stay in the UK for, you should be ok on the penalty front.

What may cause a problem, is the fact you are a non UK national. EU contries are all OK. Other countries you mayhave problems depending on nationality and visa status.

Can you give some information around this?

movilogo

Though I'm a non EU national, I shall get my UK residency status next year. So, that should not be a problem (people like me already bought houses in UK)

Just a question, which one has more resale value in future in general - flat or house? (assuming in same locality)

And it is for my own living - not "buy to let" case.

herbiesjp

Sorry to disagree

Many lenders will not like the fact you do not have permanent right to reside - there are indeed some that will look at application ( as I place many such similar cases), but please do not think it will not be a problem -as it could be

Dead_Eye_Jones

Go and chat to a mortgage broker, there is some advise on the main MSE site on how to get free independant advise. I also bought a few issues of the many mortgage magazines out there, this gave me a nice background on all the different types and helped me understand enough to make my decsions.

A bigger deposit is always handy, as said above this can get you better rates and also offers some protection against negative equity and helps keep your repayments low in the first place.

As to flat vs house, well who knows whether prices are to go up or down. If you read housepricecrash.com then prices have been on the brink of collapse for the last five years. Although next year apparently they really will crash. No really.

Personally I dont have clue, and whilst other people worry about it im just gonna get on with my life! In my opinion the biggest losers will be those that buy brand new 'luxury' flats. These are marketed very well, with fancy show homes and special offers, yet having rented such a place you quickly realise that they are much smaller than you first think, the nice bathroom/kitchen dont make up for the fact that you have no storage, no garden, no character, and have to carry everything up two flights of stairs, or worse still - a lift.

I think these places will be hard to sell on, especially when competing against newer new builds. However the shortage of houses doesnt seem to be going anywhere, owners of family homes will have bought them for the long term (like me) and simply dont care about short term perceived property prices. Its meaningless to me whether my place is up 10% or down 20% until I actually want to sell it. So with people living in family house for 20-30 years and few new large houses being built I cant see the value of these places dropping off quickly.

In my town for example there have been about 9 new 10-20 flat blocks developed this year, and even more went up the year before, and no new houses afaik. So all these new owners will be looking for a local house in a few years time once they've met their wife, or had the 1st kid. So I see no drop in demand there! However I do think they will have trouble selling on their flats, they will expect a premium figure but people wil be going to the brand new developments, not the ones 3-4 years old. And when you consider these 'luxury' flats are selling for 220-250k compared to my 1930's 200k 3 bed semi its really hard to see them making any money. I have three rooms each with a double bed, plenty of storage and most importantly a nice long garden. The ideal starter home for a family... once the madness dies down, I cant see people wanting to pay 200k+ for a flat, but for a house, maybe they will.

This is based on my town in S.London, you'll get a good feel for your local market once you start your research.

Anyways, GL !