95% mortgage - advice needed

Clydefrog

Hi,

We are planning to purchase our first property and are in need of advice from someone, who is more experienced. I'll try to describe our circumstances first, and then type up the questions towards the end of this post

Anyway, we will probably go for a 95% mortgage. I am aware this will mean an extortionate interest rate (we've heard 6% so far) but we are prepared to pay more for this house. Note, I would normally not consider buying a property without having at least 20% deposit but:
- we have been renting the same property for the past 5 years
- we have just learnt it will be sold within the next couple of months
- as long term tenants we received a very attractive offer from the current owner, who must sell for personal reasons and wants as little hassle as possible (genuine person we have known for a long time, nothing dodgy)

We want to buy this property, because we know it well and are on very good terms with our neighbors. It would be very difficult to find anything better in this area for a similar price.

So far we went to an independent whole of market broker, who suggested a 95% mortgage (note: he explained he could not get a quote from HSBC, because they don't deal with brokers). Then we also contacted our bank (Lloyds) who were able to offer us a 90% mortgage on what seemed fairly attractive terms. We cannot afford 10% with our current savings and would have to really, really stretch ourselves to get the money together.
Finally, my partner is starting a full time degree in nursing in September. The broker explained that if we want to get a mortgage we must act before she starts her studies. Even though her monthly income (taking bursary into consideration and additional hours at the hospital) will be just slightly lower than her current one, the broker told us the lenders will class her as 'without an income'.

Regardless of whether we go for 95% or 90% we are confident we can keep up with the repayments without any problems.


To the point:

Question 1) How difficult is it to get a 95% mortgage? We have no debt (apart from a small student loan), excellent credit history, have good careers and in our mid 20s. An advisor at Lloyds told us they could offer us a 90% mortgage.

Question 2) Is it worth contacting HSBC for a quote - if they offer 95% LTV that is?

Question 3) Is it true that, while she is studying, my partner's income will not count towards working out the amount of money we can borrow? Would we get a mortgage on more favorable terms if she was in employment rather than education (even though her income will be similar in both cases)?

Question 4) Can you recommend any lenders who offer reasonable mortgages, taking our circumstances into consideration?


Any help will be much appreciated. Thanks for your time.

GAH

1) There are only a select amount of lenders offering 95% mortgages, and Im prtty sure they are higher than 6%.

2) HSBC are not offering that mortgage

3) Im not sure here

4) You need to speak to broker who can find you the best deal.


If you work everything out correctly and can afford payments and you want to buy then go for it, but you have to be wary at themoment that with house prices continuing to fall, and that fact that you only have a 5% deposit, then when you come to remortgage in 2/3 years, your equity could be wiped out and you could get stuck paying an even higher rate.

hcb42

I know you want to buy it, but make sure the price is reasonable - 95% of a smaller amount is always preferable

casper_g

hcb42 wrote: »

I know you want to buy it, but make sure the price is reasonable - 95% of a smaller amount is always preferable

This. If your landlord is thinking sensibly, you should be able to get a good price. After all, if they don't sell to you then either (a) they'll have the hassle of trying to sell a property with a tenant in situ (and you could be awkward about viewings and take months to evict before contracts can be exchanged) or (b) have to cover the mortgage with no rental income between the end of your tenancy and the date they sell.

bofox

Skipton are doing 95ltv mortgages, but not through brokers.