Brothers 'new' house purchase/mortgage

waveneygnome

Posting on behalf of my brother (who currently rents @£875pcm):

Purchase price £205k
Deposit £52k (with help from big brother)
Saved for fees £3k

Been to see 4 brokers/EA in house mortgage brokers and now totally confused.

Best I could find was 2.89% fixed for 2 yrs, then SVR of 4.24% with Santander. 10% overpayments possible. Repayment basis. Fees £995.

He wants a fix for the first couple of yrs at least while he settles in, then plans blitz the mortgage with overpayments.

Income circa £40k +OT potential

He owns an existing house with consent to let:
Val £120k
Mrtge £66k (been overpaying for past 6 yrs)
BBR+0.17% (ahhhhh those were the days) = 0.67%
He can port this, but can't increase amount.
Rent £500 pcm (same stable tenant for past 2yrs, and looks long-term stayer)

(FYI - no dependents/partner....yet)

Any advice greatly received

Thrugelmir

waveneygnome wrote: »

nt to let:
Val £120k
Mrtge £66k (been overpaying for past 6 yrs)
BBR+0.17% (ahhhhh those were the days) = 0.67%

Why pay £875 to rent? Better off moving back in.

Invest money saved while interest rates remain low.

waveneygnome

Thanks T.

Good point, but..............He's living/working in a different city to where his current house is - hence renting. Been renting for the past 7 months whilst looking for new place to buy.

waveneygnome

Bump .

Thrugelmir

Does the taxable income take your brother into higher rate tax?

As this may influence whether to port existing mortgage to new property or even sell.

waveneygnome

Thanks T.

Brother is already a higher rate tax payer (as often does overtime).

I hadn't thought of the tax side of things.

getmore4less

Why on earth has he been overpaying the mortgage?

Savings get a minimum of 2% these days after tax.

waveneygnome

He was overpaying when interest rates were higher. He stopped overpaying in 2008/9 when the BOE base rate dropped.

Since then he has been putting money into a cash ISA and savings account - which has resulted in him building up a £35k deposit for his 'new' house. I am gifting/long term non interest bearing loan (will I ever see is again!) the other £17k to make up the 25% deposit.

Its the mortgage side I'm trying help him out on.

dimbo61

Is there a time limit on the " consent to let"? and has he got the offer from Santendar sorted?
Why just a 2 year fix with a 25% deposit could he not look at 5 years fixed hopefully under 4% ( maybe YBS) 1
Good LUck