help with 125% mortgages

gavtate1984

i am wondering if any one can help, i am currently looking to buy my first house with my gf, we have seen a house at 98500, but i have a 20000 pound loan, i have spoke to a mortage adviser and he can get me a mortgage for 135000 over 35 years at a monthly payment of 750 he also needs 450 payment for surveyors, i am wondering if this sounds reasonable, i really need a 125% mortgage so i can have my loan payed off within the mortgage also have a little bit extra to do house repairs, any advice would be greatful thanks!, also can i bid on the house before i have mortgage arranaged

thanks

MortgageMamma

You can't bid on a house at all if you need a 125% mortgage unless somewhere you have a 10% deposit which needs to be paid on the day of the auction. Unless you have experience in house auctions I would suggest you reapproach your adviser and ensure they give you advice on this.

sarah_elton

MortgageMamma wrote:

You can't bid on a house at all if you need a 125% mortgage unless somewhere you have a 10% deposit which needs to be paid on the day of the auction. Unless you have experience in house auctions I would suggest you reapproach your adviser and ensure they give you advice on this.

I'm not sure this house is actually a property being auctioned, looking at the OP's first thread:

http://forums.moneysavingexpert.com/showthread.html?t=334704

OP - is the house up for auction? As MM said, you can't buy a house at auction without being able to hand over a deposit on the day.

If it's not up for auction then it's a different story, but I have no doubt a lot of people will be along soon with views on 125% mortgages and the risks involved.

p.s. Good on you for seeking help with the debt on the DFW board, I was about to suggest just that.

gavtate1984

as to my first post, the hous is not at auction it is for sale by halifax estate agents,

gavtate1984

do the figures in my first post sound realistic, or are they a bit of a con?

mountainofdebt

I know it is the only way that some people think they can get onto the property ladder these days but please think very carefully about getting a 125% mortgage. Even before the ink is dry on the paper you will be in a negative equity situation.

How would you cope with an increase in price rises? What if house prices fell, which would make your situation worse?

Do the repairs need to be done as soon as you move in.....yes that kitchen/bathroom may not be the most modern but is it useable? What sort of repairs are we talking aboout?

Also I would be very wary of making an unsecured loan secured - how long have you got left to go on the loan - what was the loan for in the first place?

Please think very careful about this as I see the road ahead littered with mines.

gavtate1984

the loan was for gambling debts, but i am over that now and i am trying to sort myself out, the house is up for 98500, i was thinking of offering 90000, and getting a mortgage of 120000, my lender said he could get me one for 135000 at 750pm pver 35 years does this sound reasonable

MortgageMamma

It sounds like the Northern Rock Together Product, yes it is reasonable, however if you are looking for 125% there are only a couple of lenders who would consider it, therefore not much choice. I don't have any particular view on whether this is a good move or not ni your situation, as I believe firmly that only you can make that decision for yourself and only you can know if you will be financially responsible once you have purchased the property. Whatever you choose good luck - and do consider getting a homebuyers report as opposed to a valuation for mortgage purposes. If you want me to explain the difference just say and I will.

ukbondraider

gavtate1984 wrote:

the loan was for gambling debts, but i am over that now and i am trying to sort myself out, the house is up for 98500, i was thinking of offering 90000, and getting a mortgage of 120000, my lender said he could get me one for 135000 at 750pm pver 35 years does this sound reasonable

What is the %rate you are getting charged and how many yrs are you fixing it?

I am guessing the mortgage will be with Northern Rock being a 125% mortgage.

Northern Rock are reknown as being the more expensive lender but also one of the most leniant lenders. Therefore it is likely you will be getting charged over 6.2% or even close to 7% (a normal 5 yr fix will be about 5.2%) which will only be felt over the whole term of the mortgage. However, this mortgage may be the only option for you if you have a £20K loan. Therefore it doesnt matter if it is expensive or not if you have your heart set on buying a house now. In summary, the answer to whether it is a good deal is 'No' if you are someone with a 5% deposit and no debts but 'Maybe' if you are looking to consolidate your debts and potential mortgage into one manageble payment.

Having said that I personally would only recommend getting a £125% mortgage if you have a job where by your salary increases significantly every yr so that you can overpay by large amounts the following years.

seven-day-weekend

I have very little experience in mortgages (only ever having had two), but 125% mortgage seems a very bad idea as you are in negative equity to start with.

Why do you need £135,000 to buy a house for £90,000 and consolidate a £20,000 debt? At the most it should be £110,000.

Save up for the repairs. Live with them until you have the money.

That's some advice from an old'un. Hope it helps.

Madjock

To be fair to Northern Rock, their rates are better than the alternative lenders for a 125% mortgage.
If you do buy for £90k, you can only borrow 125% of that amount, ergo £112,500.