Is there such a mortgage (July 2011)??

zengirl

Hello,

I am 42 and have never bought my own house before, but (I hope) I'm about to.

I have done some research and decided (rightly or wrongly) that the best mortgage would be a 5 year fixed rate at 4% or less for 15 years, with no fees!!!

Some details:

Husband earns £60,000
We have a deposit of £50,000
I own a small plot of land (with full planning permission) in Wales :rotfl: that I'm hoping to sell, which might bring me an extra £20,000 or more (it's co-owned with my sister) but there are no takers at the moment.

Is it possible to get the mortgage that I outlined above?
Is it the Yorkshire Building Society or Nationwide that's offers the best deals? Anyone any thoughts?

Thank you.

kingstreet

We need to know how much you're buying for, so we can work out the loan to value. This determines what deal you can get.

Occams_Razor_2

it might be a stupid question, but what is the basis you have for suggesting that your research indicates this is the deal you want?

what I mean by that is, if you have researched it then go for it.

if you haven't researched it, then I don't quite understand? are you just trying to name your own price on a mortgage? because that's chocolate tea pot territory.

apologies if I am misunderstanding.

kingstreet

Yorkshire BS - upto 75% 5 year fixed at 3.99% has a valuation fee to pay and a £99 booking fee. You'll have your legal fees to pay, of course.

zengirl

Thanks everyone.

Kingstreet - Our borrow will be *about* £200,000 (maybe less). That deal you mention.. I think that's if you have a 30% deposit, no?

Occams/Razor - I have done quite a bit of research... but since a mortgage is something I've never had before, I don't fully trust my own judgement/research. Also, a mortgage is a MASSIVE debt and I've never been in debt before (so it's scary!). I just wanted reasurance that I had done the research right, and that there wasn't something obvious that I was missing/not taking into consideration/knowing about.

We will only have a 20% deposit (probably, could be only 15% but not sure until we find the right house).

We are working on the premiss that you get the house first so then you know the % deposit that you'll need, then you find the mortgage.

First_Time_Buyer_Guru

Hi Zengirl

I'm sure you're absolutely capable of researching competently and assessing the deals well. You're in an excellent position and it's great that you'll only have a mortgage term of 15 years. If you're still feeling very unsure and want the assurance then it sounds like you might need to simply source your deal via a mortgage broker. They're not for everyone, but there's certainly something to be said for letting someone else do the work and allowing you to shed that 'have I done the right thing' feeling.

Good luck in your purchase!

zengirl

Ok thanks. We're only going for a 15 year mortgage because my husband is 50 so we don't think he'll be allowed a 20 year one. Also, my research tells me that if you get a 20 year mortgage the true price of the mortgage will be £70,000 more than the actual loan; whereas a 15 year mortgage means you "only" pay £50,000 interest.

dimbo61

Hi Zengirl have a look at offset mortgages and as others have mentioned I think YBS are great and as you have already decided on a 5 year fix consider the 5 year offset fix from them or First direct.
Dont pay over £250K as you get stung with 3% stamp duty and other costs add up when buying
Rates have just gone down so have a look on there website

zengirl

Thank you. I don't know what "offset" means but I hope to find out...

*off to the YBS website now*

I will definitely not go for a house over £250,000 because I'm a FTB and will be able to avoid Stamp Duty.

zengirl

WOOOAAAHHHH!

Just read about what an offset mortgage is. Sounds excellent. Why doesn't everyone want an offset mortgage then? I can't see any disadvantages.

For example (from YBS, a 5 year fixed offset mortgage is):

Interest rate: 3.59%, Product end: 30/09/16, SVR: 4.99%, 4.6% APR, Min deposit: 25%, fee: £995

So because it's offset I'd be paying less interest than if it were just a 5 year fixed at the same rate - all with no extra risk. Right?


UPDATE - I just read the offsetting thread at the top of this page. Not so simple!

zengirl

... but in simple language (for beginners at all this like me)

"An offset mortgage is far more likely to work in your favour if you are a higher-rate taxpayer with lots of savings, or someone who is self-employed, and therefore has large amounts of money sitting in your account at various times in the month.

To work out whether an offset mortgage is good value for you, you need to work out whether you are getting a better rate on the mortgage, or on your savings. Because you do not pay tax on the offset, you will need a higher savings rate to achieve the same effect with an ordinary savings account."

Pros of an Offset mortgage:

* You could pay your mortgage off earlier.
* You are likely to save more in interest than you could earn on your savings because of the tax advantage.
* You can usually take your savings back at any time.

Cons of an offset mortgage

* Some offset mortgages are effectively interest only, meaning that you have to be disciplined about making capital repayments yourself.
* You may not get the best mortgage rate available, especially if you have a small deposit.
* You will need to go through the hassle of setting up linked savings accounts and maybe changing your current account.


It seems to me that the cons are rather paltry and the pros quite significant. However the above quote is from a two year old article in the Sunday Times so could be out of date now...?