FTB Layman - Mortgage Advice Please

mchu6am4

Hi,

Advice on any aspect of buying for the first time is most welcome.

I am looking for a property to buy in Manchester (I'm a first time buyer). I have been working full time for the last six years and have saved up quite a bit of capital. I recently got made redundant (six months ago and have been unemployed-but **not registered**-although I did some contract work in the last six weeks). I (hopefully) will start my new full time permanent job next Monday.

My questions are:

1) Is there any help for First Time Buyers to get on property ladder (my wage is 23K) and how likely am I going to get it. I work in the private sector.

2) When will I be able to apply for a mortgage as I have been employed/unemployed on and off in the last six months - I start my new job next Monday.

3) What type of mortgage should I apply for? I am interested in a 10 year fixed rate offset mortgage my bank offers at 5.7% APR. Is this a good deal? as I like the idea of offset mortgages in case I was to be made redundant again then at least I'll have some money to keep the payments going for a while.

4) Will I be able to apply for mortgage/income protection since I've not been employed in the current job for any amount of time?

5) Should I seek some 'independent'??? advice? I have my reservations about advisers as I really don't know whether they have my interest at heart or are only interested in the commission amount they are going to make if I went through them. I feel like going to bank directly.

Thanks in advance.

AndrewSmith

Hi,

Answers below:

mchu6am4 wrote:

1) Is there any help for First Time Buyers to get on property ladder (my wage is 23K) and how likely am I going to get it. I work in the private sector.

Depends what you mean by help. There are not as many incentives available for FTB these days as there were a few years ago. As for whether you will get it, that depends on how much you are looking to borrow and how much deposit you have.

2) When will I be able to apply for a mortgage as I have been employed/unemployed on and off in the last six months - I start my new job next Monday.

This, I fear, will be your biggest obstacle. If you had moved simply from one job to another then it would have been easier however with a period of unemployment between it will always be more difficult to get acceptance.

Lenders will require at least 1 years employment/unemployment history with all job changes and breaks in employment explained.

As for when you can apply, that will depend on the contract terms and conditions of your new employer with particular reference to any probationary period.

3) What type of mortgage should I apply for? I am interested in a 10 year fixed rate offset mortgage my bank offers at 5.7% APR. Is this a good deal? as I like the idea of offset mortgages in case I was to be made redundant again then at least I'll have some money to keep the payments going for a while.

Offset is a good idea if you have generally more than £15,000 to keep in the offset account. Yes I understand that it is down to the individual and some will agree or disagree with my statement however I merely cite from personal experience and the opinions of those dealing with such things on a daily basis. 10 year fixed rates are fine as long as you are pretty certain of your future both employment wise and where you are going to live. The last thing you want is to tie in for 10 years then need to downsize in 5 years only to suffer penaties on the mortgage for reducing it.

There is no right or wrong answer though, and is something that is far beyond the scope of this forum as it is something that will depend on your personal situation.

4) Will I be able to apply for mortgage/income protection since I've not been employed in the current job for any amount of time?

You can apply for it however you will need to be very mindful of the terms and conditions relating to the individual policy and the required length of time in the current job prior to making a claim. Will again depend on your personal situation and the provider you select.

5) Should I seek some 'independent'??? advice? I have my reservations about advisers as I really don't know whether they have my interest at heart or are only interested in the commission amount they are going to make if I went through them. I feel like going to bank directly.

Why wouldnt you? A fees free broker gets paid a commission only once the mortgage completes and will be able to offer comparisons from more than one lender. The commission cost is not passed on to you in any way. If you go directly to the bank you will only get their own product information.

FSA regulation means that the broker has to fully justify any recommendation made and has to substantiate it's suiitability to the client. Also any broker worth their salt will openly show you their sourcing results and allow you to select with them the most suitable product for you.

Hope this helps

Andy

herbiesjp

mchu6am4 wrote:

My questions are:

1) Is there any help for First Time Buyers to get on property ladder (my wage is 23K) and how likely am I going to get it. I work in the private sector.

2) When will I be able to apply for a mortgage as I have been employed/unemployed on and off in the last six months - I start my new job next Monday.

3) What type of mortgage should I apply for? I am interested in a 10 year fixed rate offset mortgage my bank offers at 5.7% APR. Is this a good deal? as I like the idea of offset mortgages in case I was to be made redundant again then at least I'll have some money to keep the payments going for a while.

4) Will I be able to apply for mortgage/income protection since I've not been employed in the current job for any amount of time?

5) Should I seek some 'independent'??? advice? I have my reservations about advisers as I really don't know whether they have my interest at heart or are only interested in the commission amount they are going to make if I went through them. I feel like going to bank directly.

Thanks in advance.

In answer to your questions:

1) Not sure what help you mean - but there are no benefits that are given to FTBs. If you were classed as a Keyworker i.e. nurse. police etc you may be entitled to help with a deposit

2) You should already be able to apply for a mortgage with some lenders.
3) Why a 10 year fix? You pay a higher amount for offset rates - the offset mortgage does not help you when you are made redundant any more than any other mortgage. You may be better of going fro a cheaper fixed rate, and saving into a separate account which you can draw from if need be.

4) Income protection does not cover you for unemployment - you can apply for now. Mortgage payment protection can also be applied for, but the companies may need to assess your application more closely due to your recent unemployed period.

5) If you dont trust and independant - how can you trust going to the bank direct? They are only going to be able to offer you their own products irrespective of whether they are the best for you or not so an even worse position for you. By all means go to your bank, but then compare with what a fee free whole of market adviser can offer you.

Have a read of Martin's article also

HTH