Skipton BS, credit check scores? Please help

Thrugelmir

WillF wrote: »

Let's assume that OP's rent is £800pm and they are looking for a 160k mortgage at Skipton's 6% interest rate. Interest only on the full capital is £800pm, but this will decrease every month because they are paying off the capital.

If they can overpay for the fixed period (Skipton allows 10% of the capital per year) they will significantly increase their equity and should be able to negotiate a 90% LTV or better mortgage.

An interest only mortgage does not include any capital repayment element.

So a repayment mortgage would cost £230 more than the rent. Plus they would be responsible for the property maintenance themselves.

Better to save first than obtain a mortgage then overpay. As the benefits of a lower LTV are considerable.

callmechar

Hi...current rent 825 a month. Skipton will be 6% so about 1000 a month for approx 160k. We are sick of private renting and paying landlords mortgage.

Thrugelmir

callmechar wrote: »

Hi...current rent 825 a month. Skipton will be 6% so about 1000 a month for approx 160k. We are sick of private renting and paying landlords mortgage.

Don't overlook the fact that you be responsible for the property though.

Costs mount up. So you need to put money aside every month.

WillF_2

Thrugelmir wrote: »

An interest only mortgage does not include any capital repayment element.

So a repayment mortgage would cost £230 more than the rent. Plus they would be responsible for the property maintenance themselves.

Better to save first than obtain a mortgage then overpay. As the benefits of a lower LTV are considerable.

You missed my point. I stated interest only because we should be comparing the money "wasted" on rent to that "wasted" on interest.

I understand your point, but basic maths disagrees with it.

callmechar

Thanks

We will be putting away 100 a month for house repairs plus still saving

Henry_P_Chester

WillF wrote: »

But is it, though? You can't really say that without finding out more about how much they're spending on rent and whether they will be able to contribue any of their current surplus to overpayments.

Let's assume that OP's rent is £800pm and they are looking for a 160k mortgage at Skipton's 6% interest rate. Interest only on the full capital is £800pm, but this will decrease every month because they are paying off the capital.

If they can overpay for the fixed period (Skipton allows 10% of the capital per year) they will significantly increase their equity and should be able to negotiate a 90% LTV or better mortgage.

Of course, this ignores the potential of significant drops in house prices and the risk of the OP being stuck in negative equity while unable to negotiate a better mortgage deal after the fixed period. Skipton's follow-on rate is pretty scary.

The interest proportion of an £160,000 loan at 6% is £800 per month. Add on maintenance etc and you are wasting more money. Mortgage interest is dead money. At least rent includes maintenance.

WillF_2

Henry_P_Chester wrote: »

The interest proportion of an £160,000 loan at 6% is £800 per month. Add on maintenance etc and you are wasting more money. Mortgage interest is dead money. At least rent includes maintenance.

Oh boy.

We are agreed that mortgage interest is dead money, in a similar way to renting. We have already clarified that OP can afford the additional capital repayments on the mortgage and potential maintenance costs.

I guess what you're saying is that the OP should be so terrified of the potential maintenance costs that they should continue renting and ignore all of the other benefits that come with owning your own home.

Solid advice.

callmechar

Henry_P_Chester wrote: »

The interest proportion of an £160,000 loan at 6% is £800 per month. Add on maintenance etc and you are wasting more money. Mortgage interest is dead money. At least rent includes maintenance.

Yes but what are we getting from renting? Nothing. We cannot decorate or do anything here. Tenancy ends in just over a year and you never know where you are eg will landlord renew or try to put rent up?

At least in 25 years we will own that house (which we buy). We would renegotiate after 2 years to get a better deal

Also no stamp duty for us at the moment so another £2000 saved

callmechar

WillF wrote: »

Oh boy.

We are agreed that mortgage interest is dead money, in a similar way to renting. We have already clarified that OP can afford the additional capital repayments on the mortgage and potential maintenance costs.

I guess what you're saying is that the OP should be so terrified of the potential maintenance costs that they should continue renting and ignore all of the other benefits that come with owning your own home.

Solid advice.

Thank you. For us the benefits as you mention far outweigh maintenance costs. We will save for repairs etc but generally speaking what is there to do? We will get cover for the boiler etc and we will put money aside for repairs £100 a month, and also save other money for holidays etc and save money for anything else (hopefully some overpayments to get us a better deal when 2 yr fixed rate ends)

Henry_P_Chester

WillF wrote: »

Oh boy.

We are agreed that mortgage interest is dead money, in a similar way to renting. We have already clarified that OP can afford the additional capital repayments on the mortgage and potential maintenance costs.

I guess what you're saying is that the OP should be so terrified of the potential maintenance costs that they should continue renting and ignore all of the other benefits that come with owning your own home.

Solid advice.

You are missing my point. I'm saying the OP would be wasting more money by buying with a 95% mortgage. As I said by saving a larger deposit now will save the OP a small fortune in the long term.