Need a small mortgage

wendyloub

After a year and a half my ex has finally accepted 25k to buy him out of my house, I'm a single parent with three kids, my house is worth 125k and has no outstanding mortgage, I have no other debts.

My income is around 23k per year, only 6k of this is my wages, the rest is tax credits, maintenance etc.

I have managed to save up 10k over the past year or so, but now need to borrow 15k, I've looked into loans and I'm quite worried that if my circumstances change I might not be able to afford the bigger payments.

A ten year mortgage seems my best bet, I would have to pay around £150 per month I think, which on my current budget would leave me with around £150 per month to save, just in case I lose my job or something.

I have a mortgage promise from the Halifax, but their fees seem very high, and obviously I want to find the best deal.

I don't understand those savings\mortgages at all, and whether they would work for me as I would then need to borrow 25k and leave my 10k in an account.

Any advice would be very welcome, thanks

Wh05apk

With regards to charges, don't pay them! a £1,000 charge on a £15,000 mortgage is 6%!!

Abbey will probably be your best option, they have delas with no fees, a free val and they will help with your legal fees, you will be doing a remortgage with transfer of equity, they will pay the standard conveyancing fees, however you will have to pay the transfer of equity element to get your ex taken off (£4-500)

Morgage_Confused

what about an offset?
link your 10K savings to the 25K offset mortgage....and only pay interest on 15k. it seems silly to pay interest on 25k when you only actually need 15k.

Wh05apk

Morgage_Confused wrote: »

what about an offset?
link your 10K savings to the 25K offset mortgage....and only pay interest on 15k. it seems silly to pay interest on 25k when you only actually need 15k.

Why borrow £25k? why not borrow £15k?

holly_hobby

Wh05apk wrote: »

Why borrow £25k? why not borrow £15k?

Because loans under 25k are CCA regulated - which is why most lenders have a min initial advance of 25k on an unencumbered (mortgage free) property.

Offset account is good advice, as is alternatively effecting the mge on a penalty free deal from outset, and repaying the extra and unreqd 10k as a lump sum following completion. (or effecting on pen free svr at outset, repaying the extra 10k and then transferring to a product).

Unencumbered remortgages also don't usually qualify for fee free remortgage deals (regardless of the TOE issue), so initially restricting yourself to lenders/products offering fee free remortgage deals, may mean you overlook more attractive interest rates/products from standard market deals.

Due to your experience, and the above issues and market evaulation required, I would have a chat with a whole of market broker, who will not only source the most appropriate lender and product for your requirements, but will also support you throughout the whole application process. (do check their applicable fees)

Good luck and hope this helps

Holly

Wh05apk

holly_hobby wrote: »

Because loans under 25k are CCA regulated - which is why most lenders have a min initial advance of 25k on an unencumbered (mortgage free) property.

Offset account is good advice, as is alternatively effecting the mge on a penalty free deal from outset, and repaying the extra and unreqd 10k as a lump sum following completion. (or effecting on pen free svr at outset, repaying the extra 10k and then transferring to a product).

Unencumbered remortgages also don't usually qualify for fee free remortgage deals (regardless of the TOE issue), so initially restricting yourself to lenders/products offering fee free remortgage deals, may mean you overlook more attractive interest rates/products from standard market deals.

Due to your experience, and the above issues and market evaulation required, I would have a chat with a whole of market broker, who will not only source the most appropriate lender and product for your requirements, but will also support you throughout the whole application process. (do check their applicable fees)

Good luck and hope this helps

Holly

Never come across a lender who will not do fee free deals on unencumbered properties?

Offset mortgages are in my opinion the most mis-sold product ouot there, they tend to be more expensive, and unless the flexibility is required are generally not worth it, for 95% of people on them they would do better with a cheaper tracker/fixed, they also tend to attract higher arrangement fees.

holly_hobby

Really fee free remortgage on an unencumbered .... that does surprise me

As in my time all lenders offering fee free remortgages excluded unencumbered props from this scheme ..... due to the fact that on an unencumbered prop, there isn't just a straight swap of title involved, the legals are therefore more involved and essentially treated as more akin to a purchase for the lenders fee free purposes (for processing that is, not mortgage products). If however there has been a mortgage recently redeemed (6 mths) this may enable the lender to just proceed with straight registration - which may have been the case you refer to ?.

With regards to Mortgage Confuseds comments re Offset mortgage - this is a good alterantive of ensuring the OP does not pay interest on the unrequried extra (until able to redeem this amount), instead of as I suggested, seeking a penalty free product from outset ( to enable immediate repayment of the unrequired capital released).

Offset mortgage products are now more akin to traditional lending rates - and quite widely offered in the market place.

As stated earlier, I do think with the various solutions to this issue, the OP seeks broker guidance.

Hope this helps

Holly

getmore4less

FD do mortgages of £10k.

holly_hobby

getmore4less wrote: »

FD do mortgages of £10k.

Good shout ... they are also currently offering fee free deals for purchases (which may solve the unencumbered fee free remortgage situ) - so it seems given the circumstances, this may be a very good place to start your enqs (if you want to avoid a broker involvement/fee).

Hope this helps

Holly

Wh05apk

getmore4less wrote: »

FD do mortgages of £10k.

A lot of lenders do, Abbey for instance, do an entirely fee free (aside from £35 tt fee) remortgage deal at 2.89% on a 2 year tracker with a minimum loan of £6,000, they also accept income from tax credits and maintenance (subject to criteria)

Not sure what the issue is with unencumbered remortgages, I do these regularly.