a few questions from a FTB...

Sarahpuggy

hi all,

I just wondered about some things and hoped i could get some help.

If we get a mortgage in principal, how long do these last for? Does it depend which lender its with?

If you fix the rate on a mortgage for say 5 or 10 years, what happens if you want to sell/move house?

Thanks.

talksalot81

The mortgage in principle is of course worth little more than the paper it is printed on. It is in no way a guarantee of a mortgage. So in that much, the term of validity isn't much of a concern. Being able to wave a valid MIP is not going to help you in the slightest.

As for the fixed term - many of the fixed deals I have seen tie you in for the fixed term. You would have to pay a fee if you wanted to pay off the mortgage. Alternatively, if you are just moving to another property - just keep the mortgage.

Sarahpuggy

Hi,

I didn't think that a MIP would help us in the way you are talking about. I was more concerned with getting a mortgage promise soon before the interest rates go up again. Where we live, the property gets snapped right up so it could take a while for us to find something suitable, so i was wondering if you get a MIP at say 5.5% for example, how long would that offer be valid for?

Thanks for the info on the fixed rate. Yes i was thinking, mainly if we decided to move to another house in the future but still had it fixed.

Thanks again.

talksalot81

The MIP would not help for the reason you hope. The rate is not guaranteed at all. You would need the mortgage agreed. If you have a promise and the rate goes up, you will pay the new rate irrelevant of whether the MIP is valid or not.

courtjester

A lot of lenders are withdrawing their fixed rate deals owing to the likelihood that rates will be raised over the next year.

If you take a fixed rate you are obliged to stick with it for the period and there are penalties for early redemption - which might also apply to moving home.

The thing to bear in mind when reviewing any mortgage deal is the overall rate for the period - discounted deals for the first year or two may look attractive, but these will go up and ahigher rate deal from the start may be more cost effective over the long term.

Sarahpuggy

Hi all,

Thanks for all the replies and i understand now about the MIP.

I hope we will be able to get a good fixed rate deal. At the moment i am just waiting to receive some inheritence money (should be in the next 4-6 weeks). I will then pay off our debts, about 5k, and then apply for the mortgage.

Is it worth going to a mortgage advisor now, and explaining we will be debt free by the time we apply for the mortgage, or should we just wait until we have paid everything off and then go see the advisor?

Its just that property around here is going like hot cakes and looks like its rising all the time!

Thanks for any advice.

Feanor

Can anyone help with my above questions?

helping_hubby

The question about if you want to move with a fixed mortgage...this may be different for other mortgage companies. But the 2 I was looking at (Woolwich and Abbey), if you move you take the mortgage fixed rate with you - altho I'm not sure what happens if you need to borrow more. And as mentioned above if you change mortgages there are penalties. For us its about 3.something%. If we took the 10 year fixed the penalty was 6.something%