Mortgages newbie

20_Briggsy

Hi all. I'm a complete newbie when it comes to mortgages, having lived with parents for some time. I've been reading through many of the articles on this website and has made some of the jargon a lot clrearer. But I'm still unware of what it all actually means and which type of mortgage would suit me best.

Bit of info on myself.. I'm 28 and after getting married last week me and the other half have decided to finally get a foot on the property ladder. I'm an employed electrician and have been at the current company for almost 2 years. Last year I earnt £30,000 and this year I'm on course to pass that figure. My partnet has just qualified to be a teacher and currently works part timeat a school. While saving for our wedding, which is fully paid off, we managed to put some of our savings aside for our mortgage deposit. I've checked my credit rating online as advised by the online guides I've read on this site and my credit score is 470 which is in the excellent bracket.

We currently have £12,700 which we hope will cover the 10% deposit and the legal fees involved. We are viewing 3 house tomorrow, two of which are around the £80k mark and one of which we really like the look of which is £110k. The latter has been on the market since august, with little interest. Although we were informed from the propertyshop that it has been sold but the deal fell through over christmas.

I'm unsure on what mortgage type would be best for me and my partner. I like the idea of knowing what we will be paying each month, but are reluctant to be tied into a 40 year mortgage and the interest only mortgage.

Typically how much should I expect to pay back a month for a £110,000 property with 10% deposit? And would it be advisable to add an extra loan on type of this to pay for furnature etc.. when we move in?

I bank with Halifax and have book an appointment to go in and have some advice of them, but I'm aware there are many other lenders out there and are unsure which ones would be best for.

Any advice would be greatley appreciated. :beer:

20_Briggsy

Sorry forgot to add my out going total £200 per month. Which is for new car I just bough before christmas and phone bill. Have no credit cards or outstanding loans.

ACG

Your income alone with the car might not be quite enough - but as your partner is working that will probably be fine.
You dont tie into a 40 year mortgage. You can take a Mortgage out for as long as you like within reason, on average theyre around 25-30 years for first time buyers but your usually only tied in for the first 2-5 years depending on which deal you take, you can then change every few years if there are better deals around.

As for what you should go for, nobody can say without doing a factfind. But if you are after budgeting then fixed is usually better, variable will usually be cheaper unless interest rates rise but you cant be sure your interest repayments wont rise.

20_Briggsy

Thanks for you adivce. Were seeing 3 houses this morning then I'm hoping to have an appointment at my bank this afternoon to have a talk to them.

I do like the idea of a fixed mortgage. Also is taking an additional loan out for furniture etc.. advisable? Also is their penalties for paying your mortgage back early? For example if we had a little extra cash a month, instead of saving could we pay a little extra mortgage payment?

ACG

I would still speak to a Mortgage Advisor - why limit your search to just the bank? You may as well find out what else is on the market.

Its for you to decide if you should borrow more or not. People do it all the time, but imagine how much more it will cost over the term of the mortgage in interest payments.

There are penalties, but some lenders allow you to overpay by a percentage each month without penalty - in the main its 10%.

20_Briggsy

Thanks very much for your advice.

Just an update. We seen 3 properties today, one of which we really liked. We did the pro's and cons on each and have decided to make an offer on the one we have set our hearts on. We've got a second viewing tomorrow. The house is a semi-detatached 3 bed room with a single occupant. Its on the market for £109,000. The woman who owns the property indicates she very keen for a quick sale and willing to take offers. subject to a second viewing tomorrow we going to offer £95,000.

I've been upto my bank this afternoon, Halifax. Based on my income alone I can be accepted for a martgage to the value of £108,000. The advisor has given us a repayment mortgage quote based on the £95,000 offer (sibject to change). So with a 10% deposit the advisor has given us a quote on a £85,000 mortgage, over 25 years.

The break down
£85,000 mortgage
Fixed rate of 5.990% for two years which equals to a monthly payment of £547.
followed by 275 payments of £455 at a variable rate (currently 3.990%)

Total amount paid back will be £139,514
that means we pay back £1.63 doe ever £1 we borrow.
The overall cost for comparison is 4.5%

An incentive of £650 as cash back has been offered, when mortgage completes.

Now we have know I can get a mortage and figures involed I can get other quotes. Is there any comparison sites? Or is it best to go sit face to face with a lender?

20_Briggsy

Got a second viewing soon, fingers crossed.

Yorkie1

Don't go bank-hunting; some will do credit searches which will affect your credit record.

Best advice is to use a whole-of market independent mortgage broker. They will have a much wider range of products to search.

Re your question about a loan for furniture - you can't add it on to the mortgage, and do not apply for any additional credit until you've completed and moved in to your new house. If that means sitting on beanbags until a sofa arrives, so be it.

20_Briggsy

Thanks for advice.

Just an update we've had an offer of £97,000 accepted. We've got a meeting with independent mortgage advisor on Wednesday to discuss out current mortgage deal from Halifax and what other options they are for us. So now we've got the ball rolling hopefully we will have out home shortly :-)

callmechar

Great news! We have been hunting for our first house for MONTHS (since Sept). Its soooo boring! You found your house very quickly

20_Briggsy

Thanks. We've been very lucky to be fair. The house is literally over the road and a few houses down from where we currenly living with parents and its a home we see ourselves in long term. Added to the fact that the current occupier is a single occupier who is looking for a quick sale as she is down sizing and going to rent. Good luck in your house hunting, I'm sure the right home is out there.