FTB - found a flat, now for the mortgage!

bodmil

So I've found a flat that I really like the look of, but I have a few questions!

Basic facts - Salary £30k, deposit of £50k plus £12.5k extra for fees/emergency savings. Hoping to purchase for under £185k so 27% deposit. AIP for £135k, no previous credit problems/loans/debts etc.

- I have an AIP from HSBC for a mortgage, 3.99% fixed for 5 years on a 25 year, although as I'm 25 I'd like to get it over 30 years to reduce monthly repayments. Are there any unforseen disadvantages to a longer term?
I intend to rent out the second room to overpay and reduce the term on 'my terms' if that makes sense.

- I'd also prefer to take out a mortgage with First Direct who I already bank with, same rate but they allow £500 a month over payments, again, any issues in doing this if I already have an AIP elsewhere (albeit linked institutions)?

- Of the £50k deposit, I have £27.5k in instant access accounts, but the rest is locked away, either inaccessible until August or forfeiting interest. My Mum is able to give me a bridging loan of £20k until then if it's needed, will this impact a mortgage lender's decision?

- Not sure if this is as easy to answer, it is a 3rd floor flat with an internal staircase to a separate bedroom in the eaves. Outside the garden is down a flight of stairs from the ground floor (built on a hill). I have heard that it is harder to obtain a mortgage for a property on a 5th floor or above due to fire risks. Is there some truth to this?

Presumably the next step is to find a surveyor and solicitor and get some quotes? :eek:

betmunch

first things first. Read the many threads on here about HSBC, then ditch them, First Direct may be linked but they only have the thorough underwritting issues, and not the Conveyancing issues. You wont be able to use money from your parents as a bridging loan, you will either need pay the penalty on your savings or delay completion until the penalty ends. Solicitor is your next step from here so get a good recomendation from friends that have used someone local.

bodmil

Thanks very much for your response!

Oh crumbs that doesn't sound good with HSBC, will have a look at previous experiences with them.

What's the problem with a bridging loan, so many young buyers get gifted deposits? Surely my position is better than that with proof of money in the bank?

betmunch

Its either a gifted deposit of a bridging loan from your parents.

If your giving it back then its a loan so you have to declare it, at best it will be taken as an ongoing commitment, at worst fail the application.

Leon_W

I think you are over complicating things.

The lender may not even ask for proof of deposit, but if they do you have your savings statement. How are they to know your not cashing them till August and borrowing a bit from Mum until you do ?

I really wouldn't worry about it.

bodmil

betmunch wrote: »

Its either a gifted deposit of a bridging loan from your parents.

If your giving it back then its a loan so you have to declare it, at best it will be taken as an ongoing commitment, at worst fail the application.

But the commitment would show a bank account that's able to pay it in full in a matter of months? As above, hopefully it needn't be complicated.

betmunch

The way to make it not complicated is to complete when you can get your own money.

On your application will be a sapce to put where your deposit money is coming from, what will you put? and when the solicitor checks the origin of the funds what will he find?

bodmil

So I put it's savings and a gift from Mumsy, job done.

Is anyone able to advise on the other issues raised?

Many thanks,

The_J

My advice:

1) You plan to overpay but you're being a !!!!! and taking a 30 year term. C'mon son.
2) Property is probably ok. Sometimes more than 4 floors without a lift is a problem. Always subject to valuation.

betmunch

bodmil wrote: »

So I put it's savings and a gift from Mumsy, job done.

Is anyone able to advise on the other issues raised?

Many thanks,

Its not a gift though is it. You said yourself its a loan.

You have put your offer in a couple of months before your in a position to buy and you are commiting a mortgage fraud because you dont see the harm in it.

The lender asks you where your deposit comes from because they want to know as they use it to make a lending decision.

Your ignoring what I'm saying as it doesnt suit you to take it into account.

I realise how petty is may seem due to you only owing your mother for a couple of months, but thats the way mortgage lenders choose to opperate these days.

I wish you luck and hope you do the right thing, but I'm not commenting further on this thread

The_J

Nah betmunch, if the mother says it is a gift it's fine. Even if the intention is to repay it. The lender definitely won't care as long as it is stipulated as "a gift and non-repayable", their only concern is a legal possibility of the mother arguing a stake in the property on repossession.