First time buyer, mortgage question

joea9

I'm a first time buyer, and am looking at a new build house in a nearby development. (We can only look at new build houses in order to qualify for the new 5% deposit scheme).

We have to do that because we don't have a large deposit (only 9-10k which also needs to cover all of those extra admin fees).

We've talked to the finance person linked to this development, and he says that we fit their criteria to be able to afford the mortgage based on our income, so all of that seems good.

However...it seems that because we are going for this 5% deposit thing, the lender (Abbey) will only give us an interest rate of 5.99%, and charge an extra 1k up front to even give it to us.

Seems crazy, how does this 5% mortgage government scheme help anyone if they then have to pay an extra 1k and pay over the odds on mortgage repayments at 5.99% interest?

So my question is...should I stay well clear of this 5.99% interest mortgage? Or does it not seem so bad?

We can technically afford the repayments at that rate so if it seems like a fair rate to people who know what they're talking about, it won't seem so bad to me (finding that extra 1k up front will be the tricky thing). I'm just wary of walking blindly into a bad deal.

Really need some comments, help, advice, thanks

Thrugelmir

How quickly can you save and increase the size of your deposit?

The_J

It's high risk therefore high rates/fees.

joea9

Thrugelmir wrote: »

How quickly can you save and increase the size of your deposit?

I do have spare money at the end of each month, so I could add a few hundred to the deposit monthly.

The problem is that getting a house is time-sensitive for us, because my wife is currently on maternity leave, we can currently use her income to help us qualify for the mortgage (I know I can afford the repayments on my wage alone, the problem is convincing the lender of that).
When her maternity leave ends we won't be able to use her wage and then probably won't be eligible for the houses we want (for quite a long time...many years possibly).
I know that may sound like a risky tactic, but we can seriously afford to do this on my wage, we don't waste money on anything.

Additionally, the houses on this development will all be snapped up if we wait any longer, and I'm not aware of any more upcoming developments.

Now I've typed that out, it almost seems like I don't have an option aside from accepting this mortgage!

But at the same time, I don't want to be taken for a ride with that interest rate.

is 5.99% ridiculously high?

CharlieBilly

spam post 4

The_J

No, it's average for that LTV. It's not even a high interest rate historically. If you can't afford that then you cannot afford a mortgage.

Thrugelmir will blow a nut reading that, even I (an advocate of risk) would suggest that what you are planning to do is folly and incredibly risky.

joea9

The_J wrote: »

No, it's average for that LTV. It's not even a high interest rate historically. If you can't afford that then you cannot afford a mortgage.

Thrugelmir will blow a nut reading that, even I (an advocate of risk) would suggest that what you are planning to do is folly and incredibly risky.

Well we can afford the repayments at 5.99%, I just really didn't want to feel like I was paying over the odds for something. It's certainly higher than the repayments we had in mind.

I guess I really just wanted reassurance that 5.99% was reasonable.

If it's an average interest rate for the LTV ratio, that makes me feel better about it.

kingstreet

Is this a NewBuy case?

If so, Abbey/Santander aren't lending on them yet AFAIK.

http://www.abbeyforintermediaries.com/content/mortgages/newbuy

The three lenders at the outset are NatWest, Barclays and Nationwide.