Advice on getting foot on the property ladder..?

Moneysaver1111_2

Dear all

I would like your experienced advice.

I'm in my 20s, a first time buyer, the limit of my budget is 120 k. I am planning to put down 20% deposit (I have been eating dry pasta for weeks to do so). My credit score is good and my job is secure.

I want to a buy a place that I can live in for 5 years before trying to rent it out and purchase another place.

I saw an 'independant' mortgage advisor who works in a well known estate agency today, she told me 3.3 % interest rate on a fixed deal would be the best thing she can find me and would suit me best. This sounds reasonable.

The next thing she said is that I am better to span the mortgage over 35 years as opposed to 20 years (which I had though was better to keep long term costs down) and after a couple of years to look for a new mortgage with a better deal.

Is it possible to change mortagage companies like car insurance ? Or are there pitfalls ? Like new fees etc.

Also if you put a mortagage over 35 years to begin with can u change and pay off the mortgage at once or change the time period i.e 20 years after?

thanks for your help

jc808

I wouldnt do a 35 year mortgaege unless you absolutely CANNOT AFFORD anything else for the next x years and ABSOLUTELY WILL be able to change to a faster repayment after that timeframe

Yes you can swap mortgages, usually after 5 years IIRC, depends on the deal, you may need to pay a fee

nick_

I have taken my mortgage on a longer term, however this is under the proviso that it will be reduced once our salaries start to rise as expected over the next few years. Granted there are some huge risks to this strategy but then hopefully it'll pay off in the long term (i can stomach paying slightly more interest in the short term knowing its the house we want). You're not "better off" spanning it out as, as you point out you end up paying more interest. I'd suspect she may be taking into account your monthly affordability but without a transcript of your conversation knowbody on here can really put her statement into any sort of context to say if its right or wrong.

In terms of "swapping" mortgages (re-mortgaging), it depends on the deal entirely. Fixed deals will tend to be "fixed" for the initial duration and then will revert to the lenders standard variable rate, at which point you are free to look for another deal. If you break this early (i.e. before the end of the fixed period) you are usually subject to an "Early Repayment Charge" which will in most cases be a fixed % of the mortgage balance - again depends on the deal itself so its impossible to make a sweeping statement on this.

When looking for a new deal, you may have to pay fee's, you may not - again all depends on the lender and the state of the mortgage market at the time. Some of these fee's can be added to the loan so it won't necessarily mean shelling out £1,000 every couple of years.

By the sounds of it your knowledge of mortgages is very low (no offence intended) so perhaps read some of the articles on here. This will give you a much greater understanding of the various terms and products available so you are at least armed with some prior knowledge.

brit1234

Moneysaver1111 wrote: »

I'm in my 20s, a first time buyer, the limit of my budget is 120 k. I am planning to put down 20% deposit (I have been eating dry pasta for weeks to do so). My credit score is good and my job is secure.

Roughly what's yours salary? I wouldn't trust any mortgage advisor attached to an estate agent. I might be wrong but sounds like they want to extend the term to 35 years so you can borrow even more.

DVardysShadow

Moneysaver1111 wrote: »

I want to a buy a place that I can live in for 5 years before trying to rent it out and purchase another place.

Groan.

Why can't people just be happy to have a roof over their own heads for which they owe nothing to nobody - rather than having 2 mortgages and enslaving someone else as a tenant to afford it all for them?

Frankly, it seems your head has been feeding on the property sales oriented manure this 'indepandant' [sic] estate agency mortgage advisor has been putting on the table

dimbo61

If you take out a mortgage over 35 years you may well after 2/3 or even 5 years still owe almost as much as when you started!!!!
You may not even have 75% LTV even after putting down 20% deposit depending on the housing market and what you buy now ( new build ? )
If you cant afford a mortgage over 25 years then you cant afford to take on such a large mortgage.
Dont know where you live but if you can buy a property for £120K ( its not central London ! ) and earn good money look at a small house rather than a 2 bed flat IF possible.
Number of good 5 year fixes on the market and if you have an offset mortgage you can build up savings to save interest while building up a large deposit for the next property.
Only my views Good Luck

Kynthia

Please go and speak to an independant mortgage advisor after having done some reading on mortgages. They really do need to be independant and preferably qualified with access to 'whole of market'. You can choose to pay them a fee or they can be paid by commission from the lender you use.

geoffky

oh to be a landlord...everyone wants to be one....its my pension ....i could have ten but the morals of it all have stopped me...maybe i am the lone wolf.

katejo

brit1234 wrote: »

Roughly what's yours salary? I wouldn't trust any mortgage advisor attached to an estate agent. I might be wrong but sounds like they want to extend the term to 35 years so you can borrow even more.

I would be suspicious about a mortgage for 35 years. Did he give a reason for this? I wouldn't necessarily be worried about a mortgage advisor attached to an estate agent. I would not have found my current base rate plus 0.27 without help from the broker and he was attached to an agent.