First Time Buyer - Am I Doing it Right!?

siross

Hi all, I'm a first time buyer and very much need some help!!!

As a bit of a background, I've managed to save £27,000 over 5 years for a deposit and have recently had an offer accepted on a house for £127,500. I'm planning on an 80% LTV mortgage putting down £25,500 and using the rest to cover legal fees and stamp duty . I just need to decide on a mortgage:

I've spoken to 2 brokers so far, L&C Mortgages over the phone and the independent advisers from the estate agents. Both are whole of market.

I've looked at the deals which might not necessarily be pushed by brokers HSBC, First Direct etc.

I'm largely basing my decision on 3 things:
1) Arrangement fees
2) Monthly cost
3) Overall cost of initial period. I'm aware that if I move away from the mortgage I will have to pay exit fees and arrangement fees of a new mortgage. This won't be a problem because by this point I'm planning on being married and applying for a joint mortgage.

I'm leaning towards a fixed deal at the moment just because the monthly payments are only £20 ish different from a tracker and personally, especially in the first few years, I would attribute more value to the security of a fixed over a tracker.

There are 2 that stand out, both from the Woolwich.

Option 1 is a 2 year fixed with a percentage of 3.69%= £455.12/month with £999 arrangement fees, if included in the loan = £482.87

Option 2 is a 3 year fixed with a percentage of 3.99% = £472.07/month with £499 arrangement fees, if included in the loan = £485.86

Option 1 total cost over 3 years = £18,915.18 - this is assuming the last 12 months reverts to 3.89% but it's variable
Option 2 total cost over 3 years = £19,365.36

Both monthly payments are within the £500 I have budgeted for a mortgage payment so that's not an issue.

Just to add another complication I've also been looking at the Lifetime Tracker Mortgage from HSBC which is fee free and 3.09% over the BoE base rate, this works out at £463 per month and from what I can read on the website there doesn't appear to be any exit fee or fees of any description.

Am I right in thinking this means I can apply for the mortgage, enjoy the lower monthly payments and if the BoE raise the rate I could choose another mortgage without incurring any fees? If this is correct, surely this is the best option? The only negative would be that if when I wanted to change, the other mortgages were not quite as good.

Sorry for the long post! I just don't want to get it wrong!

Thanks,

Simon

ACG

The first Direct deal is pretty good. They have stricter criteria than other lenders when looking to accept people - there are stories on here...that doesnt mean you wont get accepted, only you know your past credit history and how good it is.

Like you say, if you go with the FD deal then rates do rise - it would probably still be a decent deal, but then when you look to tie in rates will be higher. So you have to decide whether short term gain is worth the long term risk or not.

Nobody can tell you as we dont have crystal balls, everyone has their own ideas of whats important to them.

Personally having had a quick look at it the other day it seemed like a pretty good deal.

The_J

The only thing with the lifetime variable is that when you jump out to fix they will undoubtedly be higher than you can get now.

Having said that, the variable is pretty attractive at the moment and base is looking less likely by the day to go up in the short or even medium term.