Would really appreciate some independant advice...

KerryJean

My partner and I have finally found somebody who will give us a mortgage. My credit history is rubbish due to 2 defaults registered in 2005 (paid off a year ago) - one of £7k. Anyway thats by the by - like I said we've found someone willing to lend us the money.

The thing is I need to decide whether its worth doing or whether I should just sit tight for two years and get a normal mortgage with Abbey (who will give me one but not until 24 months after my defaults were cleared).

Can someone please have a look over the below info (loads - am sorry but didnt know what to put and what to leave out!) and tell me if this is a big risk or not? We're buying in central London so am worried about being priced out of the market.

The company is Future Mortgages and they are offering the following:

Loan amount : £213750.00 (purchase price £225k - we have a £13k deposit)
Fees - £3206.35
Mortgage repayment period: 30 years

Product: A fixed rate of 6.10% until 01 June 2010
Followed by: Variable rate which is 2.44% above UK LIBOR, currently 5.54% for the remaining term of the mortgage, to give a current rate payable of 7.98%
The mortgage interest rate will be adjusted immediately after an interest rate change. (Prime Fix 3 Yr)

Maximum loan - 95% of purchase price

The total amount to repaid: £555881.31 (£2.56 for every £1 borrowed)
The overall cost for comparison is 7.9% APR

What if interest rates go up?
Under the Fixed Rate Limited offer on Future Mortgages's Prime Fix 3 Yr scheme, any increases in Future Mortgages's Standard Variable Rate will not increase your monthly payments during the fixed rate period. Any rate increases after the fixed rate period expires will increase your monthly payments. After the Fixed rate ends on 01 June 2010 then for one percentage point increase in the UK LIBOR rate, your monthly payment will increase by around £142.93

Fees payable to Future Mortgages
Arrangement fee (to be added to mortgage): £3206.25
Deeds/Redemption Discharge Fee: £120.00
Telegraphic transfer fee: £35.00
Valuation fee: £235.00
Administration/Processing fee: £120.00
Other Fees
You may have to pay other taxes or costs in addition to any fees shown here.

Early repayment charge: 6% of outstanding loan - (£13004.66 maximum)

Mortgage cannot be transferred to another property.

Advice would be MUCH appreciated!! Thank you. Kerry.

homer_j_3

Future are not the best lender in the world and they are part of Citibank - a big american bank. The product interest rate isn't too bad taking into consideration your credit history but I would see the above that you are only really putting a 10k deposit down as the fees are a sizeable amount which is being added.

Could you post some details about your circumstances, i.e what you earn, debts, credit history details and see if there is any other options out there for you?

herbiesjp

KerryJean wrote: »

The thing is I need to decide whether its worth doing or whether I should just sit tight for two years and get a normal mortgage with Abbey (who will give me one but not until 24 months after my defaults were cleared).

Have you actually approached Abbey and asked them to look at your application? Or did the 24 month information put you off from applying?

Abbey can be pretty flexible in these scenarios sometimes, as long as you have a good explanation for the defaults

HTH

KerryJean

homer_j wrote: »

Future are not the best lender in the world and they are part of Citibank - a big american bank. The product interest rate isn't too bad taking into consideration your credit history but I would see the above that you are only really putting a 10k deposit down as the fees are a sizeable amount which is being added.

Could you post some details about your circumstances, i.e what you earn, debts, credit history details and see if there is any other options out there for you?

Hi - thanks for this.

We both earn £29k a year. My partner has a clear credit history and absolutely no debts. I have two defaults on my account - one of 7k (natwest graduate loan/bank account) and one of £1.3k ) Natwest credit card. Both defaulted in Dec 2005 and were paid off in March of last year. We have a deposit of £17k in total but as £4k of that will be fees can only really put £13k down as deposit.

Herbie - we went to Abbey last November and they told us to come back in 2 years

We have literally been to around 6 mortgage brokers and the one at the moment is the only offer we've had. Nobody else will touch us.

Thanks again.

toonfish

I have just arranged an Abbey mortgage with an unsatisfied default for £9K at 90% loan to value. Did you do direct to Abbey, or through a broker? You need to find someone with access to an underwriter

KerryJean

toonfish wrote: »

I have just arranged an Abbey mortgage with an unsatisfied default for £9K at 90% loan to value. Did you do direct to Abbey, or through a broker? You need to find someone with access to an underwriter

Through a broker who was friends with the underwriter!!

I think it might have been because we need 95% loan to value. If we saved more we'd def be able to get one with someone like Abbey but it will take us a good year and a half to save that much and by then who knows how much the London prices will have soared

AndrewSmith

Don't immediately think that the rate you are being offered is too bad.

6.1% 3 year fixed is not a bad deal at 95% with adverse credit history (admittedly the lender is privvy to all your information whereas we are not, thus making it impossible to form any real conclusion).

The fees are quite high but then commensurate with the type of lender/product being taken. Note though that there is no mortgage indemnity premuim so that has to be a plus.

I note that the rate you quote is from their 'Prime' range which makes me wonder if there could be other lenders, maybe non mainstream or specialist arms of highstreet lenders, who could possibly offer a slightly better deal. However, impossible to say definately though.

To answer your question, no it is not a bad deal on the face of it as long as you stay with that mortgage and do not move house for 3 years.

KerryJean

AndrewSmith wrote: »

Don't immediately think that the rate you are being offered is too bad.

6.1% 3 year fixed is not a bad deal at 95% with adverse credit history (admittedly the lender is privvy to all your information whereas we are not, thus making it impossible to form any real conclusion).

The fees are quite high but then commensurate with the type of lender/product being taken. Note though that there is no mortgage indemnity premuim so that has to be a plus.

I note that the rate you quote is from their 'Prime' range which makes me wonder if there could be other lenders, maybe non mainstream or specialist arms of highstreet lenders, who could possibly offer a slightly better deal. However, impossible to say definately though.

To answer your question, no it is not a bad deal on the face of it as long as you stay with that mortgage and do not move house for 3 years.

Thanks Andrew. I just have to convince my super-cautious partner now that its not as bad a deal as we thought!!

Thank you all for your advice - its very very much appreciated.