Mortgage dilemma

gazareth

Bullet points summary:

• My wife & I had an offer accepted on a house in December
• We received a mortgage offer from Nationwide for a 5 year fix with a 15% deposit
• We sold our flat in February and moved into my parents' house
• We have been waiting for our sellers to be ready ever since and have been frantically saving extra money
• Last week we heard that our sellers have had an offer accepted on an empty property so we are good to go
• Our original mortgage has expired so we are looking at new options
• We are now up to 18% as our deposit
• If we put in a few extra K we could bump it upto 20% and save 0.5% on the 5 year fix interest rate
• This would only leave us with about £1.5-2k after all fees - not much of a safety net or furniture fund!
• I'm expecting a windfall from work this month or next to the tune of around £10k, comfortably enough to boost us into the next LTV bracket and still leave a buffer in our savings

I'm a bit stuck as to what we should do. The 80% mortgage is £100 cheaper a month and obviously a lot cheaper over the 5 years. The work windfall is 95% certain but I don't know when it will be (could be tomorrow, could be 30th September); I'm also not completely certain how much it will be although I have a pretty good idea.

I'd welcome any suggestions!

Also, is it possible to apply for one mortgage product with a lender and then switch to another after the offer? I mean, obviously it is possible, but would we have to pay for another valuation and all that stuff?

Senior_Paper_Monitor

Switch within lender's products usually involves small admin fee (£99 with Nationwide / NOTE: Northern Rock don't allow this).

A different lender is a full start again (all costs) situation.

The above from memory as a tad busy - so please check it before proceeding.

gazareth

Senior_Paper_Monitor wrote: »

Switch within lender's products usually involves small admin fee (£99 with Nationwide / NOTE: Northern Rock don't allow this).

A different lender is a full start again (all costs) situation.

The above from memory as a tad busy - so please check it before proceeding.

Thank you - as long as the products available yesterday are still available when we come to the business end then we won't be switching lender. Nationwide currently have a product with a 4.59% rate and another at 4.09% but the latter requires 20% deposit. Sounds like the small admin fee would be the way to go, but of course we'll check.

Jimbo1976

Some lenders will allow you to switch to other rates after you have received an offer but you normally have to pay. As SPM has suggested Nationwide would charge £99.

You are cutting things pretty fine if you only have £1,500-£2,000 for emergencies but by going down to 80% you save yourself 0.5% per year for 5 years.

I think your idea to wait and see what your bonus is makes great sense. If its enough then you can put a bit more deposit in and lower your loan to value so you qualify for 80% products, but just bear in mind that rates may change between now and then so the 80% 5-year fixed rate available after you get your bonus might not be as good as the current one

gazareth

Jimbo1976 wrote: »

Some lenders will allow you to switch to other rates after you have received an offer but you normally have to pay. As SPM has suggested Nationwide would charge £99.

You are cutting things pretty fine if you only have £1,500-£2,000 for emergencies but by going down to 80% you save yourself 0.5% per year for 5 years.

I think your idea to wait and see what your bonus is makes great sense. If its enough then you can put a bit more deposit in and lower your loan to value so you qualify for 80% products, but just bear in mind that rates may change between now and then so the 80% 5-year fixed rate available after you get your bonus might not be as good as the current one

Indeed - neither of us are happy about leaving ourselves with that little 'buffer' so I don't think we will apply for that product without the windfall funds in place. I guess we will have to apply for the higher IR and then switch later if we can.