need an experienced person advice

roxazz

i am 24 year old,
thinking of buying a terrace house here in NI in a small town.

looked at the prices, they are arround £40k

i have over 50% of savings, and thinking to pay 50%as deposit and the rest repay in 5 years

what most economic way is in my situation?

my income is £14K gross i just checked on comparison sites what i could choose from, and see that many of lender doesn't count it as mortgage asks to take more loan than house costs(strange).
found that HSBC and their online bank first direct are cheapest
with no setup fees, 2year fixed rate
my plan would be to save some money in those 2 years and then pay as much i can. as i don't want to owe for a long time,
now i rent the house of worse condition ant pay more then mortgage would cost, so decided the time has come.

i need opinions is my plan most efficient or something i could do better.

mrsmumbles

Hi there,
Firstly well done to you for saving up such an awesome deposit amount! Things have changed a lot from the 100 percent deals of 2004 and even later than that. the good news is that with a deposit like that I would be surprised if you didn't get a great deal. You are also spot on with first direct, they are consistently good on customer services, and. I have banked with them for 16 years. the call centres are great, based in Leeds, you always get out through fast and speak to a human. if you work, this is probably a more efficient way to manage your mortgage, and the Internet element allows you to manage a lot of it yourself. get an offset mortgage, mine is fixed quite high as we had to move in 2008, but the tracker or variable deals might be best. the beauty of an offset is that all your salary hits down your mortgage interest, rather than you paying just a tiny allocated monthly amount? I know it sounds tricky but they really are not, and the result is that a first direct offset would help you pay down the remaining mortgage debt even faster. You get to make unlimited overpayments too. I could not recommend them enough, we have one with them for 35 years but at our current overpayment rate we aim to have paid them off within 5 years...pretty big saving. Even on a lower income, you could overpay a few hundred a month, these forums are full of ace saving ideas, and then you get the pleasure of seeing your monthly interest charges fall. Go for a Fd offset, you won't regret it, just get your current account moved over to them to set it up. Fd used to offer a free 100 to do this, not sure if they still do, but they are still a good bank to lend from. Hope this helps you.

SG27

You could get a mortgage that offers unlimited overpayments. I think HSBC may do them.

Then there is a possibility that your mortgage rate would be lower then best savings account probably an ISA. Then make the mortgage payments for 5 years and fill your savings accounts until there is enough in there to pay off the mortgage.

mrsmumbles

Also good advice but have to say that, once you take on a mortgage I think it is best to pay at least two thirds down before saving, especially with the measly interest rates you get. Plus in this case the buyer has already shown they can save well and has a big deposit, so keep up the good work, I'd say. first direct has much better customer service than HSBC, i think, and is a sister company to HSBC anyway. they also offer the best savings account on thE market to their own customers, at 8 percent!

GMS

Call First Direct and check they lend in NI and minimum income requirements. I think they may have minumum income of 30k.

roxazz

thank you guys for all advises.
p.s. first direct only for offset mortgage's need £30k salary, mine is 14k
i never had any credit cards as my motto to live without credits, but now i am in situation when i have saved half money for own property, yes not new built, but more affordable .i realized that the rent i pay for landlord, i pay his for mortgage , not mine. so it would be cheaper to pay bank couple thousand for lending me money, than just renting until i will have 100%, and i feel that house prices are at very bottom and i believe it will go up slowly.

getmore4less

What's the rent on these £40k places?

AIUI some NI property built in the last few years was substandard.

I would check it is in good order and no maintanence suprises round the corner, relative to the value they could be high.

I would not drop the savings to zero,

As for the most economic way it will depend on the numbers once you get representative mortgage rates.

the usual rule is
borrow as little as possible
borrow for the shortest time possible
Borrow t the lowest rate possible

This does not mean you have to commit to a short term, a longer term with overpayments will do the same job. having the option to reduce payments should finances get tough is a valuable feature to have

The starting point will be £20k over 5 years will be a minimum of £333.34pm at 5% it goes upto £377.43 if you can aford that then a 5 year plan is realistic.

Reue

roxazz wrote: »

looked at the prices, they are arround £40k

!!!

I need to move...

roxazz

new build apartments were sold for 40k, but semi detached new builds costs 85-150k

now, where i live its 2 bedroom apartment above chip shop with oil smell all the day, no parking space, no garden, wind is lifting laminate floor,without any service from landlord, the only one advantage is so cheap gas heating. it costs to rent £380 per month and i could pay up to £450.
i went to see those cheaper terrace houses in small town couple miles from where i work, and i was quite impressed with interior condition as they were modernized couple years ago.

also i have a flat in country where i come from which costs now arround 11k so in worst situation not much needed to repay.