FTB - 85% LTV Mortgage (Advice/Broker needed)

ghulam35

Hi,

I've just had an offer of 92k accepted on a house, i've got 15% deposit but struggling to find a good deal on a mortgage. The mortgage will be applied jointly in my and my wifes name. We are both working and combined net income is around 22k per year.

However neither me or my wife has ever had any credit cards or loans, will this have any adverse effect on our credit history and effect chances of our mortage amount that we want to borrow (78k)?

I've spoke to 2 brokers at the moment, one through workplace and he's recommended a fixed mortage of 3 years with nationwide at a rate of 4.18% and a total of fees of £389 after the 3 years the rate goes to SVR of 3.99%. Overpayments are allowed upto £500 extra per month without charge.

The other broker I spoke to is L&C which is recommended by MSE, they recommended me a rate of 4.28% fixed for 2 years with Skipton Building Society, there are a total fees of £330 and after the 2 years the rate goes to SVR 5.49 %. Overpayments are allowed upto 10% of the loan annually.

I've also spoke to my bank HSBC and the one that was in my interest was where the rate is fixed for 2 years at 3.64% and then it goes up to standard variable rate of 3.94% however whats putting me of on this is that there is an arrangement fee of £999 and other fees totaling £167. Overpayments are allowed upto 20% over the monthly payment.

I am also interested in an offer that Britannia (Co-op) have got on, fixed rate of 3.69% for 5 years and arrangement fee of £999 (free if current account with salary being paid into there for over 2 months) as well as other fees im presuming which are not stated on the website. After the 5 years the rate goes to the standard variable rate of 4.74%. Overpayment charges are not mentioned on the website. However the arrangement fee and the recent news about Co-op being in financial trouble is making abit more reluctant to go with this.

However I dont want to be paying more than £400 a month on mortage and want to be fixed at a low interest rate for as long as possible where I can make overpayments without extra charges being applied. Are the above deals good or are there better deals out there? Can anyone advise please?

bigadaj

Want you are after is a little contradictory, a fixed rate allowing overpayments is a rare beast, you either want security or flexibility, difficult to combine the two.

The nationwide deal looks the best to me.

ACG

HSBC are, going off posts on this site quite strict. Im not entirely sure as a buyer i would go with them - maybe on a remortgage but last thing you want is a deal falling through.

Most fixed rates allow over payments - usually up to around 10%.

I used to work for co-op mortgages and they allow you to overpay by 10% of the balance per year without penalty.

If your looking for advice, you have 2 brokers. The co-op deal would not be available from a whole of market advisor, but you could sit down with one of the brokers and put the 3 deals in front of them and ask discuss the deals with them. Only an advisor can give you qualified advice, advisors on here would not be prepared to do that as it is a heavily regulated industry and without having all of the info its difficult to say.

kingstreet

Avoid products with high fees. You aren't borrowing enough to get back any fees by interest savings, especially over only two years. A product with a free valuation and/or cashback may be a better option.

For example, interest & fees over two years;-

Nationwide - £78200 x 3.74% x 2 yrs + £734 fees = £6,583

Skipton - £78200 x 3.88% x 2 yrs + £330 fees = £6,398

HSBC - £78200 x 3.64% x 2 yrs + £1,166 fees = £6,859.

Following my idea, Yorkshire Building Society is offering a low fee two year fixed at 3.89%. There's also a £1,000 cashback;-

Yorkshire = £78,200 x 3.89% x 2 yrs + £154 - £1,000 = £5,238.

There is a £130 processing fee and £24 telegraphic transfer fee, but it's still £1,160 better value than Skipton, if you are actually looking for a two year fix.

http://www.ybs.co.uk/mortgages/mortgage-finder.html#13218-product-details

If you want a five year fix, you need to make that decision and stop messing around with two and three year options. You want payment certainty, you have to decide how long for.

Obviously I'm not recommending any lender or product, merely emphasising that the conventional wisdom that the lowest mortgage rate equals the best value is easily challenged.

ghulam35

Thank you for all your advice, I've added the Yorkshire mortgage one to the shortlist. I think HSBC I will avoid after reading comments on the board, the Skipton one I will also give a miss because the Yorkshire building society seems better. What about Britannia (co-op) is it to risky to go with them at the moment with the difficulties they facing?