Just got a mortgage - where to next?

prettyplease

Hi all,
So I have a shared ownership mortgage (50%) and with house prices set to rise and me making great inroads into my debt reduction I called my bank today to discuss mortgage options to own 100% of my flat.
Well they agreed to a mortgage - I have a decision in principle which if I accept once I get paperwork through they will hold for 6 months. So now I need to get a valuation etc...I wanted to get a decision in principal as if this was not possible (as I have debts) there is no point me paying valuation fees through the leaseholder.

Ok now the mortgage details. I have been accepted for a 5 year fix - 4.49% then SVR 3.69% LTV 86%. No upfront fees (my choice as debt busting and cash poor right now). I opted for a 5 year fix as I feel this is a big step and want some security. Im hoping to be debt free in 2 years. In all honesty I was not expecting to get approved for a mortgage due to having multiple credit applicaions recently (most of my debt now on 0%).

So my question is - should I bite their hand off or look elsewhere?
Also do you think Id be better with a 3 year fix - my bank offers this at 4.19% then svr 3.69%. My worry about this is if interest rates do shoot up I will still have a relativey high LTV and thus may find it difficult to swap lenders.
Thanks in advance

prettyplease

forgot to add - lender is first direct

Thrugelmir

prettyplease wrote: »

Well they agreed to a mortgage

A DIP is not a mortgage offer.......

May yet be declined.

kingstreet

You have not yet reserved a mortgage product if you've only had an AIP. Once you make a full application, the product is reserved. I would not go for a five year fixed rate now if you plan to reduce your mortgage in the next couple of years.

You may be better off taking a shorter-term product at a lower rate with overpayment options, than looking to remortgage when you have a better loan to value in a couple of years' time.

A product with a fee may be a better idea if you are borrowing a larger amount, as the amount you save on the lower rate will pay you back the fee over the course of the rate. Do detailed comparisons to see how it pans out.

If well under £100k, a higher rate/no fee combo is probably the right answer. If borrowing over £130k or over a longer period, the five years you mentioned for example, you may be better off with a keener rate/fee combo as you'll save more overall. Between the two, it will be down to the case and rate options.

jamesd

You will be required to do a proper mortgage application. That means bank statements and P60 and such accompanying the paperwork, then a loan decision by an underwriter.

LTV of 86% is unfortunate. Just 1% away from being able to get potentially cheaper 85% LTV loans.

prettyplease

Thanks kingstreet - I would be borrowing £155,000. I did the sums and the no fee mortgage came out at £100 more expensive over the term hence I went for the no fee option as currently paying debts down.
I will get my valuation done and seek an independent advisor for advice!
Thanks

prettyplease

Thanks all,
Went through my entire 3 month bank statements over phone item by item. Whole process took 90 minutes on phone. The advisor said I passed all the financial checks including an experian credit check. Will need to provide proof of income but as its my bank she could see the payments had gone in so I just need the paperwork to back this up.
I know until I provide this there is a risk they can say no but I have been credit checked today and statements scrutinised so am still hoping it is ok. I am worried however an additional application elsewhere may jeopardise this.