Mortgage help..

pldd4

Hi,

Hopefully someone can help here, i'm trying to help a friend out by posting their info on here.

They are first time buyers and would like to buy a house for £298k with £19k saved up for stamp duty, fees and deposit. So Stamp Duty would be about £8940, fees £1000. So leaving them with around £9k deposit.

They would like to keep the mortgage fixed for 2 years so they can predict their outgoings easier and not be tied in with an early repayment charge also.

London & Country suggested one option would be to get an unsecured loan for part of it and the rest would be the mortgage. I'm guessing that the idea behind this will be using the unsecured loan to increase deposit to 10% of the hosue value to enable more mortgage choices.

So....

£20,800.00 unsecured loan
£9000 left from savings
= £29,800.00 which is 10% of the £298k


Their salary's are £27,500.00 and £36,880.00

It would be a massive help if someone could share some ideas or advice on how to go for the best option.

Kind regards


edit--updated the figures

darkcloudi

Problem with taking out an unsecured loan is that it will mean a credit search but also it shows to the mortgage lenders you have an existing debt.

When I went to take out a mortgage ( I used a broker ) they looked at my existing loan and as it had 9 months remaining they asked me will it be paid off prior to mortgage payments and I agreed yes. In some instances mortgage lenders may agree to lend even though a loan exist.

Personally I am not sure whether a loan would be a good idea ( especially if you looking at taking 10% of the property value which is around the £29k - £30k ), but someone else with more experience may able elaborate pros and cons for doing so.

Also have you considered additional costs? i.e. Stamp duty, solicitor costs, surveyor fees etc will you be borrowing more to take these costs in to account.

herbiesjp

I'm guessing they are talking about the unsecured part of the loan being part of the mortgage deal.

Most 100%+ lenders do this.

90% or 95% will be secured with the balance taken out on an unsecured basis but at the same rate as the mortgage

What options did L&C come back with?

pldd4

herbiesjp wrote: »

I'm guessing they are talking about the unsecured part of the loan being part of the mortgage deal.

Most 100%+ lenders do this.

90% or 95% will be secured with the balance taken out on an unsecured basis but at the same rate as the mortgage

What options did L&C come back with?

yes it seems like its part of the deal via Alliance & Leicester this is what L&C came up with

details are:-

mortgage desc: Plus 2 YR Fixed Rate 6.14% max LTV 100%
prod code 80019
fixed rate will be 6.14% for 24 months
1st payment at fixed rate 6.14% £1,877.50
23 payments at fixed rate 6.14% £1,560.48
396 payments at variable rate of 7.49% £1,804.95

unsecured loan £20,800
term 35 years
repayment £120.56 variable
apr 7.5% variable

so total monthly payment will be £1681.04 (variable on unsecured loan)