a hopeful FTB

Leia_Stephens

My partner and I are both 32 and interested in getting a toe-hold on the property ladder. Saving up for a deposit - of at least 10% - could take a while , then if after paying the mortgage for say 20 years, one of us dies, do mortgage payments then stop .

Leia

rchddap1

You get insurance to cover you in case of death, illness, unemployment etc... However, you need to look carefully at the Ts&Cs and make sure that you declare everything that they ask you to.

dougk_2

As rchddap1 says you can take out various insuarnce polices to cover the mortgage repayments. You can also take out cover for things like illness and unemployment.

Its a personal decision and of course you need to pay the premium every month which adds to your costa and in a way stops you from paying up your mortgage so quickly.

You also need to look at the future and take into account that you are likely to move and hence your mortgage will change.

I would do lots of reading now about mortgages and insurance (different types available) so you are better informed for when you actually buy.

Leia_Stephens

Thank you .

I have just used a savings calculator and discovered it might take us 10 years to save up for a 10% deposit :eek: . I have read elsewhere on this thread that a 10% deposit is a good one.

Do any MSEs have any advice about what sort of percentage of our take-home pay should be budgetted for for the mortgage and insurance payments

Leia

rchddap1

There are plenty of calculators around that work out your expected monthly mortgage payments. Halifax has one for example, as does Nationwide. Asking us how much to estimate this is like asking us how long is a peice of string. We don't know where you live, the house prices in the area etc... Go to a good lender's site and you should be able to work out exact amounts for yourself.

Anyway, if you do intend to buy a house you will need to get a good idea of house prices in the areas that you are considering.

Leia_Stephens

I live in the South East, so prices are high .

We have had 2 mortgage interviews and we can borrow up to £150K, but
we would be looking at mortgage and insurance payments of about 1k .

We were hoping of more management payments of not more than £700, which is probably borrowing £120k, perhaps we should relocate up north, or continue renting.

Leia

rchddap1

I understand about the renting thing...been there...saw landlady going on holiday to Kenya every year...had enough...looked for a house. One thing you might like to try is approaching a housing association for a DIY shared ownership scheme. Some associations will lend you up to 25% of the price of a house. When you chose to move or sell the house you must repay 25% of the value of the house to the housing association. It may be different in your area but could solve your problem.

You might be able to find out who your local HA's are by contacting your local council.

Joe_Bloggs

A life insurance policy/critical illness policy is worth far more to a broker than the mortgage deal they are offering hence their fixation with the topic.
With any luck house prices will fall slightly and keep on falling perhaps interest rates will rise and help you reach your savings goal. You need 5% deposit to be a serious contender for many good geals. Add £2000 for stamp duty and solicitors fees etc and you are on your way.
There are approx two hundred homes under construction in my area. Quite a few offer shared ownership as they are worth £175-200K plus.
J_B. (Good luck with those premium bonds).

herbiesjp

You can get away with as little as a 5% deposit - if this helps speed up your process at all. Whilst most lenders will charge what is known as a Higher lending Charge, there are some lenders that do not.

The rates are not the cheapest, but it can save you from adding on around £1500 to your mortgage if you cannot pay the HLC up front.

As already stated, a life and/or critical illness policy would pay out in the event of death or upon diagnosis of a critical illness - this is how the mortgage would be paid off were one of you to die or be diagnosed with a critical illness during the term of the policy.

Joe_Bloggs

@Herbiesjp
Do you have a list of those who do charge 'HLC' and those who don't.
I don't know of any who do but I don't know that many lenders either. But to get many shared ownership schemes you need 5% to be considered.


You have to survive the illness to get a critical illness payout ! Critical illness diagnosis is not enough. The conditions considered critical are very restricted and subject to debate. If you survived then the claims adjusters may revue the alleged critical nature and make you an offer less than you expected.

J_B.

Scott

While it is true that to avoid HLCs you need to get below 90% LTV (loan to value), you do cut them in half if you can save up 5%.

Also, many companies will capitalise the fees on certain products, however these usually command a higher interest rate, but might be worth doing to save paying the charges at first, before switching to a better deal after a couple of years.