mortgage advice needed...

gmu1983

Hi

Our house is currently on the market and our current mortgage expired a couple of years ago, automatically going onto the bank base rate as our mortgage provider dont offer new mortgages anymore. As we were planning on moving we have left as is so when we move we can start a new deal. Our mortgage was interest only as we were first time buyers and young/uni, but now we are in a much better financial position. Saying that though we have little if any equity and will only scrape 5% deposit.

will our history of only being on interest only and only putting down 5% on our next home reduce the chance of a good mortgage deal? I was considering taking a small amount from my savings to pay a payment towards our mortgage, to show some has ben paid, even £1000, would this make a difference, or would this money be better added to the deposit?

Thanks... very confused and desperats to sell our home!!!

kingstreet

Interest only so far, will have no impact.

Your small deposit will mean higher rates. Typically 95% will see you with a rate of around 5%.

Pixie5740

As kingstreet says having an interest only mortgage won't have an impact. As long as you've made all your mortgage payments in full and on time, that what a lender would be most bothered out.

A 5% deposit will limited the number of mortgages available to you and will attract higher interest rates than if you had a 10% or 15% deposit. Have you got other savings besides the 5% deposit to cover stamp duty and solicitor's fees?

gmu1983

Hi

Thanks for responses, the housing market is much more complicated than when we bought our first home 7 years ago...we are holding out to sell ours even though its been on 2 years, as we dont want to be forced by a part ex new build.

yes we have 5 % and we will be able to cover fees. It is a shame we cant push for 10% deposit but the majority of our savings were obliterated when we married last year.

Am I right in thinking if one of us got a £10k loan, would the mortgage companies know we would use this towards our deposit?this would raise it to 10% deposit and open better rates?

Thanks

Foxy-Stoat_3

It will effect your affordability if you look out a 10K loan and may effect the amount you can borrow.

gmu1983

Well I've just done a quick search for 10k over 3 years and I didn't realise how much the payments would be, so it would be better for us to take a 1% hit on mortgage rates with a lower deposit than stretching ourselves unrealistically with a more expensive mortgage and a loan payment as well.

marliepanda

gmu1983 wrote: »

Am I right in thinking if one of us got a £10k loan, would the mortgage companies know we would use this towards our deposit?this would raise it to 10% deposit and open better rates?

Thanks

Yes they would know and it would not be allowed as a deposit. You need to show where money has come from, it will be very clear where it has come from.

gmu1983

Thanks! I knew vaguely it wasn't allowed as they are quite clever with what money has come from where. I know you can use a payment given from parents as that's different.