New home mortgage decision.

Liam999uk

Hi all.

Im wanting a few opinions with regard to a house purchase. Basically me and my wife have seen the perfect house to buy but we are torn with regard to the amount of mortgage needed.

The house is on for £210k, we have deposit of £38k to put down after fees. We have sold our property and are chain free but i know that they won't shift much on the price. That would make our mortgage £172000 at worst case and we could get a 2 yr fixed rate with the Yorkshire building society for £700 a month over 30 years.

We earn £45k between us basic, but usually get another 10 - 12k a year in overtime & bonus. Does this sound like we'd be pushing it for the house as its right at the top of what the building society would lend us. My worry is interest rate rises in the future and if we would cope. I obviously know its our decision at the end of the day but i want to find out the general feeling as to wether to go for it or not!

Many thanks

ACG

Put the rate up to to say 5% - do you still think you can afford it?
I imagine this would fit with lenders, but you have to look at it yourself and decide if you can afford it should the worst happen, what happens if the overtime dries up for example or they put caps on it?

Also, think carefully about going with YBS. There is one lender I refuse to use and its them - they are not easy to deal with, they lack common sense and I would rather think of the underwriters as business prevention department.

Its like they start with a no and you have to convince them otherwise.

Liam999uk

Hi thanks for the reply. Yes at a push i think we probably could but it would be tight! I suppose it would be a bit easier after a few years more equity in the property. With regard to the overtime, i base everything on our basic wages. The bonus and overtime has always been there and i can not see any change in that in the near future but like you say you never know.

With regard to YBS you will be in a better position to tell me about them. They just offered me that deal and would lend upto £174000. That was the big thing as the mortgage would be so close to that limit. If it was you would you do it???

ACG

I would not use YBS for even straightforward cases with a low LTV.

Some people on here say they were alright, others say otherwise - but both cases I have submitted to them should have been straightforward and they made it a nightmare.

Liam999uk

Would you get a mortgage for that amount knowing our wages and deposit if you were in our situation??? Who would you recommend instead of YBS?

ACG

I dont know enough about your circumstances but on the face of it £174k should be easy enough to get.

I cant recommend lenders on a forum as it could be seen as leading. This site is more for generic advice.

Thrugelmir

With a 30 year term you be exposed to higher rates in the future. How comfortable would you feel at 7% interest rates?

Are you choosing a 30 year term on the basis of affordability?

dimbo61

Now we have been with YBS for the last 10 years with an offset mortgage and love the flexibility that it offered us.
We are also lucky because we have a local branch only one mile away.
We had 50% deposit and overpaid from day one with emergency savings in the offset account.
You are going for the shortest fix and the longest term !
How much will you pay off over the 2 years ? LTV in 2 years ?
Rates may well be higher in 2 years so why not a five year fix now !

Liam999uk

Thrugelmir wrote: »

With a 30 year term you be exposed to higher rates in the future. How comfortable would you feel at 7% interest rates?

Are you choosing a 30 year term on the basis of affordability?

Hi ideally yes to start with as we have a bit of childcare to pay for but this will reduce in a year. In a perfect world i would get a 5yr fixed on a 25yr mortgage but i worry about the repayments, £884 a month seems a scary figure to be paying out! Bearing in mind we only pay £500 now. Maybe we would cope fine,£220 a week on a mortgage doesnt sound so bad when we usually bring in £800 a week in wages. Maybe this is the sensible thing to do. Cheers again.

Thrugelmir

Worth bearing in mind that at a 5% interest rate. After 20 years you would still owe £87k on your mortgage on a 30 year term.