Cheap Monthly Mortgage Payments... Factors?

dranzer01

What are the causes/factors of having a low monthly mortgage repayment?

My friends dad bought a house in south east london for £150,000 approx and the monthly mortgage is only £400

Now I do not know much about mortgages. But what factors are taken into consideration for a mortgage repayment to be so low?


Thanks!

ACG

How much the mortgage is, is pretty important. It could be a £20k mortgage and be really expensive or it could be a £130k mortgage and be really cheap.

But the term of the mortgage (20 year will have higher payments than 35 years - although you would pay more over a 35 year term).

The rate.

Thrugelmir

dranzer01 wrote: »

My friends dad bought a house in south east london for £150,000 approx and the monthly mortgage is only £400

There's no relationship between the purchase price and the mortgage outgoing. There is to the amount borrowed though.

getmore4less

Three things effect payment
1. much you borrow
2. Interest rate.
3. Term longer costs less (interest only is just very long term)

dranzer01

Thanks guys, !

secondly is it very easy for a parent to get a new mortgage in their name for a new property and along the line transfer it into their childs name? or does it have to be in the parents name throughout the term?

~Beanie~

You can't transfer a mortgage into anybody's name. The child would have to apply for their own mortage and buy the house from their parents.

Thrugelmir

dranzer01 wrote: »

secondly is it very easy for a parent to get a new mortgage in their name for a new property

Do have they an existing mortgage?

Some lenders will not allow 2 residential mortgages. Also affordability rules will be applied.

dranzer01

Thrugelmir wrote: »

Do have they an existing mortgage?

Some lenders will not allow 2 residential mortgages. Also affordability rules will be applied.

Yeah they have an existing mortgage... (i thought you can have as many mortgages on different properties as your bank balance/monthly salaries sees fit...?)

I just thought this option would of been a good loophole for someone who may find it had to get their own mortgage! But then again everyone would be doing this...

getmore4less

There are issues with this but I think you will find there are not than many parents around that can afford to do it.

Those that can often just bung the kids to they get their own mortgage.

jamesd

No limit on how many mortgages you can have but a fair number of lenders will only let you have one from them, so two might need to be with different lenders.

It's possible that no additional mortgage will be needed. The parents may be able to increase borrowing secured on their own home and use that money to provide a large enough deposit to deal with the issues for the planned owner. That person would have to be aware of the issues with gifted deposits, which lenders in general don't like but can sometimes accept, most likely if at least five percent of the deposit comes from the person who will be living in the property. Alternatively, maybe the parents could borrow enough to give the money to buy the property outright with no mortgage for the recipient.

psstoverere

The house might have been £150,000 but the mortgage could have been considerably less depending on deposit. I am far more interested in a house in south east London for £150,000 as i am struggling to find a flat in that area for that.