First time mortgage advice please

Chrispy_2

OK, sorry for being a bit of a dummy but I know nothing about this type of thing.

I want to buy my brothers flat which has been valued at £85,000. The problem is I dont think I could afford the mortgage unless the loan I am currently paying was incorporated into a mortgage.

I have 10K of the loan to pay off and I pay £270 a month for it.

Is there any way that this is possible or is it just a case of waiting until Ive paid off my loan?

cannycat

Hi,

There are a couple of products out there that allow you to do this kind of thing (or did until recently, I don't know if they still exist as I haven't checked for a month or so). Like you, I'm in the position of having to consolidate (not thrilled about it; if I'd known this kind of mortgage existed sooner then I wouldn't have been stuck "paying some b*stard's mortgage" [ ie renting] for the last 5 years and might even have some equity now, but enough of the digressing). (And incidentally, I'd LOVE to find somewhere for £85K, down here in sunny Devon the cheapest grottiest in need of complete renovation flats are £100K plus...)

Northern Rock has (or had, I THINK it still exists though) a product called Together; I think Alliance and Leicester has a similar product though theirs is only available via a broker; there's also Coventry and I think there may be one other - you might want to have a chat with an independent mortgage broker about what's available. (You don't have to commit to go with them just to get the info...) The disadvantages of these are obviously higher interest rates than on a "normal" 95% mortgage and some of them have high arrangement fees as well. Lots of people on boards here and on the housepricecrash.co.uk site will warn you off this mortgage, but I suspect in lots of cases they're people who bought at the right time (ie prior to 2001) and are sitting smugly on huge amounts of deposit, or alternatively reckon there will be a housing crash. I've been hoping for a housing crash for the last 6 years and it still hasn't happened; I've ended up wasting thousands of pounds on rent! (And I am old enough to remember the last housing crash and walking down streets in Newcastle where every other house was up for sale. I think a crash may happen in time to help people in their twenties, but for people older than 35 I don't think it will happen soon enough to make a difference.)

Good luck.

alexandlee

do you wish to borrow all 85K as mortgage?
if so the number of lenders that will consider you is around 12, and if you need to add the loan on top then that number comes down further.

Some lenders will go to 125% of the purchase price but you have to appreciate you will be paying a higher rate. You will still need to meet the lenders income multiples/affordabilty calculations

Chrispy_2

Ok then, slightly different scenario.

If I was to go into a joint mortgage with a friend, as a project to sell the house on after some work to gain some equity.

Would there be a way of getting a joinmt mortgage to incoporate my loan?

For guments sake lets call it a 100k property. My friend borrows 50k and i borrow 60k. Is that a goer?

cannycat

Hi Chrispy

If the scenario changes so there are 2 of you on the mortgage then HSBC have a mortgage that fits this category (as a couple of friends and I looked into it). I'm not sure though if they'll let you incorporate a loan as the house we were interested in got bought by someone else.

homer_j_3

You are looking to borrow 85k for the flat and then an extra 10k for your loan.

The only way you will do this is through 1 of 6 lenders who will consider this kind of arrangment. You will need to be earning roughly 25k p/a to qualify for all of thes, if you earn less then this figure will reduce to probably 2 or 3.

You have to be careful that you do not end up in the deep brown smelly stuff because house prices arent accelerating at the speed which we have seen over the last few years. So on this basis, you need to try and ensure that you get the 10k paid off asap. You can do this by taking the loan over a shorter term than the mortgage or you can keep the term to as short as possible term to what you can afford so your balance will come down faster. IE over 25 years rathere than 35 years.

Doing the mortgage in a joint name will burden them with your debt and you will only be replicating what I have described above so you should only need to do that if your income is seriously short. Your credit will have to be OK too.