Which mortgage route do i take? please help

Arkious

Hi all,

I have a shared ownership property (25% of £166,000) and were now in the position to be able to take the full 100% mortgage, but I don't know how to do it as I shall explain...

I'm basing the following numbers on the original property value of £166,000, so these will change slightly but the idea remains the same.

We pay £212 mortgage payment per month and £350 rent per month at the moment, so £562 per month in total. We have roughly £12,500 equity in the property which is enough to get the rest of the mortgage, but at a high rate of around 5-6%. We are not sure if taking that mortgage now and remortgaging after the 2 year fixed rate would be better, or saving to get the bigger deposit and continue paying rent until we have enough to take us to the 2.5% mortgage rates.

I'd have taken the help to buy out to give us that boost over the 2.5% mortgage mark, but unfortunately that isn't available so I don't know what else to do.

I used the Halifax calculator (as its who were through at the moment) to see the difference between waiting and saving, or taking the mortgage now.

£787.52 per month at 5.19% for 2 year, no rent, no initial savings, but over paying as much as possible and saving during the two year fixed period to bring down the APR for the next period.
£521.35 per month at 2.79% for 2 year after paying £350 per month rent until I save £13000.

what option seems best, or please correct me if I'm looking at this completely wrong!

Mortgage_Mark_2

5.19%? That sounds like a Help to Buy product with Halifax?

What LTV?

Arkious

No I don't believe so, I called Halifax customer service to clarify the calculator was giving me correct mortgages. It was explained that the values you give the calculator will show which mortgages are available to you. That is the rate the calculator give me using £13000 as a deposit on a property value of £166000

The LTV is around 92%

betmunch

Arkious wrote: »

No I don't believe so, I called Halifax customer service to clarify the calculator was giving me correct mortgages. It was explained that the values you give the calculator will show which mortgages are available to you. That is the rate the calculator give me using £13000 as a deposit on a property value of £166000

The LTV is around 92%

Think you have been given duff info by Halifax there my friend.

I'm 99.9% sure thats the HTB-MG product with no arrangement fee.

The other 0.1% will come if I look it up when I get to the office!

Mortgage_Mark_2

Arkious wrote: »

No I don't believe so, I called Halifax customer service to clarify the calculator was giving me correct mortgages. It was explained that the values you give the calculator will show which mortgages are available to you. That is the rate the calculator give me using £13000 as a deposit on a property value of £166000

The LTV is around 92%

The reason you've been quoted the Help to Buy product is that the only products Halifax have above 90% LTV are Help to Buy products, so if you can't/aren't using Help to Buy, your maximum LTV will be 90%, possibly less given that you're remortgaging, effectively.

I'd speak to a broker if I were you as it seems as if you're getting confused, and a broker can help with this.

Arkious

Yes I still need to speak with a broker and get some hard information, but even at say 90% LTV, it's a significantly higher interest rate of 4.59%

Which would you say is better, wait a few year whilst paying the rent and save the deposit, or just take the mortgage out in the coming months and over pay enough until it drops us to a 2.59% rate?

Mortgage_Mark_2

I'd speak to the broker to establish whether this is actually viable first, as if it's not, you have no decision to make.

Arkious

What do you mean by actually viable? I've been to the Halifax and asked if were eligible, which we are but need a around £4000 deposit increase to take our LTV where it needs to be.

That would allow us into the 4.59% region, but I'm still unsure if saving more to get us to the 2.79% would be financially better than taking the mortgage now

Mortgage_Mark_2

If you're with Halifax at present, I'm unsure where the 2.79% has come from?

If you're borrowing additional money with Halifax, you take a product transfer for the existing amount of borrowing (which there is a 2.79% product for) and then a further advance product (lowest fixed rate 3.98% for 2yrs) for the top up?

I think the information you've been given/have seen from Halifax is incorrect, which is why I mention checking if it's viable.

Either way, with c.£12,500 equity in the property, and a value somewhere north of £165k, there isn't an option at present as you can't remortgage for more than 90%, even at 5-6%.

Arkious

I'm totally confused now then haha, I should have got more down on paper. I don't mind moving from Halifax, as I got told that it would be better doing so due to them classing it as extra lending rather than a remortgage. But I'm just trying to understand my options, which are now different again if your saying it's not possible to do extra lending?

Can you point me in the right direction then please? Basically, as above we have 25% and want to increase to 100%, using £13,000 equity (and extra cash if required) what is the best course of action?

Thanks very much

Mortgage_Mark_2

It's possible but if you're currently a Halifax borrower and are looking to raise funds, they do a product transfer for current balance, and then a further advance for the rest, which they have one rate for - 3.98%. I'm not sure where they've given you the 2.79% rate from? Unless there's something I'm missing about stair-casing to 100%, which means you get a totally different set of rules?

I would engage a broker to be honest as this is exactly where it can be a blessing. If you'd just applied to Halifax, it would have been a bit of a shock!