FTB mortgage advice

Dird

Hi,

I was looking for feedback on how good/bad my mortgage plan was/if there was something better I should look at.

I'm looking at houses around the 110-130 range but recently found one I like (124 but hoping to bid lower). I'll be going in with a 45k deposit and my plan was to do a 5 year fixed mortgage with a 7 year mortgage in total (assuming I get the house for 118-120, it becomes just over £900/month).

My mom will live with me & cover normal household bills so my bills are literally: mortgage, fuel (< £100/month), internet (£60) and occasional food...probably get house insurance & split with my mom. This means that every 2 months I should have saved enough to cover 1 month's mortgage to cover any out-of-work time.
Is a 7 year with 5 year fixed a good idea? My reasoning:
- Duration is so short it's not worth changing mortgages midway/after fixed period.
- Although there's no signs of rates going up they're even more unlikely to drop.
- Finally, my understanding is that once the 5 year fixed expires I can pay back without early repayment charges so once it expired I could pay off like £20k in one go from all the two months saving up 1 month's mortgage meaning my rate at that point would be low (probably finish in year 6 rather than 7).

HSBC also has a "fee saver" mortgage where I don't need to pay the application fee (if I'm applicable for the fee saver...not seen if it's existing customers only or any other conditions).

Thanks for any feedback

betmunch

Looks good assuming both you and the lender are comfortable with the payments, you may be forced to extend the term and the use overpayments to manually reduce it.

Also your mum will need to sign a declaration to say she is living there and will not have an interest above the lenders. Also its unlikely she will be able to provide towards the deposit, you havent stated where thats coming from

Dird

120 in 7 should be fine. I went to an estate agent & they said the banks would only allow 130 in 8 rather than the 7 I was planning but it seems as long as it stays below £1k/month they should be OK with it.

Why do I need to mention my mom/get her to sign anything to the banks? The deposit is just from savings over time (since before graduating).

libf

Dird wrote: »

.probably get house insurance & split with my mom.

There's no probably about this. It will be required for you to get the mortgage.

Dird

I had worded it wrongly "get house insurance & probably split with my mom"
You don't have to get the insurance until after the mortgage though right? So just a promise of intent?
Otherwise you'd have insurance on a house you don't own/be forced to use the bank's providers

betmunch

Dird wrote: »

120 in 7 should be fine. I went to an estate agent & they said the banks would only allow 130 in 8 rather than the 7 I was planning but it seems as long as it stays below £1k/month they should be OK with it.

Why do I need to mention my mom/get her to sign anything to the banks? The deposit is just from savings over time (since before graduating).

Estate agents are not qualified to give mortgage advice, I am assuming you mean a Mortgage Advisor in an Estate Agents?


It will be a requirement of the lender, any adults living in the house will need to be declared to the lender and the solicitor should get them to sign a document to say they wont have any rights above that of the lenders in the event of repossession. Its a standard document, nothing to worry about

amnblog

Failure to mention Mum is mortgage fraud.


Using any of her money towards the deposit and not declaring it is also mortgage fraud.

libf

Dird wrote: »

I had worded it wrongly "get house insurance & probably split with my mom"
You don't have to get the insurance until after the mortgage though right? So just a promise of intent?
Otherwise you'd have insurance on a house you don't own/be forced to use the bank's providers

You need buildings insurance from exchange of contracts (unless it's a new build and then it's on completion).

Dird

Yes a Mortgage Advisor in an Estate Agents.

What does "interest above the lenders" mean? Like I've promised her a %? I can mention her I just felt it strange as she's not a dependent. If 2 people moved in after-the-fact would I need to update the mortgage company? (no plan to but I don't see how it would be different)

No money from her towards the deposit.

Exchange of contracts is after the survey/conveyancing parts have all passed?

Edit: Oh, house insurance is so cheap anyways. Value of goods probably isn't even the lowest option on comparethemarket (we bought a lot of it second hand) but the quotes are still £200-300 with an overquote of content value

betmunch

Dird wrote: »

What does "interest above the lenders" mean? Like I've promised her a %? I can mention her I just felt it strange as she's not a dependent. If 2 people moved in after-the-fact would I need to update the mortgage company? (no plan to but I don't see how it would be different)

Interest above the lenders would mean that she could delay the repossession because she has an interest in the property that is greater than the lenders from a legal point of view. In this case "I was here first you cant chuck me out my home". Signing the form takes that potential scenario away.


It is different to people moving in after completion because that would be after completion and would be easy to show their interest in the property began after the lender had an interest.


Also, just because shes not a dependent, doesn't mean that a lender would not want to know, I cant think of 2 lenders off the top of my head that ask how many adults and children living in the property rather than dependents and adjust their lending accordingly

libf

Dird wrote: »

Yes a Mortgage Advisor in an Estate Agents.

What does "interest above the lenders" mean? Like I've promised her a %? I can mention her I just felt it strange as she's not a dependent. If 2 people moved in after-the-fact would I need to update the mortgage company? (no plan to but I don't see how it would be different)

No money from her towards the deposit.

Exchange of contracts is after the survey/conveyancing parts have all passed?

Edit: Oh, house insurance is so cheap anyways. Value of goods probably isn't even the lowest option on comparethemarket (we bought a lot of it second hand) but the quotes are still £200-300 with an overquote of content value

It's buildings insurance that you need on exchange of contracts. You could get contents insurance at the same time if you wanted, or that can wait until you move in (and isn't a requirement in the same way that buildings is, but is definitely recommended!).