Confused FTB

andynmarshall

Good Evening,

My girlfriend and I are looking to get on the property ladder. We have spoken with first mortgage who advised a maximum amount we could borrow. This turned out to be nonsense after taking with an independent broker who obtained a decision in principal for double that amount.

He then confirmed that we could go ahead with paying the reservation fee of £750 on a new build. 3 days after paying it, he called to say that we cannot get the required 90% mortgage on a new build.

As it stands, we are set to lose out on £250 from our reservation fee due to poor advice.

To complicate things further, I'm a contractor with 1 years books. My current contract is for a further 12 months which will then take my to the end of my 2nd year.

We are struggling to find a 90% mortgage on a new build.

We have spoken to a crowd called Contractor Financials who advise they can infavt offer the 90% on a new build.

We're very confused and just looking one of you geniuses to help us out?!

Thanks in advance
Andy

andynmarshall

Additional: the property is £229995 and we have a £25k deposit.

Thanks

libf

Have you considered using Help To Buy Equity Loan?

kingstreet

90% is possible on a newbuild, for a contractor using their daily rate.

Depending on the builder concerned, there may be one or two lender options.

andynmarshall

libf: we are in Scotland and HTB has expired. I'm aware of a Help to Buy 2 scheme where the government effectively underwrite (?) 20% of the loan??

kingstreet: do you know where I could look to find more information on this? The builder is Bellway, not sure if you are aware of any of their options?

Thanks
Andy

kingstreet

Ask Contractor Financials. They've told you they can do it and I'm echoing that they can.

I am unable to name the lenders who will lend, but it's no secret among brokers.

andynmarshall

I spoke with them on Friday - they've advised they can obtain a 90% mortgage with Halifax and the monthly payments would be £1001 per month. We can't afford this.

I advised them that this was too high and he has changed the term to 40 years which brought the payment down to £801 per month. This has resulted in the total to be paid back over the term of the mortgage to be more than double the value of the loan!

Is this right??

If we take out this mortgage - is it possible to remortgage down the line on completely different terms with another lender (once I have my 2nd years accounts?)

Dird

If you repaid over 40 years it's pretty understandable. That's an expensive house and a low deposit.

What fixed rates are you looking at? Perhaps keep going for 2 year fixeds will increase your LTV quicker

kingstreet

A mortgage payment is influenced by three factors;-

the amount
the rate
the term.

If you can only alter the term to reduce the payments, the amount you repay will be higher as a result.

When you have enough equity in the property to remortgage, you may be able to get better rates if your circumstances have also changed for the better.

As libf suggested, why not use the HTB equity loan to reduce your initial mortgage?

http://www.helptobuy.org.uk/

andynmarshall

Thanks Kingstreet. Is HTB available in Scotland still?

Jon_B_2

Sounds like you are stretching yourselves to the limit whilst interest rates are low. What would youy do if interest rates rose? You are already looking to max out the term...