Where to start? Advice please

lydriver

I haven't done anything except put figures in to the various calculators to see how much I would likely be offered/monthly payments etc

I don't know how much I'll need to borrow yet, could be anything from 40-70k but have been reading that you need to get a mortgage sorted out (or at least the process started) before viewing places!

Do I try and apply for the highest amount I'm likely to need or do I need to get a more definite figure before doing anything?

Malmo

What you need to get the process started is an AIP / DIP from a lender. This isn't a mortgage. The purpose of the AIP is to validate your creditworthiness and based on that, indicates your maximum borrowing power taking into account income and commitments, subject to further affordability and other criteria.

An AIP is then turned into a full mortgage application when you have a property you want to secure the loan against. You can obtain the AIP either yourself direct from a lender assuming you have researched their criteria or via a mortgage broker. Just get one for the maximum amount the lender will allow based on your income/commitments. It doesn't mean you have to borrow that much later on.

Estate agents generally treat you as a serious buyer if you have the AIP in place when you view and then offer.

Never use estate agent mortgage services. Keep them at arms length when it comes to your mortgage and conveyancing matters.

JPB123

Malmo wrote: »

Never use estate agent mortgage services. Keep them at arms length when it comes to your mortgage and conveyancing matters.

If it's a National chain (Countrywide, Connells, etc), run a mile. If it's a small independent, the broker is normally free of the sales targets / dubious behaviour.

I am an Independent Mortgage Adviser

You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.

lydriver

I was pretty certain I was going to try and get a fixed rate mortgage for as long as possible (10yr fixed @ 3% from Woolwich) but have been reading it's better to use a broker in unusual circumstances
I have a fairly big deposit for my wages/price of property I'm looking at so I suppose that's unusual circumstances
What more can a broker do? Are there deals they can get that can't be found on comparison sites?

Dird

What is your salary? deposit?
Any dependents?

If you're set on buying soon then an AIP should help you out with your bidding position. I made an asking price bid but the EA was all "but you don't even have an AIP so we can't just take it off the market". Called up HSBC that night and got an AIP done over the phone.

lydriver

when applying for the AIP do you need to decide what kind of mortgage you want, fixed over what term etc or is it just income/outgoings at this point?

Dird

lydriver wrote: »

income/outgoings at this point?

only ins/outs and duration...just say 25-30 years to be on the safe side. I made the mistake of saying "7 or 8 years" which only just managed to cover the amount I wanted to borrow (I'd have needed a new AIP if I wanted a more expensive house)

lydriver

I'm only looking to borrow 70k max, maybe as little as 40, no way do i want it to last that long....
I know the AIP isn't definite but after saying 25 years will they let you take out a 10 year mortgage?

Dird

lydriver wrote: »

I'm only looking to borrow 70k max, maybe as little as 40, no way do i want it to last that long....
I know the AIP isn't definite but after saying 25 years will they let you take out a 10 year mortgage?

When you do the real application they'll look again & you can change to what deal you want/they allow. HSBC AIP gave me the amount for 7 years but when I went to make my application (Yorkshire) 9 years was the lowest they could allow as they went off national averages. If your salary is low then then it might be a longer duration than expected but you can just pay it off when you can.

They might offer you something like a 10 year fixed mortgage on a 12 year term then you could just pay off the remainder at the end of the fixed period or continue to pay it off monthly.

You should really look at 2y fixed more. I was planning to go with a 5 year fixed deal but then realised I'd save a couple grand changing to 2 year switches...I'd imagine the gains are higher for 2y vs 10y

lydriver

..to work out how much renewing a 2 year deal will cost overall do you assume that you'll get the same interest rate/fees/cashback each time you renew?

Maelwys

lydriver wrote: »

I'm only looking to borrow 70k max, maybe as little as 40, no way do i want it to last that long....
I know the AIP isn't definite but after saying 25 years will they let you take out a 10 year mortgage?

Well you can always get a mortgage over a longer term (Mine was originally over 25 years - until my 55th Birthday) and then overpay it to pay it off much earlier.

After the intitial fixed period (if any) comes to an end, there are generally few/no fees for making mortgage overpayments. The advantage of spreading the mortgage out over a longer term and overpaying is that the monthly 'standard payments' will be lower so you can cope if your circumstances change or you just have a rough month(s).

..to work out how much renewing a 2 year deal will cost overall do you assume that you'll get the same interest rate/fees/cashback each time you renew?

Fees and rates are quite volatile and changeable, you'd really need to check the available deals when you're coming up to renewal time. Rule of thumb though is that the lower your LTV ratio (so the higher your deposit) the better the deals you'll get... so if you were to start off at a 90% mortgage then as you gradually pay off the capital you'd start to get 80%, 70%, 60% LTV deals available to you.