first time buyer needs advice

smoky_joe

first of i would just like to say hello all just found out about this site and had to register so be gentle with me

we are looking for a morgage to buy a family probate property but my head is spinning there are so many different morgages out there and when we whent to the abbey they tried to offer us part intrest only and part payment now that sounded fine but i would rather know i was paying the morgage rather than just the intrest,
does anyone know what are the best deals out there we are looking for flexable so we can overpay as i would like to pay of the morgage in 15 years if possible and i would like to hear peoples thought on how long to fix for,
i know its allot of questions but if you dont ask you will never no anything thanks in advance old smokey

KiKi

Hi there Smokey.

Unless you you intend to sell the property once you've paid it off, or unless you can save the value of the property in those 15 years, then it's unlikely that you need an Interest Only mortgage.

The Abbey probably offered you Repayment and Interest - ie, paying off the mortgage capital itself, but obviously there's interest that comes with that! When you make payments on a Repayment mortgage, your first few payments will be predominantly interest - and as you get through the mortgage they gradually become predominantly capital payments (ie, the money that you actually paid for the house).

I'm not sure why they would have offered you part Interest Only unless you didn't have the funds to pay off a Repayment mortgage. Are you sure you didn't misunderstand what they meant by Repayment?

Most mortgages will let you make overpayments, so it depends how much flexibility you want. I have a Flexi Plus mortgage with the Abbey, so I can make overpayments, take mortgage holidays, offset the mortgage, pay lump sums to reduce the capital etc. But that suits my lifestyle.

There are some good deals on fixed rate mortgages at the moment, but that depends whether or not you want to have a fixed rate for the next few years. If interest rates go down, your mortgage repayments won't. (Of course, they won't go up, either!) You will almost inevitably be tied in with a fixed rate mortgage - ie, if it's fixed for three years, you won't be able to change your mortgage, or move to a different company without a penalty. You probably won't be able to make overpayments without a penalty, either.

I think you need to ask yourself a few basic questions:
a) do you want a Repayment or Interest-Only mortgage (you already indicated the former)
b) do you want your mortgage payments fixed for 2/3 or more years? And if you do, are you prepared to take the conditions that go with that?
c) How much flexibility do you want? Most mortgages will let you overpay, anyway, but with conditions (eg, you can't overpay by more than 10% of the balance each year). A truly flexible mortgage will let you do a lot more - but they're quite expensive to buy (mine cost £600), and if you don't use the other features, it's not necessarily worth it
d) what sort of interest rate are you looking for?

If you can answer these, then it will be a lot easier for people to recommend some good mortgages for you.

I hope that helps; I'm no expert on mortgages at all, but I know what a total minefield it is when you've never done it before! Trouble is, there are so many mortgages, so if you can answer those questions it makes it much easier for others to narrow it down for you!

Personally, I've had no problems with the Abbey or the mortages I've had with them.

smoky_joe

a) i dont like the idea of intrest only as that seems a bit pointless to me anyway

b) i thought that the conditions would be that i was tied to that morgage for the fixed period but i liked the idea of knowing my monthly spend


c) well they where adding a setup charge of £499 anyhow, and 10% isnt that much of an overpayment,

d) i was offered 6.85% with abbey and 6.3% with HBOS so i take it this is the norm in the present climate

i only need to borrow £45000 and i was going to take it out for 25 years in the hope that i could overpay to bring that figure down to 15 years

smoky_joe

anybody got any recomendations;)

smoky_joe

anybody