Mortgage Advice Needed

Martyn16pnefc

Hi Everyone,

First of all I am new to this forum so hello everyone.

Last month my girlfriend and I found a house that we wanted to purchase. We were unsure whether we could afford the property so the housing company (Taylor Wimpey) advised us to call a company helpline call New Home Mortgages. They asked us to provide them information about our monthly income and expenditures just like a credit check. Then they will tell us whether we can afford a mortgage and how much the payments would be per month.
They told us that we could afford one with a high street bank or building society that would cost us £401 per month which was perfect as our flat rent is currently £400.
This was a 40 year mortgage with a fixed term of 2 years at 1.99% interest rate.

With this reassuring us we then went back to the housing estate a month later once the houses were available to reserve and put £500 down to reserve the plot for our own. Happy days!

Also it is worth noting that my girlfriend had a £2000 wage increase during this time.

After a couple more weeks of getting all our documentation together we arranged a call with New Home Mortgages to agree on the mortgage and to set the ball rolling. This would lock down the mortgage cost.

When speaking to the advisor he told us that in the month we last spoke to them the rates had changed. He told us that the cost for the mortgage would be £478 per month.
This will be 35 year mortgage with a fixed term of 2 years at 2.63% interest rate.

This was extremely disappointing because this increase in monthly costs will be a stretch for us and we want to have money available for ourselves e.g. Days out etc.

We asked whether the initial offer was available and were told no. We asked whether there was a 40 year mortgage available and he said yes with Halifax. However he called us this afternoon saying Halifax had not allowed us as we are £6000 short of what we need to borrow.

Now we are unsure what to do as this is all very new to us. We thought about asking different banks but the guys at New Home Mortgages have told us that applying for different mortgages at different banks will effect our credit rating if we are rejected.

I've spoken to my parents, my girlfriend parents and colleagues at work and nobody seems to have an idea of 1. how the prices has suddenly changed. 2. What we can do next

So I want to know if anyone has an idea how the monthly cost for the mortgage has changed so suddenly. I understand they can change but this price different seems drastic!!
Also if you were in our situation what would you do? I am scared that we have put £500 down for a house only for us not to be able to afford/get a mortgage.

Any help and advice would be greatly appreciated!

Hope you are all having a good evening.

Thrugelmir

Martyn16pnefc wrote: »

This was extremely disappointing because this increase in monthly costs will be a stretch for us and we want to have money available for ourselves e.g. Days out etc.

Then now might not be the time to join the property ladder. Home ownership isn't a straight swop for rental costs. You'll be exposed to increases in interest rates, property maintenance and so on. Nor would I personally suggest a 40 year mortgage term as advisable.

Have you both opened Help to Buy ISA's ?

Martyn16pnefc

We have both open help to buy ISA's yes so the deposit is covered.

The problem we have is that the mortgage cost was communicated to us that it would be around the £400 mark, A month later its closer to the £500 mark which doesn't suit us

RhysHSCC

mortgage products can be withdrawn quite regularly which would be Explain the rate change, however the change in term could be put down to revisiting the advice already given. With the change in circumstances I.e pay increase. It may have been more suitable for you to shorter the term. E.g cost less in the long run.

I'm not an advisor myself but having spoken to advisor colleagues, even small changes can greatly impact on the advice given, like a chain reaction.

Thrugelmir

Martyn16pnefc wrote: »

We have both open help to buy ISA's yes so the deposit is covered.

The problem we have is that the mortgage cost was communicated to us that it would be around the £400 mark, A month later its closer to the £500 mark which doesn't suit us

Basing a decision on the current level of interest rates when considering a 40 year term is unwise. Affordability is assessed by lenders if rates were 7%. As that's nearer what they would be in normal times.

amnblog

Mortgage rates under 3% and a 35 year term is about as low as it gets it terms of monthly payment.

I suspect the lender and product discussed when you first spoke to New Home where not applicable when they looked into your case in more detail - hence the difference in cost.

If £478pm is far too expensive for you to manage perhaps you should be looking at borrowing closer to £120,000 than £130,000 and select your property option accordingly.

You baffled me regards the deposit. If the funds are in Help to buy ISA's you cannot have been saving long - I hope you are not relying on the H2B ISA bonus here to secure your full deposit fund?

Martyn16pnefc

We have got the deposit via inheritance so we are covered on that side however we will be using the help to buy scheme.

We will also be using the help to buy ISAs to help assist with the deposit. We can already afford the deposit without the ISA however the more money we get by doing the help to buy ISAs the more money we will have for things such as e.g Carpets, washing machine etc.

Does that help at all?

Sorry this is very new to me!

AnotherJoe

Go and see a broker who can walk you through the options and let you know likely lenders, without needing to go so far as applying for numerous mortgages.

Verix

It sounds like they were originally looking at Halifax over a 40 year term, now they've had to Natwest over 35 years for some kind of affordability reasons. Without knowing more about your situation it is impossible for anyone here to tell you whether there are any other lenders worth considering.

I would echo what others have said and maybe reassess whether this is something you can really afford to do right now. In two years time you will come out of your fixed rate at 2.63% (which you already think is quite high) and jump on the lenders SVR which is currently sitting at 4%. Even if you can do a product transfer or remortgage you may still be looking at higher rates depending on what the economy/bank of England do.

I'm also assuming you are using the help to buy scheme which is another thing which may need to be factored in to you calculations.

csgohan4

I am more concerned for you that 75 pounds more a month is a stretch for your currently.

There is no guarantee the interest rates will stay the same in 2 years time and whether you can re mortgage or not due to employment changes. If you can't re mortgage you will be stuck on a SVR which can be more than double your rate

As said above a home owner transcends just a straight rental swap, you are responsible for the maintenance such as boiler, re roofing e.t.c in future both cost more than 2k. No crying to the LL for repairs.