First time buyer questions urgent help needed.

trance14

Good morning all and happy easter to you all.

Ok so yesterday me and my partner have fell in love with a property and have put an offer in. We have until monday morning 11am to give them our best offer as there is another party putting an offer in aswell. The guide price is 110-120k, and we are considering offering the high end amount.

Question is, if we offer 120k, am i right in saying the property will need to get a valuation before the mortgage goes through, and if they say its only worth £100k will i only get offered a mortgage for £100k? That again isnt a problem i have £30k as a deposit, but would this make my ltv 90/10 instead of 75/25 meaning higher monthly repayments?

Hope that one make sense, now a couple of others.

With the above details, i have the opportunity to adjust my deposit amount if i wish but iv had a think and £30k would leave me some £ left over for furnishing etc. Could somebody roughly tell me on top of the £30k deposit what the total cost of fees is likely to amount for, the one i no so far is the mortgage advisor fee of £499 but obviously i no it doesnt stop there.

Looking at mortgages online i am seeing rough monthly payments of around £450-£550 for 24 months and then that figure jumps up by around £100-£200. Why is this, after the 2 years is there not a way round to keep the mortgage payments around the £500 mark? Just thinking of budgeting, my partner will be at university for 3 years this september with pretty much 0 income for the house, and my salary is £23500 which gives me around £1600 a month take home, i am new to all this as you can tell and i am worried that £1600 a month will not cover the total household bills monthly, will i be able to afford to see my friends on a friday night for a couple of beers :beer: And am i just panicking a bit because i am used to mummy paying the bills before!!

Any help is appreciated, i have until tomorrow am to give my final offer. Many thanks guys!

Contemptuous

So:

LTV is based on the purchase price or valuation, whichever is the lowest. So you're right in saying if the valuation came in lower then the LTV would be calculated using that. The rate of interest you'd be offered would be higher at 90% LTV than, say, 80%.

With fees, I think I paid around £1200 in Legal costs but think that included some stamp duty. You will also probably have a valuation fee of a couple of hundred (for a basic valuation) and perhaps a product fee.

Your monthly repayments don't have to change after two years: there are fixed rates available for anything up to 10 years at the moment so you could keep your payments the same for longer, particularly whilst your partner isn't earning.

j_yorks

If you're paying your mortgage advisor £499 (you don't have to pay anyone!) then they should be able to help you find a fixed rate mortgage for longer. Bear in mind that, in general, the longer the fix the higher the rate it's fixed at. So you'll pay more per month for the security of fixing for 10 years.

dimbo61

You can offer what ever you want for the property
A mortgage ANY lender will offer you on the property is what the RICS surveyor values the property AT!
Now have you looked at recent sold prices of properties on the same road?
How old is the property? Are there lots of other houses on the road which are exactly the same?
You have saved a good deposit WELL DONE
If you are looking at a £120K property you can put down a good deposit and get a good deal.
How long do you plan to live in the house ?
Room for kids or Lodgers ?
The kind of job you do and wage rises !! are relevant

amnblog

Your lender will lend on the lower of the valuation or the purchase price.

Yes, they will value before they offer the mortgage.

Divide the mortgage by the valuation and multiply by 100 to calculate the loan to value.

If you offer £120,000 and the property values at £110,000 then your deposit means you need a 75% LTV product as your LTV is 73% (£80,000/£110,00 X 100)

With regards to costs, you will not pay stamp duty land tax on this purchase by you will pay:

Solicitor (allow £1,200 for all legal costs)
Valuation (allow £600)
Broker(your stated £499)
Lenders product fee (allow £999, you can often add this to the loan)

With your budgeting allow for insurance to protect you and your family rom sickness or death, your broker will advise.

With regard to mortgage products, the lender normally allows you to take a new rate when your initial rate ends, so your payments won't necessarily leap. Another question for your broker.

Trying_to_be_good

I'd encourage you to do some reading this weekend on the costs of running a home as well as the costs of buying a home. Take a look at the Debt Free board to find the Statement of Affairs (SOA) that has the headings for all the main expenses in life - you'll have all the bills (Council Tax, Electricity, Gas, Water, phone, TV, broadband, buildings insurance, contents insurance, life cover if you want it), you'll need a savings fund for any emergencies that arise.

Do you have any other dependants? Your OH will be classed as a dependant if they have no income.

Owning a home has a lot of long-term responsibility, so just make sure you understand all this BEFORE you start spending on fees and charges, or taking on the debt of a mortgage.

MoneyEM

I am also a first time buyer with 25% deposit. (45k on 180k property) and I have used a broker to go with Leeds Building Society. They are offering a 2 year fix at 1.85% and £199 product fee which is added to the loan amount (over 24 months it works out to be something crazy like £1 extra a month) and a free survey.

My costs:
Solicitors Cost (Inc. searches): £1110 (£100 extra as it's leasehold)
Life Insurance & Income cover: £12.49 a month
My place is a newbuild with a 10yr guarantee so I won't take out any additional surveys, but if yours is an old house you may need to have a full homebuyers survey which could cost up to £1000 I'm led to believe.

I would not look at the figure at the end of the 2 year fix which will be your Standard Variable Rate (SVR) as you can always remortgage to a similar deal or fix.