FTB - Confused by the amount of different products....

PixarFan

Hello. I am a First Time Buyer and I am currently searching for properties. I have recently been given a DIP from Nationwide. The DIP is for £140,000 and I have £70,000 deposit.


I have been looking at the different products available and to say I am confused is an understatement. I am fully aware their must be a lot of posts on this topic and it is a question many others have and a question that does not really have a "right" answer, however, what I am after, is just your advice and what you would do in my situation?


I earn 27k a year. I am buying the house alone. However, my finance is moving in with me and simply cannot get on a mortgage as she has not started her job yet after her degree (she starts in September and will be earning 22k).


Thank you so much for any advice!

ACG

She can go oon the mortgage, she would just have no income to bring to it.

If you are looking for advice on a product you should be sitting down with either the nationwide advisor (if you really want to stick with them) or with a broker if you want whole of market advice. Their job is to find the best product for you.

kingstreet

There are lenders who will lend to someone with a firm job offer and start date. You do not need to apply on a sole basis.

On product types, seek professional advice so you get the right product for your needs.

frazell

It comes down to how risk averse you are;

Very Risk averse = fix, for long duration
Risk averse = fix, for short duration
Not so risk averse = tracker/variable

Also, other factors might come into play like, how much these products cost (arrangement fee) and how often you can be bothered to remortgage.

Some people like to fix for 10years as they like to know what they are paying and they don't take much notice of other/better deals.

Others like to take 2 year products so they can reassess their situation regularly.

As you are a FTB and new to all this, then why not consider a 2-3 year product to get you started and understanding how it all works. I think with the rates being where they are at the moment that either fixing or a variable/tracker are as good value as you're ever going to get (historically low rates), there's little between them in real terms, especially with the amount you are looking to borrow. Just pay attention to the arrangement fees.

Perhaps engaging a broker who can give you some specific advice would be a good idea? The reality is that it really is your choice.

upoiupou

I think you just need to break it down into steps then go through the steps one at a time. It may be a good idea to see a broker or meet with lenders' mortgage advisors, but as a supplement to having an understanding of what would suit you, not instead of that. In the end, it's still you who will be choosing and you need to make an informed choice.

Nationwide offer two different types of mortgage - fixed rate or tracker. They explain the two here:
http://www.nationwide.co.uk/guides/buying-and-owning-a-property/first-time-buyers/understanding-mortgages#tab:Understandingmortgages

I would firstly think about whether you have a preference for one or other other, based on how risk averse you are as frazell explains above.

Then I would think about how long feels right to be tied in to the initial arrangement. 2 years seems a good length of time to me if you're uncertain. Personally, I prefer a 4 or 5 year deal because I'm risk averse (I always fix) but also because I don't want to have to make the decision often and because I hate the possibility of having to pay arrangement fees even if that means the best overall deal. 10 years would make me feel a bit trapped but that's purely personal, we're all different.

You also need to consider whether you want the ability to overpay during that time without penalty.

By doing this, you can define one or two scenarios to look into. You can always change them later, but it gives you something concrete to work with. For example, you might decide to look at 2 year trackers that allow overpayments and 2 year fixes that allow overpayments.

Then you can search and filter for these on Nationwide's (or any other lender's) website and compare them. eg
http://www.nationwide.co.uk/products/mortgages/existing-customer-moving/mortgage-rates#tab:Ourmortgagerates

After you put in basic details like property price, amount of deposit, length of whole mortgage etc, you'll be given a list of mortgages which you can refine further by putting in your chosen mortgage type and duration of the arrangement. This will give you a manageable number of options to compare.

Look at how much in total you'd be paying for the duration of each option, including any application fee, arrangement fee, product fee and all the monthly payments. Include cashback in the equation, but only by looking at the total amount for the duration - a non-cashback deal could work out better overall. Obviously, with a tracker you can't say for certain what the payments will be because they can vary, but you can see what the amount is at the current rate and consider how you feel about the risk.

Also read the terms and conditions, for example about overpayments and portability (moving the mortgage to a different property if you move).

Be certain to look for special deals if you have a large deposit, as you do. You may be able to get a really good deal on a 60% loan to value mortgage (ie you can pay 40%+ as deposit).

Then if you go to see a broker or mortgage advisor, you'll have a benchmark and an idea of what questions to ask them.

Good luck!

frazell

Cracking response upoiupou......

PixarFan

Thank you so much. That information from all of you has been a pleasure to read - has made things a little clearer. The reason why I was a little hesitant to discuss this with the mortgage advisor from Nationwide was that I always feel professionals like this always have a bias and may not have my best interests at heart - however, I do fully appreciate they are the experts for a reason. After spending the afternoon looking at the products and taking in your valuable advice, I am currently looking at a 2 year tracker at 1.79% (initial rate), no fee and no early repayment charge allowing unlimited overpayments. This looks to be the best for our situation at the moment. (I also get £500 for being a first time buyer).
Again, thank you so much.

getmore4less

fixes change the risks they don't solve them.

Even being risk adverse a tracker even lifetime ones can be the right choice it depends what risks you want to mitigate or protect against.

amnblog

PixarFan wrote: »

The reason why I was a little hesitant to discuss this with the mortgage advisor from Nationwide was that I always feel professionals like this always have a bias and may not have my best interests at heart

The regulator precludes any professional from disadvantaging you with their advice, and will hold them to account if they do.


Two of our posters above are guiding you toward product choices with generic information without knowing your situation in full - this is something a professional is not allowed to do.


If you decide you to use Nationwide get advice from their Adviser for your own protection.

upoiupou

amnblog wrote: »

Two of our posters above are guiding you toward product choices with generic information without knowing your situation in full - this is something a professional is not allowed to do.
If you decide you to use Nationwide get advice from their Adviser for your own protection.

A) I don't think we have guided towards any specific decision, only how to consider your preferences and inform yourself in advance of talking to an advisor. Hence generic, without specific information. And building on the fact that most people are perfectly capable of an understanding of the generic issues. If you feel we have guided towards specific product choices rather than giving general advice and general examples, please say how exactly in preference to making unsupported comments, so this can be considered and understood.

We have both referred to talking to a broker or advisor - just, not without having first familiarised yourself with what's what - surely any professional broker or advisor would be very happy about that?

C) What you say makes no reference to or explanation about the situation of tied advisors vis a vis whole market advisors, the pros and cons of paying a fee for an independent advisor and the pros and cons of not paying a fee to a tied advisor. So I feel it's covertly critical while not being completely transparent/helpful.

I'm sure you are in a position to provide more specific guidance if you get more specific information - which could be helpful. Since the information provided was generic, I feel that giving some generic tools for a generic situation was appropriate. Please feel free to get more specific as you see fit.

frazell

I have to agree here with upoiupou and can only assume that I am one of the posters being accused of offering guidance towards specific products to the OP which is certainly not the case.

You will note where I use the term "why don't you consider" and "the reality is that it really is your choice" and "Perhaps engaging a broker who can give you some specific advice would be a good idea?"

From my perspective, all I have tried to do is give the OP some general idea of the types of product that are available and discussion around why some people choose a particular product over another.

There are obviously infinite permutations when considering a mortgage which will be specific to an individual and we cannot cover those on a forum. I am not a financial advisor so I am drawing on my own experiences and making suggestions and hopefully the other members of the forum join in and offer their viewpoint etc, that's a community, right?

Besides in the first post the OP realises that there is no "right" answer, and they are quite correct, in the realms of this forum there is no right answer, hence the suggestion for the OP to obtain specific advice.