First Time Buyer advice

MikeBurry

Hi ,this is my first post!! I have been reading the forum and appreciate a lot of the good posts / replies that have been made so would like to explain my situation and see if any advice/suggestions it would help me as this is the first time i have done anything like this

Im Currently looking to Buy and have met with 2 Separate Brokers

Im Self employed (ltd) with 1 years accounts with a income of 35.000
I also have a default from two years ago with a phone provider for £230

I have a 15% deposit of 25.000 and I'm looking for a mortgage to the value of 135000 (property value is 160000)

Due to my employment status and my default from 2012 i don't have the opportunity to get with a high street bank and milk a attractive interest rate..c'est la vie:mad:

But regarding the offers i have been proposed I'm unsure which may be best suited if at all and i should carry on pursuing a better rate - ( we have found a house so ideally wanted this settled before end of December)

Broker one , No Fees - commissioned by the lender i assume - deposit of 15% needed - but a fixed rate at 5.9% for two years

Broker two. 2.5% upfront fee of value of sale when application is made to lender - but thinks he can place me on a 3 or 5 year Fixed rate at 3.79 or there a-bouts (the hefty £3400 upfront fee is my main concern if he cannot provide the rate but finds me something not as good i still have to pay the fee on the basis he found me a mortgage )

both over the space of 3 years work out in total to around the same ... 18.5kish

I would be keen to get involved on the second broker deal on the basis i can Fix the Rate at 3.79 over 5 years (if this can be done)
- In my line of work my income in two years time could potentially be reduced to around 20k , I haven't got my Partners income included on the mortgage due to her credit rating but if my income was reduced our combined income would meet the 35k mark so affortability is fine but the chances of a re mortgage after 2/3 years is unlikely till her credit is better, …….probably around the 5 years would be better - i have "stress" tested the re payments of my income reduced with the house annual and even at 10% we would manage re payments but for the next 5 years i would ideally like to think i have been wise in regards to what rate i have , should interest rates inevitably rise …..

Can anybody advise what would be sencible or what other options i might utalise before making a decision it would be very much apprichated !!

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a off subject observation i have made and correct me if I’m wrong but Lenders Stress test each case at 7% to ensure they can meet increased interest rates, but some of the less favourable lenders who i would be in there demograhpic or there in mine should i say already have interest rates around 5.9 / 6.08 (kensington etc) …. If this is the case and the BOE base rate does proceed to rise surely the subprime lenders who already have rates set around 6% would surpass the 7% that they stress test and this would cause defaults/repossessions …its like setting people up to fail should interest rates rise? am i correct in this? This somewhat would apply to me looking to use a subprime lender albeit i can still manage payments in excess of 10% i imagine many couldnt as the loan is approved with the stress testing done below the potential level of increased intrest

amnblog

A confusing situation.

No one can say for sure what your options are as we don't know how much research these brokers have done on your case.

On the face of what you have said we can say:

The 'free' broker seems to have limited knowledge as a 3.79% may well be possible.

The charging broker is suggesting terms that are well off of the pace. There are plenty of experienced brokers who will place your case with a broker fee of between £499 and £999.

You should note however, that with one years accounts your options are minimal.

ACG

Paying 5.9% for 1 years accounts and a small default seems OTT. I also dont understand why you would go with a 3 or 5 year fixed rate especially when payming a higher rate. Next year once you have 2 years accounts I see no reason why high street rates would not be possible.

3.79% seems to be in the right ball park but on anything more than a 2 year deal you are losing out and thats before you take into account a £3k bill!

I dont see how a broker can charge £3k upfront without the customer knowing what they are getting.

Personally I would find another broker, fees on results who can manage to get you a rate well below 5.9%, sub 4% should be possible with a couple of lenders - based on what you have said. Obviously we only have limited information to go off.