FTB - choosing mortgage fix and other questions

Kami_J

Hello all,

My husband and I are just starting out on the house buying journey and of course have a lot of questions. We both have LISAs which we will be topping up once the year rolls over - I understand the extra 25% will be paid a month later, in May. If by then we have picked a house, we'll be ready to buy, otherwise we might wait until I get my bonus paid in June.

1. What is the timeline in which we should be looking to find a mortgage broker, get AIP, etc.? I don't want to do it too late, but I imagine now it's a bit early.

2. I think we will be getting a fixed mortgage on the logic that interest rates can't go much lower, but there definitely is room for them to grow. On that basis, with a choice of 2 year fix at 1.79%, 3 year fix at 2.15% and 5 year fix at 2.29% - any opinions on which makes the most sense? I understand there are other factors to this, I have only taken these from MSE mortgage finder so trying to simply figure out what makes sense.

3. Any other advice on what we should be doing now? We're starting to look at the areas we're looking at buying and signed up for property alerts to get the feel of what's out there. We think we know what our budget is and it's below what we think we could get a mortgage for, but it might also be good to check eventually...

Thanks!

ACG

1) In around a month or so, that should still give you plenty of time to start getting things in place but not be too early that you have to go over everything again.

2) This is a conversation to have with your broker. But as a first time buyer , you need to consider things like how long you plan on remaining in the property for, is it big enough for a family should you want one, is it the right area. If not, then do you want to be tied in to a mortgage knowing you will not be there for the duration? It means your options are limited or expensive when you plan on moving.

3) Just keep saving, pay your bills on time, try not to take out any new credit/have credit checks carried out.

pinknsparkly

The only comment I would add to ACG's is to ensure that you've budgeted for all the additional costs (mortgage arrangement fee, stamp duty, solicitors fees, house survey costs, house move, any furniture you need).

For what it's worth, my husband and I opted for a 5 year fix since we intend to stay in the house long term and also try to start a family in the near future. A 5 year fix should get us through the first few years of expensive childcare, and we're happy to pay a slightly higher interest rate in order to not run into problems with trying to remortgage in 2/3 years time when we're paying out more in childcare costs than the mortgage!)

Kami_J

Thank you both! Yes, we are planning on staying in the property for 5+ years, so are open to fixing for a longer time if it's a good deal.

Good point on the extra costs, I've budgeted about 10k for them. We are renting and have no furniture, so I am expecting the move to be £200-£300, and we're quite keen on only getting some basic second hand furniture at first and slowly decorating as we go. I'm more fuzzy on the actual mortgage related costs. The indications vary wildly, like in MSE guide: solicitor fees - £500-£1,500. I understand that the fees actually do vary but I guess I won't have a better idea until we pick someone and then we'll know the actual cost

GoingOn30

The solicitor does the conveyancing and not the mortgage, conveyancing and mortgage application fees are 2 separate costs.
Don't forget the cost of a survey on top of conveyancing.
We didn't bother with AIP before we had found the property we wanted to purchase.
Best thing to do in the next few weeks is book viewings at multiple properties, then when you find the right one you will have a feel for how much it's worth.