90% LTV Products

proformance

Hi guys,
My partner & I have saved a deposit of just over 10% of a property for an agreed price of 540k,
Unfortunately, the best deal we can find (having spoken to ~10 brokers) is a ~3.59 fixed for 5 years.
I'm sure many people are in this boat and I just wondered what the consensus is on this type of product? I guess it still beats paying rent but what a kick in the teeth it would be! People keep talking about high-street lenders' "flash sales", but they don't seem very attractive either. 
FWIW, 85% LTV's are seemingly only marginally better. Really you need 20-25% deposit to see a marked increase in value.
Any advice ios appreciated!

Thanks,
Z

foxy-stoat

If you have spoken to 10 brokers, one of them must be whole of market, then I doubt there will be any other lender to try.

I would fix it for a shorter time as possible (2 yrs) and look at changing lender, and make overpayments to bring your LTV down in the mean time.

haras_n0sirrah

There is a way around the 10% deposit issue if your income is high enough. It can be worth doing in the right circumstances
If you are looking at 90% then best rate I can see is 3.49% on a 2 year or 3.54% on a 5 year

Carl2510

It is crazy, my brother is buying a house for 170K and I’m buying one for 234K yet I’ll have a cheaper monthly payment as I’m putting down 20% and he’s putting down 10% it might seem unfair end of the day I’m putting a lot more money down so you should be rewarded with a better interest rate .

MattMattMattUK

Your options are buy a cheaper property and by doing so decreasing your LTV, wait to save more of a deposit, or use HTB on a new property. Unfortunately those might not be what you want but the market is very limited at the moment for those with a high LTV. 

grumiofoundation

proformance said:

Hi guys,
My partner & I have saved a deposit of just over 10% of a property for an agreed price of 540k,
Unfortunately, the best deal we can find (having spoken to ~10 brokers) is a ~3.59 fixed for 5 years.
I'm sure many people are in this boat and I just wondered what the consensus is on this type of product? I guess it still beats paying rent but what a kick in the teeth it would be! People keep talking about high-street lenders' "flash sales", but they don't seem very attractive either. 
FWIW, 85% LTV's are seemingly only marginally better. Really you need 20-25% deposit to see a marked increase in value.
Any advice ios appreciated!

Thanks,
Z

You will be borrowing 486,000.
At interest rate of 3.59% so you will be paying ~£17,000 in interest every year for the first 5 years.

So is it actually better than rent (if rent >£1500 pm then paying less interest than rent)?

Thrugelmir

If you want to borrow at a cheaper rate of interest borrow less. The rates on offer reflect the risk to the lender. 10% equity can soon evaporate. Particularly if it's a forced fire sale. 

RTC87

We are in a similar position to you. We purchased a new build with HtB 3 years ago and due to increased equity and saving are now in a position to jump a few steps up the ladder to our forever home, albeit at 90% LTV. 

The way we look at it is although the interest rate isn't amazing, many have known far worse in the past and as we are planning on staying there for the next 20 years we see our risk as somewhat diminished. Current plan is to overpay for the 5 year fixed period to be at around 75% - 80% and remortgage with another lender on hopefully a shorter term (currently opted for 35 years just so we have a little more flexibility in the short term given global circumstances, we could of mortgaged over 25 years but the higher payments and unknown seemed overly risky).

WiseOwl00

We are in the same position too. We originally had a 90% LTV product at 2.99% but the seller pulled out and now we're annoyingly faced with higher rates  . 
We will be going for a 2-year fixed rate at 3.74% over 25 years. I'd be tempted with a 5-year product as there's uncertainty with how the rates will change, but I don't want to commit to 5 years in case we decide to move. I calculated the interest we will pay in our first year, and as horrific as it is, it's still cheaper than paying rent. Our monthly mortgage payment is £950 a month with about £575 being interest and £375 towards our equity. To rent a similar 3 bed semi around this area would be around £800pcm, so still cheaper and we get our own house. If we went for a 20% deposit for a cheaper rate we'd be getting a £100k house, which is achievable around here, but we'd definitely be wanting to move within the next few years to a bigger house. Thus, lowering our LTV is not really useful for us as we'd then have to pay a few thousand to move again and there's no guarantee rates would even be better. Saving a higher deposit isn't really possible either as we can't stay where we are currently living. So whilst the rates aren't brilliant, they are the best option for us at the moment. 

I guess you've got to think of all the options and weigh up the pros and cons of each. I guess you could consider going for a £270k house with a 20% deposit, but that's obviously a big difference and you'd face moving fees if you were really set on having a 540k house later on. To be honest, you've always got this risk when you buy a house. Somebody might have bought a house 2 years ago with a decent rate on 2-year fixed term mortgage, tried re-mortgage now and been given a worse rate as they're LTV is still >85%. Your risk of a bad rate only really decreases as you build equity. You've either go to get on the property ladder to do that, or live in cheaper accommodation and save. 

proformance

Thanks guys, Even a 3.79%, we'd be saving and making more money than renting, so we'll bite the bullet and take it!