Mortgages and unused credit cards

samps1973

Hi @Anyanka1
Yeah, I will definitely keep this and my other thread updated as it may help others in the same boat as me. And for the entertainment of course 😁.

At the moment I have an AIP from Natwest. It's for a £140k mortgage with a 95% LTV. I'm going to use the 5yr fixed rate route. Its 3.89% for 5yrs then changes to 3.59% variable but I'll probably remortgage by then for a better deal. If I get the 90% ltv I'd have to pay a £14k deposit which would leave me with much to move in with.
So I've got £150k to play with. I seen one property I really liked that's gone. Lesson learned there. Don't get to attached to a property.
Theres not much around locally. I looked at a really nice looking flat in wantage, it had a grey floor on the front and back garden which was strange 🤔. I google earthed it and found out its built on top of a co-op 😅 and with no parking. 
I'm just relaxing and seeing what's around. 
I've just started looking into all these new builds popping up everywhere. Most of them are shared ownership that I've seen so far. If I could afford to get the help to buy 20% equity loan apparently it can bite you on the butt in the future. Looking at some of these new places going up, they look like prisons with no character but they do look good inside, I'm guessing the future is here. They come with fridge freezers etc carpets and all the mod cons. Theres so many going up theres probably some good deals out there. I wouldn't be surprised if the people moving out of the older flats that I've been looking at are moving to these new ones. But realistically looking at it, I could only get one of them is if I go onto a shared ownership scheme which I'm trying to avoid.

Over and out for now 👍

MovingForwards

Samps you're in a good position to wait until the stamp duty holiday is over. Hopefully things will settle when all the chaos is over. There will be sellers waiting to sell too.

Use the next few months to get a feel for what's about, how the layouts are, keep building up savings and then when the right property appears you're ready to pounce.

It was about 2 weeks before Christmas I viewed / offered on my home. Apparently winter isn't a time when people are looking to buy, perhaps this would work to your advantage as it could be February you'd be moving in.

Anyanka1

Struggling with the idea of a subterranean co-op, not that I shop there anyway... 

samps1973

Thought I'd do a quick update incase any one else is going through the same thing.

I got an AIP with Natwest and they offered me £140k and I have a 10k deposit. I was looking around for a property and booked in a couple of viewings. One of the estate agents asked if I'd like to speak to an independant mortgage adviser/broker.

The chap I'm speaking with is independant and not tied to the estate agent. We looked through the different options and the best option is an help to buy equity loan.

I gave the advisor 13 pay slips, they use the exact amount of overtime on the slips and take into account the pension and the interest that I'll pay (about £50 per month) in 5 years time when the interest starts on the equity loan.

I found out I can get a motgage upto 75 years old with Santander so that's a 27 year mortgage available to me.

It works out that I can get £201,500.
£10,000 deposit and £40,000 from the equity loan, so the mortgage is £151,500. 

Because the total deposit is is 50k I'll get the best interest rate. I think it's about 1.5% roughly.

The payments on the mortgage with natwest would have been £813 pm on a fixed rate for 5 years. With the htb its £615 pm with Santander.

Although with the Natwest one  I would have been able to pay some extra a month, with the Santander one I can pay a lot more extra every month.

Also if I lost my job £615 would be more manageable on a lower paid job.

With the htb as most of you will know it has to be a new build. I'm hopefully viewing one a few miles out of Reading next week.

The adviser said there are many ways of dealing with the equity loan in the future and is going to advise me on this. The way I see it its interest free for 5 years so I can pay as much as possible off the mortgage in the meantime.

So for now thats the way forward for me.

At the beginning of this thread I wasnt sure if I could get a 25% share on a property due to my age but now I've learned I can get a brand new property an a 27byear mortgage. My aim will be to pay the mortgage by 60-62 years old then tackle the equity loan. I may also start saving a little as soon as I find a property to make a lump sum payment off the equity loan.

Reading about the equity loan online seems daunting but with professional advice it's much clearer. 

The only problem at the mo is theres only a few new builds with my budget around but theres loads of new sites being built and I have until March 23 to get one so no mad rush.

It may end up I'll go down the buying an older, cheaper property but going to see how the htb route goes first.

I'll update soon

Thanks

MovingForwards

A positive outcome and worth the chat.

NW don't seem to be too generous with the amounts they lend, unlike some other lenders.

Do keep us updated with how you get one.

If you do go down the H2B route, remember it's the percentage of the value at the time you repay, not how much you borrowed originally, that has to be repaid. 

samps1973

Yeah, that's the only thing worrying me a bit.

I know that when you come to sell the property they look at the value of the property at the time and take their percentage. I didn't realise the equity loan gets bigger when you start paying it in the future. It could work out expensive. I'm guessing in a way it's just another hidden tax to benefit the government. Hmmm 🤔

Pay higher interest on older propert? Or the HTB route. What are your thoughts guys?

MovingForwards

Find a way to clear the H2B either by building equity / making overpayments to the mortgage, then remortgage to repay the H2B.
- there's a couple of very recent threads where people are asking the best way to clear it.

In theory you should have a few payrises over 5ish years and can potentially save a bit of your income each month when you move too as an emergency fund. 

By all means pick the longer term to make it manageable, but aim to be mortgage and H2B free before retirement.

Normally I would say forget H2B and go older, but it's good to think of the "what if I do have to take a lower paid job".  I am conscious of your age and there isn't many properties around within your budget. It's also a better option than shared ownership. If H2B has more pro's than con's, then it's a no-brainer.

Be aware of the service charges and other charges, as they can be a bit hefty. Don't pick a property with loads of nice extras like gym, doorman, lift (stick with 3 or 4 floors if you can).

Lastly, there's always the option to sell and move elsewhere when older, especially when your daughter settles into her own life.

samps1973

Thanks @MovingForwards you've been a great help.

I think for me, the thing I dont like about the h2b is theres no clear road ahead like, this is when you start paying and this is when you finish. 

With a normal mortgage you can put the figures in a online calculator and find out more or less when your mortgage will be paid.

With the h2b I already feel that the debt will be looming over me for years to come and it's not really something to look forward to at the end of the mortgage term.

As an example I buy a property for 200k...150k mortgage 10k deposit and 40k equity loan. In say 15 years time the property is worth 300k...I'm just coming to the end of my mortgage term on the 150k at this point I will owe 60k to the government plus interest or, I sell the property give the government their 60k so I'll be left with 240k to buy another place  Bearing in mind that I cant downsize as I'm already in a 1 bed flat and the property prices for a 1 bed is 300k as that's what I sold mine for. 

I just cant see the Logic behind it. It says help to buy, but how does it help?

The way I see it, once your in that property, unless your going to get some inheritance or something like that you'll be stuck with that property. It's not like you can downsize to a mobile home, they are just as expensive these days as a one bed flat.

With the other choice I have, I can get roughly 170k inc a 10k deposit mortgage for an older property. Although the interest is higher at least theres a light at the end of the tunnel, if I ever get there. It'll be a lot of interest as I wont have as much extra to pay off each month to get the capital down.

Once again I am completely confusled.

I've sent an e-mail to the mortgage advisor, so I'll wait and see what he says too, although I'm guessing they want you to get the biggest amount so they make more money in commission from the creditor.

Ill post these comments on both of my threads as they are related.

Thanks

samps1973

Details

Before you apply

Make sure you:

• send us a Royal Institute of Chartered Surveyors’ valuation report for your property, so we can work out how much you need to repay
• have repaid any outstanding payments or arrears
• tell us your solicitor’s contact details and give them authority to act on your behalf

I read this on the government website after googling the best way to pay help to buy.  I bet that's not cheap!!

I know all this Is negative but I'm trying to find the best way before i go and see the new build on Friday

MovingForwards

Surveyor is under £1k, don't know about legals but it will be less than you originally paid, but if you pay the smallest allowable chunk off H2B each time, you have to keep instructing the surveyor and solicitor. 

With the older properties, have you worked out how much you could afford to overpay and save each month?  Save up that safety blanket to cover 6 months outgoings then chip away with clearing the mortgage.