Interest only mortgage.

yer-man_2

I've been toying with the idea of buying a large house in the area and after a year or 2 starting to do B&B.
The house is located in a popular tourist area and I was brought up in a guest house so I know the business.

The amount I would need to borrow is 4 to 6 times my income at present.

Are interest only mortgages a valid option ? if so, which companies should I consider ?

Is there an article on the subject that I could read ?

thanks.
Yer-man

Doozergirl

There are self certification mortgages available where you do not have to declare your income, just that you are able to meet repayments. You will pay a slightly higher rate of interest to compensate the lender who will basically cross their fingers and hope you repay.

With interest only mortgages, the lender will assume that you have taken out a suitable savings plan to be able to repay the loan at the end.

These are huge risks to take, so you have to be really confident that your income is going to increase enough to keep your property safe.

You should speak to an Independant Financial Adviser who will be able to guide you and find you the best deal on either or a combination of the types of mortgage.

HTH

herbiesjp

You do have to declare your income with self certifed mortgages - and you have to fit into the income multiples of the lender

Doozergirl

There are also non-status self certificated mortgages where you do not have to declare your income. As we are relatively newly self-employed and don't have proper proof of income, we have one on our house.

herbiesjp

Non status and self certified are 2 different things:

Non status - do not disclose income
Self certified - income declared, but proof of income not requested

abc

I'm not sure if anyone still offers non status mortgages. Mortgage Express used to offer them but I don't think they do any more.

Doozergirl

Apologies for using the incorrect terminology. To clarify - there are mortgages available where you do not have to declare your income. If it helps, GMAC offer non-status, interest only mortgages.

herbiesjp

GMAC used to offer non status mortgages called STAR - I've just loooked at their website where they offer:
Mainstream
Non conforming (adverse)
Buy to Let
Self cert

yer-man_2

Hi,
after taking your advice I contacted my local high street adviser.
I have been offered a self cert morgage at 5.35% plus fees of:-
arrangment fee - £549
valuation fee - £465
telegraphic fee - £295

Is this good value, is there a better deal out their ?

Thanks.

kingofleon_2

hi, how much is your brokerage fee?

GreenB_2

The thing to remember is the variable rate of a mortgage is typically 1 to 1.5% above the BoE rate.

There are some good fixed rate deals around at the moment that would still be lower than an SVR if a 1% rate drop occured (unlikely in my viewthat you will see more than .5% drop or rise over the next couple of years)