Which Mortgage? FTB, £130,000

Hi all,

We are thinking of putting an offer in on a house. (First Time buyers)

We expect to get the house for a maximum of £145,000 (probably £140k but I'll go with worst case). We have approx £17,000 as a depost/for fees so need to get a mortgage for £130,000.

Which one...? I've read all the articles and received advice in the past but there are so many to chose from I thought I'd get some advice for those with knowledge (MSE'ers :D ).

We don't mind going for a variable rate as we are prepared to take a slight risk in the rates changing and are prepared to swap mortgages if rates change (so would therefore need low or no redemption fees) but we would also consider any other types. I've always liked the sound of the offset/current account type but I'm starting to think that these are the best as you can but savings into isa's and get lower rates on the mortage part... Fixed rates sound goo but I don't want anything with overhangin redemptions and I wouldn't want one for too long especially if it makes the rate alot worse...

Any advice appreciated..

Thanks

Simon and JO ([email="simonkirkland@yahoo.co.uk"][email protected][/email])

(incomes £23,400 and £20100 - no bad credit history and no loans (except student loans (£80/month and £50/month))
If at first you don't succeed... CHEAT...
«13

Replies

  • herbiesjpherbiesjp Forumite
    8.5K Posts
    You will pretty much have the pick of the market.

    There are no schemes that have LOW Early Repayment Charges, so you would have to look at an either/or situation

    Either you are happy to take a potentially lower tracker/variable rate and be tied in for a couple of years, or look for a slightly higher rate but have no penalties
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Fairdo_2Fairdo_2 Forumite
    442 Posts
    Firstly, well done for putting down income and expenditure details. You've seen the first questions we normally have to ask!!!

    You also mentioned that you were not averse to Fixed rates as long as they do not have a penalty overhang.

    At the moment, the shorter term Fixed (and some medium term) rates are cheaper with no overhang than most lenders variable rates with no penalty. (As herbiesjp stated there are none with low penalty as opposed to no Early Redemption Charge "ERC")

    The question begs, why are you so open minded at the moment and what would help you filter to the most suitable rate?

    That would be the next thing to do, but this is normally done by a series of discussions, going through what you need out of your mortgage and forseeable future.

    If you are not needing flexibility to move your mortgage over the next few years, then 2 year Fixed rates usually tend to be cheaper than 5 year fixed for example and they tend to be a more managable timescale, before you make your next move. However, some people are happy to Fix for longer on the basis that they won't need to change their options for longer and that they can have longer term stability.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Trying to make these decisions comes down to a bit of a guessing game really...

    Whats the bank of england rate going to do over the next few years...!!!

    I can't help feeling that we are fairly low at the minute and the rate is only going to really increase over the next couple of years...

    I see that currently we have some fixed rate mortages at @ 4.5 % (yorkshire BS at 4.54% for 5yrs and Portman at 4.39 for 2 yrs)...

    This rate seems very good and lower than the current variable rates...? so are these not the best to go for?

    Thanks

    Simon

    PS Stefano (herbiesjp), thanks for your email. I'm going to post your offers up here (if you don't mind) as I'm sure there are others that are in the same boat. Can you tell me who these are with?

    "You could look at a couple of scenarios:

    Based on £130k loan over 25 years on a repayment basis

    1) 3 year stepped discount = 3.89% in year 1 and 2 followed by 6% tracker in year 3. This would mean Monthly repayments in years 1&2 of £678.32 followed by £826.67 in year 3. £395 arrangement fee and £280 basic mortgage valuation fee. Early Repayment penalties are 3% in the first 3 years

    2) 4.74% 2 year tracker rate = £740.41 pm - £389 booking fee and £285 basic mortgage valuation fee. Early repayment charges are 2% in year 1 and 1% in year 2.

    3) 4.75% 12 month tracker = £741.15 pm - £395 arrangement fee and £280 basic mortgage valuation fee – NO Early Repayment Charges

    4) 5.14% tracker until 31/03/09 = £770.61 pm – free basic mortgage valuation, only £399 arrangement fee – No Early Repayment Charges"
    If at first you don't succeed... CHEAT...
  • herbiesjpherbiesjp Forumite
    8.5K Posts
    No problem at all - however they were not offers but schemes posted purely for discussion and generic information purposes only based on some quick research

    The rates were varaible rates as this was what you indicated you were mainly interested in, and to give you a feel for affordability/fees for a variety of schemes

    If you are now looking at fixed, then the rates you have found will probably suit your needs if you have researched them
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Thanks,

    Offer is going in this morning and the estate agent has indicated that I will get it for £140,000.

    If I were to go with a fixed rate then it will have to be a 2 yr max deal as there is potential that we may have to move house in a couple of years time.

    These are the best buys for fixed rates on moneyfacts.co.uk (with no ext. redemption):



    [font=Arial,Bold]Company, Rate, Period, Max LTV, Fee, Incentive, Redemption



    [/font][font=Arial,Bold]
    NEWCASTLE BS, [/font]4.38%, to 31.7.07, 90%, £445, Advances up to 85% - no HLC. Fee dependant on advance, To 31.7.07


    [font=Arial,Bold]
    PORTMAN BS, [/font]4.39%, to 31.7.07, 95%, £499, Advances up to 90% - no HLC, To 31.7.07



    [font=Arial,Bold]
    DARLINGTON BS, [/font]4.58%, to 30.9.08, 90%, £399, Free [font=Arial,Bold]ASU [/font]for 6 months & advances up to 80% no HLC, To 30.9.08



    [font=Arial,Bold]
    PORTMAN BS, [/font]4.69%, to 31.7.08, 95%, £499, Advances up to 90% - no HLC, To 31.7.08



    [font=Arial,Bold]
    YORKSHIRE BS, [/font]4.54%, to 30.9.10, 95%, £495, Flexible option, free [font=Arial,Bold]ASU [/font]for 6 months & advances up to 90% no HLC To 30.9.10



    [font=Arial,Bold]
    PORTMAN BS, [/font]4.60%, to 31.7.10, 95%, £499, Advances up to 90% - no HLC, To 31.7.10
    The Portman BS at 4.58% for 2 yrs appeals to me. Has anyone any experience with them or any negatives to the offer. here are the full details from the site, I can't find anything that mentions anything about flexinility and whether we would be able to make overpayments (not bothered about underpayments or breaks). Can anyone help?:



    "2 Year Fixed - Direct Business Only

    YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

    Initial Rate 4.39% fixed until 31 July 2007 - Direct Business Only

    Changing to Standard Variable Rate, currently 6.74%, for the rest of the term

    The overall cost for comparison is 6.7% APR

    Early Repayment Charge - 4% of the balance on which interest is charged until 31 July 2007


    £499 Acceptance Fee
    Available up to 95%
    A higher lending charge is payable over 90%
    Maximum loan amount £500,000
    Part repayments of up to 10% of the loan amount borrowed without Early Repayment Charge, for each full twelve month period from completion of the loan until 31 July 2007. This allowance cannot be accrued year on year and is not available if the whole loan is being repaid.
    Available directly through Portman branches or by calling our Mortgage Team on 0845 845 7000
    YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE"



    I've also just found (through L+C) that newcastle do a similar rate but with slightly cheaper fees...


    Any comments on this? (more info here: http://online.newcastle.co.uk/mortgage/indexFIXX021.htm?webabacus_id=1120201183796-1)


    Sorry it's a long post... put this is the biggest spend in our life!!! I've spent longer buying a mobile phone!!!!

    Many thanks

    Simon
    If at first you don't succeed... CHEAT...
  • My offer was accepted and I now need to find the right mortgage fast...

    I'm still deciding between a fixed and an offset.

    The best fixed appear to be:

    portman 4.39%
    west brom 4.35%
    newcastle 4.38%

    They all seem to have something undesirable. Portman and west brom are annual/monthly interest and compulsary insurance and newcastle has 85% HLC (I need 90)

    Does having daily interest matter if you're not going to/can't overpay?

    If so are there any others with similar rates but daily interest and 90% HLC?

    Also what are the best offsets?

    I have Hinckley and Rugby BS at 5.35% but all other seem way off and make offset unworthwhile...

    Thanks for any help and advice

    Simon
    If at first you don't succeed... CHEAT...
  • Woby_TideWoby_Tide Forumite
    5.3K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    Forumite
    re: the offset question, have a look at the top sticky on this board, I'm pretty sure that in your situation an offset isn't really a good choice, sure someone has done some calculations on it and unless you have 50/60% of your mortgage amount in savings it becomes more expensive than opting for a standard deal
  • Yeap I looked at this and even with the worst case figures of:

    Offset = 5% (probably higher)

    non offset = 4.5% (prob lower)

    Savings = 3%

    then I would need 25% of my mortgage to be savings...!!!

    I wasn't sure if these calcs were just a bit to simple and I was missing something...

    Anyone got a decent fixed or offset rate?

    I'm due a call of L+C in a bit so I'll see what outcome I get from them.

    Thanks

    Simon
    If at first you don't succeed... CHEAT...
  • Drantley_GicksDrantley_Gicks Forumite
    24 Posts
    Part of the Furniture Combo Breaker
    Forumite
    Hi, (apologies for luking for so long and popping up when I need advice)!

    In a similar position as simonkirkland.

    We are buying a house for £192K
    Renovation costs £20K
    Selling for £152K
    Total mortgage £110K (60K repayment and 50K Interest)

    Income £23000 + 12500 (yes this is probably at the top end of end of what we can get).

    We would like a 3 yr fixed so we know where we are for a few yrs.... (would increase this to 5 if it worked out worthwhile.

    We have gone to L&C for advice and they have recommended "ACCORD" mortgages at 4.95% (they pay survey and £300 cashback).

    Q1 I've never heard of ACCORD are they reputable company?
    Q2 Is this a good deal?
    Q3 After looking at YBS at £4.5X% would it make more sense to apply to them even though there is no cash back (I am willing to sacrifice fee help if it makes a decent savings in the first 3 yrs).

    Any advice would be extremely appreciated.

    After reading this site for while I don't trust anyone I seem to be going around in circles!

    DG
  • Drantley_Gicks - welcome aboard... I had a chat with L+C last night and they are getting back to me tomorrow (wed) so I'll see what they come up with for me... I'm hoping they can get me a better rate (4.4ish)

    I've been looking around a bit more and Nationwide BS is coming up good... It's highly recommened by some friends and family and they have good felxibility...

    Their rate is 4.49% for 2 years (with 10% deposit or 4.99 with 5% dep). No extended redemption, no HLC. You can over pay by upto £500 a month with no charges and take any overpayments you've made back at any time (makes it a bit like a mini offset!).

    The arrangement (or reservation fees as they call it) are low compared to others at £389 or you can increase your rate slightly (4.89%) and this is free but I think paying the fee is a better choice...

    They also do 3, 5 and 10 yr fixes (4.69%, 4.79% and 4.89% respectively).

    See here for more info: http://www.nationwide.co.uk/mortgage/buying-a-home/interest-rates-homebuyers-fixed-rate-mortgages.htm

    Simon
    If at first you don't succeed... CHEAT...
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