Need some Professional Advice

skyjumper

hi homer and Jill

sorry about that missing amount.

£130050 ( 130300-minus booking fee £250) was initial amount i had asked as mortgage from the lender. but after the survey A & L informed me that they are only able to offer 124500 as it was a new build and the building was not yet built etc. i wanted the property and thought the 8% incentives+ carpet+ white goods and a fully functional kitchen came with the deal- thought this would be my dream place to live in.
anyway the missing amount £ 5800 i was going to pay from my savings near the completion date.
now i'm in a position to pay more than that and in another 6 months ( Sept 08) when it is going to be near the completion time, i will be able to pool in another £10,000 (hopefully) towards the initial deposit.

my question was

1.can i ask the lender to decrease my mortgage amount 124500 to 115000. i mean now that i'm going to renew my mortgage with the same lender - will they allow me to decrease the amount without any penalties -more £'ssss

2. if i ask this, will the lender ask me to pay another arrangement fee or some other fees to arrange this

thanks jill and homer - ur advice is really appreciated

skyjumper

i'm not quite sure how to calculate the loan to value in my case
sorry Jill could you please tell me how to do this
i can give any more values and details if that helps

homer_j_3

You divide the mortgage by the purchase price and then covert to percentage.

skyjumper

but then do i have to add the incentives or leave them ?

it would be 81% if i included everything

skyjumper

or 88% if i take away the incentives money

jill2002

Skyjumper-
It depends what your actual purchase price is.
I would guess that the purchase price stated by the builders is £152500 and it will be calculated that the incentives form part of your deposit.

I don't think you will have a problem with A&L for reducing the amount that you want to borrow and there will be NO penalties. You should NOT have to pay another arrangement fee as you are keeping the same deal.

I still cannot understand what the Booking fee is for - other than a fee for your broker. But you said that your broker is fee free .

homer_j_3

I am not entirely sure where Jill was going with the LTV question but what may be something to watch out for is that A&L did put a restriction on new build flats and you whilst the a&l may work on the old criteria, this is what the new criteria states:

New Build Flats and Nearly New Flats
The maximum LTV available for New Build Flats and Nearly New Flats is 70% LTV
A New Build Flat is defined as one where the property is being purchased directly from a builder or where the property has not been occupied before.
Larger property conversions also fall within this definition, specifically this will include conversions of properties which have not previously been lived in, for example the conversion of a former office block.
The refurbishment of an existing flat will not normally be classed as a New-build flat.
A Nearly New Flat is one that was bought from a builder or developer in the last 12 months or is on a site that is still being developed.
The impact on individual valuation will clearly vary according to the nature and size of each development, its location and local market conditions and as such it is difficult to quantify the likely impact on any given development.
* Flats above the third floor without a lift
Flats above the third floor without a lift will only be accepted with the approval of the Regional Valuation Manager - evidence of strong local demand for such properties should be provided to the Regional Valuation Manager.

skyjumper

thanks for helping me out here Jill and Homer

the £250 was the initial token deposit which i paid the builders to give me the deal and they gave me 28 days to finish the paper work when i had to pay another 10,000 on exchange of contracts.

i'm a bit panicked after the revelations from Homer as i'm actually buying the new built flat from a builder based in New castle who was tore apart in the recent Panorama programme 2-3 weeks back. they were also accused of one of the builders who are, allegedly, taking the property prices sky high. i'm sure as professionals in this field, u guys know who i'm talking about.

i'm hoping that A & L gives me the option of renewing the current offer without any PENALTY charges. i'm happy to bring down the Mortgage Price, less money owed = less interest= less payments.

may be i'm asking for too much,
i'm in a position with my job and my family surroundings, to pay the repayment mortgage. but my plan would be to move out in 4-5 years to a bigger house when i can afford it. what will be the best option to go for REPAYMENT OR INTEREST ONLY. my idea is -atleast for the next 4 years- not to pay any rent - and that's why i have decided to buy my first family home. i dont intend to make any profit from this after 4 years, but hopefully i would be able to sell this for the same price i got it for.

also what will be the best option for the next 4-5 years- fixed/discounted/variable rate? i hope homer and Jill will be able to throw some light here. thanks

homer_j_3

skyjumper wrote: »

thanks for helping me out here Jill and Homer

the £250 was the initial token deposit which i paid the builders to give me the deal and they gave me 28 days to finish the paper work when i had to pay another 10,000 on exchange of contracts.

That is pretty standard.

i'm a bit panicked after the revelations from Homer as i'm actually buying the new built flat from a builder based in New castle who was tore apart in the recent Panorama programme 2-3 weeks back. they were also accused of one of the builders who are, allegedly, taking the property prices sky high. i'm sure as professionals in this field, u guys know who i'm talking about.

i'm hoping that A & L gives me the option of renewing the current offer without any PENALTY charges. i'm happy to bring down the Mortgage Price, less money owed = less interest= less payments.

The time your original mortgage application was submitted it will mean that the lending criteria back then was different to what I posted earlier.

Your broker will need to check out whether the change in lending criteria will now be applied to your application because if it is, then unfortunately, you could be looking for a different lender.

may be i'm asking for too much,
i'm in a position with my job and my family surroundings, to pay the repayment mortgage. but my plan would be to move out in 4-5 years to a bigger house when i can afford it. what will be the best option to go for REPAYMENT OR INTEREST ONLY. my idea is -atleast for the next 4 years- not to pay any rent - and that's why i have decided to buy my first family home. i dont intend to make any profit from this after 4 years, but hopefully i would be able to see this for the same price i got it for.

Its quite refreshing to hear somebody actually realising that property values do not always increase. You are buying the worst kind of property for resale purposes imho and because of this, you know that you are going to struggle to recoup your money.

You have already put 10k down and are committed so its not practical for me to say - try and find somewhere that will have a better resale potential.

Whether you go for interest only or repayment does really depend on your attitude to risk and whether you would be prepared to set up an investment vehicle to run along side the interest only mortgage. If the answer is no, then it should be repayment all the way as this poses the lowest risk to you.

also what will be the best option for the next 4-5 years- fixed/discounted/variable rate? i hope homer and Jill will be able to throw some light here. thanks

It is impossible for me to say. I do not know enough about you to say what is best for you. Has your broker discussed the different mortgage products available and explained tie in periods etc?

skyjumper

hi homer

u have been extremely helpful. i'm buying the property in lancashire, actually south manchester, and i just noticed ur location says lancashire.
is it possible for the memebers here to exchage contact no.s so that i would be able to arrange anappointment with urself and discuss this matter any further, i've started to lose my confidence in my IMA and also in myself after realising what a Mess i have drawn myself into
do u think it's possible ?