Looking for some mortgage advice

BMcN

Been to see a finanial adviser today and would just like to get your opinion on what he said.

Basically both mygirlfriend and I started new jobs around 3-4 months ago, I am on a trainee wage of £18500 and she is on an apprentice wage of £11500. We are looking at a house at around £100,000.

The mortgage he recommended for us was the RBS One Account. Over 30 years LTV of 99% monthly repayments of £657. Arrangement fees were £599 and it was a discount tracker mortgage. The term was only 12months so we can remortgage in a year when both our wages should be up (mine to around £24000 and hers to £16-18000).

What are your opinions on this?

UK007BullDog

So you have no deposit? And with a falling market want to remortgage in a years time when you might be in negative equity which means you might not be able to remortgage if you no longer like the One Account.

The one account in my opinion is for someone a bit more settled, older, wiser and with a larger paycheck and knows how to budget wisely.

I am assuming that as apprentices you are both quite young and I would suggest you both rent a while longer and get a deposit together of at least 10%. What are your ages?

The product is not bad, but I would have suggested a different product. But then we don't really know enough about both of you to be able to say it is good for you or not. Maybe if you tell us a bit more like ages, work, are you already renting or still living with parents, things like that to get a picture of you.

As for future wages, they are only safe as long as the economy is OK, Come a recession no jobs are safe, nor any increases.

Others may of course completely disagree with me.

I suggest you also read the threads on this board about the one account and similar mortgages.

UK007BullDog

Just checked and see you already asked in december 07 and MortgageMama gave you good advice.

All I can say is go and read the thread about the One Account and take the time to discuss this with your girlfriend.

Remember you still have to pay your car loan and maybe a student loan?

BMcN

Both 23 this year. Staying with parents but don't how much longer we can go on like this. Renting would make it hard to save up any money.

I understand the concern about negative equity and wages, but isn't that a concern regardless of mortgage?

payless

RBS about to restrict to 95% from tonight .... although there may poss be a few days grace in some cases

UK007BullDog

BMcN wrote: »

Both 23 this year. Staying with parents but don't how much longer we can go on like this. Renting would make it hard to save up any money.

I understand the concern about negative equity and wages, but isn't that a concern regardless of mortgage?

No not really, because you are buying right into negative equity. For someone whose LTV is 65% or even 80% there is enough buffer in case prices come down. But for you there is not.

I expect for the 100% and anything over 95% to be pulled very soon. The banks are very skittish right now and doing some knee jerk reactions pulling products left, right and center.

If I was in your shoes I would try renting together first of all to see if you guys can live together and keep on saving. Literally this is the litmus test to see if the both of you are ready to take on a mortgage.

BMcN

UK007BullDog wrote: »

No not really, because you are buying right into negative equity. For someone whose LTV is 65% or even 80% there is enough buffer in case prices come down. But for you there is not.

I expect for the 100% and anything over 95% to be pulled very soon. The banks are very skittish right now and doing some knee jerk reactions pulling products left, right and center.

If I was in your shoes I would try renting together first of all to see if you guys can live together and keep on saving. Literally this is the litmus test to see if the both of you are ready to take on a mortgage.

We have been together for over 6 years and lived together for 4 years at Uni, so that part doesn't concern us. I have around £3000 saved but will need it for arrengment fees, valuations and solicitors.

Reading about the one account it does seem to be aimed at people with larger savings.

UK007BullDog

Well, as you have no deposit and if the one account got pulled you would have to look elsewhere. But I still think you should save up more. What about your sets of parents, would they be able to each help with some deposit?

BMcN

One account was pulled last night at 5pm.

Mortgage adviser is trying Bristol and West, coming up at £670ish per month, 2 years fixed and 100% mortgage. This one concerns me a little with the amount per month and the fact we would maybe be tied to it for a while due to the problem re mortgaging later on.

Allow me to ask a new question, how much difference would it make if we could come up with a deposit of about 5%? Would this give us a much larger range of mortgages?

UK007BullDog

Yes definately! And if you are worried about the remortgage then look for a 3 year or even 5 year deal.

UK007BullDog

If you are worried of a rise of £13 between the deals maybe your budget is a bit too tight? The more money you put down the smaller your monthly cost.