Could you please explain

Tinker_belle_2

We are renting a house from a housing association at the moment and we need a bigger poperty, we can nearly afford to buy a house. We are able to get a mortgage for £117,000.00 we need at least £140,000 (that is buying a 3 bed house (we need a 3 bed as we have two children of different sexes) in a cheap area of where we live) we have had a mortgage advisor ringing us (after us speaking to him at our bank) on the side and he has managed to find us a mortgage of £150,000 but £25,000 of it is unsecured (now I must explain at this point that we have a loan of £25,000 (i know we were stupid!) so this way we could easily afford the mortgage, I think we may be able to get a house at £125,000 (there are many houses around that have been on the market a while) and actually be slightly better off, we have well and truely sorted our finances learn't our lessons and we actually have savings now.

What I wanted to know is, although my husbands job is incredible secure, I realise that things happen, would we lose our house (even if we have all teh insuarnces) because of the unsecured part?

We have tried everything, we have been waiting for a shared ownership house for ages, our house was valued at £165,000 (it is a 2 bed terrace house, but in a very good area) and the HA will only allow us a max of £15,000. We have tried homebuy they would only offer us £117,000 too. We are fairly young under 30, but I am worried that house prices are just going to keep going up and we will never afford to buy. Although I have no huge aspirations to buy, I also don't think it is fair that we sit in a council house when therotically we could afford to buy, surely social housing is meant for people that really can't afford anything else.

I am not sure if I am making any sense, I just wanted someone to explain the mortgage we have been offered, we asked the mortgage advisor but he wouldn't give us a straight answer.

Thanks in advance.

Ember999

Tinker_belle wrote:

We are renting a house from a housing association at the moment and we need a bigger poperty, we can nearly afford to buy a house. We are able to get a mortgage for £117,000.00 we need at least £140,000 (that is buying a 3 bed house (we need a 3 bed as we have two children of different sexes) in a cheap area of where we live) we have had a mortgage advisor ringing us (after us speaking to him at our bank) on the side and he has managed to find us a mortgage of £150,000 but £25,000 of it is unsecured (now I must explain at this point that we have a loan of £25,000 (i know we were stupid!) so this way we could easily afford the mortgage, I think we may be able to get a house at £125,000 (there are many houses around that have been on the market a while) and actually be slightly better off, we have well and truely sorted our finances learn't our lessons and we actually have savings now.

What I wanted to know is, although my husbands job is incredible secure, I realise that things happen, would we lose our house (even if we have all teh insuarnces) because of the unsecured part?

We have tried everything, we have been waiting for a shared ownership house for ages, our house was valued at £165,000 (it is a 2 bed terrace house, but in a very good area) and the HA will only allow us a max of £15,000. We have tried homebuy they would only offer us £117,000 too. We are fairly young under 30, but I am worried that house prices are just going to keep going up and we will never afford to buy. Although I have no huge aspirations to buy, I also don't think it is fair that we sit in a council house when therotically we could afford to buy, surely social housing is meant for people that really can't afford anything else.

I am not sure if I am making any sense, I just wanted someone to explain the mortgage we have been offered, we asked the mortgage advisor but he wouldn't give us a straight answer.

Thanks in advance.

I can explain it to you hon and it's a very risky mortgage to take in my opinion. It's a Northern Rock 'Together Mortage' you will find it here...click on the link: Northern Rock 'Together Mortgage'

This mortgage works in the way you would need if you cannot afford the true cost of the house. Also, you can get this mortgage yourself, with no need to go to a broker and pay his fees, simply by applying online direct to Northern Rock via their website. Brokers are okay in their place, but if you ask me, do the leg work yourself and save money!

The 'unsecured' part is in the form of a loan, and the payment for this 'loan' is added to your mortgage payment. No it is not secured on your house but yes! you are at risk if you can't afford to pay it! It would be a doddle for Northern Rock to apply for a second charge on your house if you defaulted. Anyone can do this if you owe them over £5,000. No unsecured loan is safe if you don't pay!

I think you would be better saving up a little more rather than taking this mortgage. If you can't afford the house on a mortage you can get then you can't afford the house! A Housing Association house is secure, buying your own with both a mortgage and a huge loan to cover the difference to enable you to buy it is not. Are you prepared to take this risk with your family and future? Think carefully before you take this mortgage.

Ember x


ps. The reason the Mortage Adviser won't give you a straight answer as to who this mortage is with is because you could then apply yourself and save having to pay him either a fee or commission! Do your own leg-work and save money hon. You have the greatest tool available in the internet, use it to find the 'right' mortgage for your circumstances and also to apply. Quicker, cheaper and you are in charge, rather than a greedy Mortgage Adviser x

Ember999

More thoughts for you.....

You are in an enviable position is some ways, you are a First Time Buyer with no property to sell...so you are very desirable to sellers and estate agents. This gives you amazing bargaining power! My advice would be to forget getting a loan, the interest rate on the Together Mortage is 5.9% which is expensive! and as a First Time buyer you can get a nice, cheap fixed rate of just over 4% with some lenders. I've got a fixed rate of 2.9% with the Northern Rock! Get your 'mortgage in principal' decision, find out how much you can afford then go shopping for houses. With a mortgage in place, prices coming down and buyers thin on the ground, you can negotiate! and knock quite a lot off a sellers original asking price. You may find you don't need that extra money you thought you did.

Tinker_belle_2

Thanks for your replies, I have shown them to my husband too. It has given us a few things to think about. We are both off work tomorrow, we will probably make a few phonecalls. The only problem is I just had a quick on the net and most require a 5% deposit we don't have that kind of savings, we have enough to cover the outgoings (solicitor fees etc..) of buying a house but not that much. I worked out it would take us 2 years to save 5% deposit, that is only if we don't have emergancy's happen that we need to pay out for.

Thanks Again

Ember999

Tinker_belle wrote:

Thanks for your replies, I have shown them to my husband too. It has given us a few things to think about. We are both off work tomorrow, we will probably make a few phonecalls. The only problem is I just had a quick on the net and most require a 5% deposit we don't have that kind of savings, we have enough to cover the outgoings (solicitor fees etc..) of buying a house but not that much. I worked out it would take us 2 years to save 5% deposit, that is only if we don't have emergancy's happen that we need to pay out for.

Thanks Again

The Halifax do a First Time Buyers mortgage which only requires a 3% deposit, or failing that, you could apply to Yorkshire Bank for a decent rate on a 100% mortage but I would avoid that if you can, because you have no equity you own in your house with a 100% mortage and also, the interest rate is higher with these.

Take a look at the Halifax website.....3% deposit is more affordable.

Halifax First Time Buyers Mortgage

Conrad

Ember999 wrote:

The Halifax do a First Time Buyers mortgage which only requires a 3% deposit, or failing that, you could apply to Yorkshire Bank for a decent rate on a 100% mortage but I would avoid that if you can, because you have no equity you own in your house with a 100% mortage and also, the interest rate is higher with these.

Take a look at the Halifax website.....3% deposit is more affordable.

Halifax First Time Buyers Mortgage

Halifax charge a hefty MIG fee (Higher Lending Charge), which N Rock do not.
Yorks Bank are very old fashioned and tend not to lend higher income multiples where as N Rock lend amongst the highest levels in the market.

IMO, N Rock tend to be best for 100% mortgages especially as I find their lending outcomes are far better than other 100% lenders. For example I sometimes use Royal Bank Of Scotland but they have low income multiples and always go through Bank statements with a magnifying glass. As such they decline far more potential cases than N Rock - IMO.


Ive been in mortgages 15 years and have seen people get burned with 100% lending as such clients tend not to be as careful as those who put down a deposit and tend not to have money in reserve. When unexpected events occur (as they will) people without any reserve money come - off badly.

This isnt a lecture, just a freindly prod as I see too many people with serious debt worries these days.

LIFE IS ALL IN THE PLANNING.