FTB Confused about mortgages

shirlyn

Me and my fiancee want to buy a house.
There are three options for a mortgage.

* Interest only
* Home start
* Capital repayment.

What are these and what is the best options for young (25 & 26)
first time buyers.

Also can we get a 100% mortgage and what are the disadvantages to this.

MarkyMarkD

Unless you take a capital repayment mortgage, you are just putting off the evil day of making the "right" payments on your mortgage. It will leave you in a situation where you haven't paid any capital off when you next move house, and if house prices haven't risen you will be in the same cash-strapped position you are presumably in now.

100% mortgages *are* available, but they are always more expensive. It is very much worth saving up a 5% deposit, or begging/borrowing it from relatives, to reduce your borrowing requirement to this level - remembering that you need to pay the buying costs like solicitors' fees, and buy furniture and the like as well.

There's nothing special about HSBC's "home start" deal - it's just interest only for three years and then repayment. That said, *if and only if* the rate is competitive, it's one way of reducing the payments during the first three years whilst you are really strapped.