Buying a house, in need of advice...

del_piero_3

Hi guys, need a bit of advice...not sure who is offering a good mortgage deal or which type of mortgage I should get: interest only, repayment, fixed rate etc.

I am about to purchase a property for 110k. I have about 15k cash, which I will use towards putting a deposit down, solicitor and survey fees etc. Duration of mortgage deal I was thinking 20/25 years but I believe I would have paid it off within 8-10 years (with family/relatives/friends help).

I have a secure job with a 25k yearly salary. My family and I are very close and they are willing to help out by contributing towards making overpayments. With the family’s help I will be able to make 10-15k overpayments on a yearly basis.
I would like to avoid paying massive early/over payment charges. Any pointers? could do with some advice...thanks.

KiKi

Hiya

I'm not a mortgage expert at all. But if you're planning on making lots of overpayments, then I wouldn't recommend mortgages that have fixed terms as they usually have penalties for early redemption or overpayments associated with them.

Personally, I have a great flexible mortgage with the Abbey which allows me to overpay...those overpayments go into a savings pot to offset the mortgage which reduces the term drastically (if you make *capital* payments, it just reduces the mortgage over 30 years, rather than reducing the mortgage term). It also means if you wanted to dive into those savings because your family needed their money back then you could do that.

Re your deposit, I would put down the 11K for a deposit but you will need 4K for costs of moving...it's often more expensive than people imagine if you haven't bought before.

Another issue will be how many mortgages will allow you a 10% deposit, given the number of mortgages that are being taken off the market at the moment.

Sounds like you need a repayment, flexible mortgage with no penalties - which suggests to me that a fixed term mortgage won't be for you right now.

Hope that's useful, but I'm no expert at all, just going on my own experience! I'm sure someone with more knowledge than me will be along in a minute.

KiKi

cells

del_piero_3 wrote: »

Hi guys, need a bit of advice...not sure who is offering a good mortgage deal or which type of mortgage I should get: interest only, repayment, fixed rate etc.

I am about to purchase a property for 110k. I have about 15k cash, which I will use towards putting a deposit down, solicitor and survey fees etc. Duration of mortgage deal I was thinking 20/25 years but I believe I would have paid it off within 8-10 years (with family/relatives/friends help).

I have a secure job with a 25k yearly salary. My family and I are very close and they are willing to help out by contributing towards making overpayments. With the family’s help I will be able to make 10-15k overpayments on a yearly basis.
I would like to avoid paying massive early/over payment charges. Any pointers? could do with some advice...thanks.

from waht you say, you would be best served via an offset mortgage.
they will let you make as many or as few overpayments as you like plus you can take the overpaid money back out again almost instantly without any notice/fees ect

first direct where the best but they stoped doing mortgages a day or two ago, i dont know who is the best that remains


on top of that, you may want to ask yourself if its the ideal time to buy.
lots of people are predicting a big crash in prices. wouldnt waiting 6 months just to see be worth it?

del_piero_3

Hi guys thanks for the advice.


I have not mentioned this in the original post but I have another house on my name which is paid off, so I have decided to remortgage this because I want to add my sister and/or brother to the deeds. I dont mind having a mortgage on this property and none on the new purchase, doesnt make a difference to me.


A random broker/IFA contacted me and offered me a remortgage deal, could you tell me if it’s any good?

Its offset repayment deal with Coventry with 6.25% fixed rate for the first 5 years. There are no penalties for overpayments. The lender is charging £500 for account setup, free valuation and legal. The broker/IFA is charging £395. My monthly works out to be £630 (all the fees included) which is not a problem. I am borrowing 95k over 25 years, I'm pretty sure we would have paid this mortgage off within 8-10 years with overpayments. I have 15k cash/savings to make up the 110k figure.

I know the market is bad but people will always pay the extra around my area regardless of market status. Very rarely house goes up for a sale here but if it does it gets snapped up within seconds. I have a private sale agreement with this guy, he wanted 130k and we agreed on 110k because he wants a bigger place.

homer_j_3

Having randomly been contacted offering a deal sounds like either you have submitted your details via a mortgage site and you have been sold as a mortgage lead to that broker.

There are a few things to consider, where will you be living?

Why do you want to add your siblings onto the mortgage deed of the property that you currently own?

The offset is a consideration for its flexibility and the rate does seem ok. I without doing further research and fully understanding your circumstances, I am not sure if there is anything better out there for you or whether or not you would qualify for the scheme being mentioned.

There may be normal mortgages out there with the required overpayment amount but as I say, its difficult to say for certain without the full facts in front of me.

del_piero_3

homer_j wrote: »

Having randomly been contacted offering a deal sounds like either you have submitted your details via a mortgage site and you have been sold as a mortgage lead to that broker.

Yes thats correct, I did get quotes of websites that are recommended on here.

There are a few things to consider, where will you be living?

I will continue to live with my parents. I dont live in the property that is being remortgage (my sister and her family do) and I wont either live in the property that is being purchased, more like investment for time being.

Why do you want to add your siblings onto the mortgage deed of the property that you currently own?

The property being remortgage is really my sisters although the deeds on my name, just that she couldnt get a mortgage at the time and I volunteered to help. She doesnt mind me staying on deeds as longs as she is also named.

Our main concerns are, making overpayments without paying penalties and finally getting my sister on the deeds on the house that is being remortgage.

homer_j_3

Ok - If your sister can now get a mortgage for the amount you need, it may work in her benefit to purchase this back from you and for you to buy the 2nd property cash as there will be tax implications on you owning 2 properties.

If the coventry suspect that you do not live at the property that you are remortgaging then you will not qualify for a normal residential mortgage, you will need a buy to let mortgage most likely.

I would say that either your existing broker is not aware of your circumstances, or has chosen to try and find a "work around" which will not doubt involve lying to the lender which could mean that you are being fraudulent. The FSA have been looking at applications which are suspiciously BTL but have been put down as a residential mortgage.

You should consider this and seek advice on the tax side of things before even worrying about which product to go for as that is the final step once you have structured your finances and got them sorted to ensure you do not end up giving away money to the government for no reason.

del_piero_3

homer_j wrote: »

Ok - If your sister can now get a mortgage for the amount you need, it may work in her benefit to purchase this back from you and for you to buy the 2nd property cash as there will be tax implications on you owning 2 properties.

She's a housewife so cannot get a mortgage, whereas her husband is on low income and can only borrow about 70k. This is not enough because the value of property is about 250k now (was 50k when purchased 7 years ago). Am pretty sure it would raise taxman's eyebrow if the property worth over 200k goes for 70k.

If the coventry suspect that you do not live at the property that you are remortgaging then you will not qualify for a normal residential mortgage, you will need a buy to let mortgage most likely.

I've never let the house, from day one my sister been living there and I have never gained a penny. As for me not living there, thats not an issue I can move there permenantly as its just across the road.

I would say that either your existing broker is not aware of your circumstances, or has chosen to try and find a "work around" which will not doubt involve lying to the lender which could mean that you are being fraudulent. The FSA have been looking at applications which are suspiciously BTL but have been put down as a residential mortgage.

You should consider this and seek advice on the tax side of things before even worrying about which product to go for as that is the final step once you have structured your finances and got them sorted to ensure you do not end up giving away money to the government for no reason.

Am not trying to scam the system, just trying to figure out best way to get my sister onto the deeds. I cant gift the property because the solicitor's says the taxman going to take around 40%, thats just a joke and we wont pay that.

Thanks for your time bud, really appreciate it.

homer_j_3

I am not saying that you are trying to scam the system, I am trying to say that to get a residential mortgage, you need to have that as your permanent address. You may get away with a holiday home if you have a 2nd property kind of thing but if all your post goes to your parents and you are on the voters roll, you will have to explain exactly what you are doing and hope that the are comfortable with this.

If I remember rightly, if you were to gift the 130k deposit, you would only be liable for 7 years should you die. You can or could take a policy out to get around this though to eliminate this. I am not a tax specialist but neither will your solicitor. Maybe Dunston H or one of the other IFA's can clarify this?

What are you going to do with the 2nd house?

del_piero_3

homer_j wrote: »

If I remember rightly, if you were to gift the 130k deposit, you would only be liable for 7 years should you die. You can or could take a policy out to get around this though to eliminate this. I am not a tax specialist but neither will your solicitor. Maybe Dunston H or one of the other IFA's can clarify this?

I will look into 130k gift deposit. I have spoken to few solicitors (conveyancer), each of them says different thing, not sure who to believe. I think I need to see a tax specialist.

What are you going to do with the 2nd house?

Meanwhile it will stay empty, it needs decorating etc. In year or two I’ll probably move in there myself with my wife. Thank you for your time...