Small mortgage

alimcdee

I'm a first time buyer wanting to borrow 18980, Halifax have offered me a 10 yr mortgage, fixed at 6.09 for 5yrs no fees, 500 cash back. I know this is minuscule sum compared to some! is this as good as it gets? would I gain that much shopping around, I'm self employed, self assessed, no accounts, all they are asking for is proof of income, seems an easy way in for me, I see their broker Monday, Ye or nae?!

travelling1

Is Halifax the only place you've been? There are lots of independent finacial advisors out there, or in here who will be able to advise.

Tiddler_2

Lots of lenders have a minimum loan amount, very often £25001. Because of the size of the loan any interest rate changes would have a very small effect on your monthly payments. A 1% difference would only make £10 difference per month.

Assuming you qualified, you could go for a HSBC deal at 5.39% and save £7 per month, but the fee would be £999 so it would actually cost you £579 more over 5 years, plus you wouldn't get the cashback

For a small mortgage I would go for a deal with no fees, the fact you are getting a cashback is a big bonus as it is the equivalent of approx £8 per month(£500/60 months) off your payments, or a rate of 5.25% with no cashback. That sounds pretty good to me, in the current climate.

Might actually be better looking at Halifax's 6.19% deal as that also has a refund of a valuation fee aswell as the cashback

alimcdee

So now I'm a Proud property owner! or the owner of a mortgage! I'm not quite sure which? with the Halifax, do I overpay the mortgage or put any extra I have in a Cash ISA?

mewbie_2

In terms of interest alone it is almost always better to pay the mortgage.

BUT

It is also good to have some cash, as the next loan may be harder to find. So it depends of course on your personal situation.

Typical rule / suggestion is to have three months money in a fairly accessible place before paying off a mortgage loan.