advice on new morgage needed!!!

moonrakermagpie

Hi there,

I would like to ask the advice of anyone who could give it??

I am looking at purchasing a house.

Around our catchment area, a two / three bedroomed property is around £170.000.

I had a brief meeting with a morgage broker and have been advised that I could raise around £170.000, based on my income.

Could I ask if anyone could advise me, on how I can reduce the monthly payments to as little as possible, even if this means extending the morgage to 25 or more years, I am 49 years old by the way.

Any advice on how to save as much as possible would obviously be more that welcome.:D

Cheers Steve

Ian_Griffiths_Halifax

First of all, an Interest Only mortgage isn't the most efficient type of mortgage as it would never be paid off, but this is the way to keep the payments to the lowest possible.

If the 'Lowest Possible' isn't necessary, ie. you can afford more, but not as much as a Repayment Mortgage, then look at Part Interest Only/Part Repayment.

I assume that your Daughter won't be single forever, though you might want her to be, but at some point somebody else may come along who can assist with overpayments, to relieve you of the burdon or help as well as you.

moonrakermagpie

Thankyou for that, how much per month would a 170.000 morgage be???

Cheers

Steve

Ian_Griffiths_Halifax

If you are wanting a 100% mortgage you are limited. Do you have a £8500 deposit (5%) or could you negotiate a 5% reduction in the asking price to use a lenders Vendor Deposit Scheme?

moonrakermagpie

Hi there,

Thanks for that, yes I can raise £8/10.000 cash from an investment that has just mutured. And I can always raise some from interest free credit cards to top up or to replace the cash from the investment, (i.e keep the cash and raise the money on the 0% credit cards).

Could you possible suggest a ball park figure for a standard repayment and an interest only morgage in terms of cost per month.

The key point is to reduce the monthly cost to as little as possible for a few years, to be able to have enough cash flow to continue living at a reasonable standard, ie improvements and holidays etc.

Steve

17Dave

Hi Steve
If you put down a 5% deposit and so borrowed £161,500 the payments would be as below based upon 6.25% interest rate.

Interest Only £841.15
Repayment
15 years £1384.75
25 Years £1065.40

I've put in 15 years as this would take you to the normal retirement age - a lender would require that you demonstrate that you will have sufficient income in retirement to afford the mortgage. The interest only option can be over any term at the same payment.

Ian_Griffiths_Halifax

Don't forget Stamp Duty at 1% of the purchase price (£1700). Legal Fees and Disbursments for the purchase at around £650 if there is a 'USABLE' HIPs Pack. I say usable as some are next to useless due to missing information.

A valuation may be payable also.

If you can get the sellers to pay the 5% deposit for you then the money you can put in the pot could either reduce the Loan To Value Ratio (LTV) to 90% to get a better rate, or alternatively you could let her have the funds to furnish the place rather than her getting loans for furniture, interest free or not.

moonrakermagpie

If I went for the interest free over 25 years or more, would I have to take out a means of paying back the loan, ie. endowment, or is it possible to start off and leave the paying back of the loan to be sorted out in the future.

Do you know of a web site where I can read up on "the knowledge" about morgages and loans, or maybe a good book on the subject!!!

Many thanks

Steve

homer_j_3

The website is this one for reading up on things about mortgages as well as having on hand help from people who can qualify your understanding.

You can go interest only - not interest free and some lenders will not ask to see proof of a repayment vehicle but others will. I think you would need to bear in mind that if you were to buy a 100k house with a 5k deposit, your debt will be 95k.

Take this debt on with the benefit of a fixed or tracker for 2, 3, 5 or longer number of years and you will have to hope that the house is still worth the same or more. If the price drops to so 95k or 90k and the debt is still 95k as you have not repaid the capital off the loan then you may struggle to get a remortgage.

That said, if you do a longer deal 3-5yrs min then hopefully things will be settling down at this stage. If the property is worth less, it may mean that you will be stuck with the current lender so you will either be going on to variable rate or taking a retention deal again.

alfiesmum

HIya,
I replied on your other post, but as you were advised to ask again on Mortgages board, you may not have seen it. I just wanted to let you know that if your daughter receives any help towards her rent, i.e. housing benefit then you buying a house for her to live in and rent from you, would be regarded by the authorities as a contrived tenancy, and she would not qualify for any help at all.

I just thought it worth mentioning, as I thought if she were paying her current rent out of her own pocket, then she could afford to go joint on a mortgage with you anyway. Look into in properly if it applies to you and your daughter - other wise you'll be stuck with mortgage payment that you'll find difficult to meet.

As I said on the other post, I'm not presuming that as she's a single parent that she's on benefits. I've was a single parent for a loooong time! And always worked. But if does apply, it's an important point. If you're factoring in as part of your mortgage payment will come from housing benefit, it won't I'm afraid.

alfiesmum
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