Mortgage Term / Rates

Gaz1979

Hi all,

I found a Shared Ownership property that I liked recently and I went to see Allen & Harris today about the Mortgage (£62500). I'm a first time buyer and they basically take care of everything, I just agree and complete the forms.

The lady there suggested the best deal they currently have was a 5 Year Fixed Term Repayment Mortgage with Nationwide at 6.05%.

I believe the next one was as above, but just Fixed for 2 years at 6.15%.

Apologies if these are not 100% accurate, I'm awaiting an email from her with all the details. But they are near enough correct....

Not knowing much about Mortgages and how the market could change over the next few years, I was just after your opinions on what to go for. The view amongst my friends seems to be to just go for a 2 Year Fixed, then hopefully get something lower when that ends.

Thanks for your help.

Gaz.

Gaz1979

Hmmm 73 views and no response. Did I post this in the wrong place?

Sorry, I'm new here as you can see.

Working for a Building Society myself, I guess I should already know the answers.

poppy10_2

In two years, rates may be higher, or the value of your property may have dropped, leaving you in negative equity and unable to remortgage onto a new deal. A five year fix gives you security of knowing what you will be paying, but you could lose out if rates drop. Depends whether you personally are a gambling type or like security.

Gaz1979

Thanks for the info Poppy. I guess I have to make a decision on how much of a risk I am willing to take, as you said. Hmmm..

One other thing - Do you know who's offering the best deal at the moment? I did try doing a quick search, but my eyes are starting to hurt after sitting in front of a PC all day.

Tiddler_2

Hi Gaz,

There's a couple of points to take into account. Firstly not every mortgage lender deals with shared ownership and so your options to get another rate at the end of the 2 years is restricted (though Nationwide may offer you a new deal) It also depends how long you see yourself living in the house.

Are you putting down a 10% deposit on your share?
What percentage share are you borrowing - 25, 50,75 ?

I was looking at a shared ownership for a client yesterday and spoke to Nationwide. They told me that the rate charged is based on the full value of the property and so you should qualify for a less than 75% rate, which are a little lower than you were quoted (assuming that the person I spoke to at the Nationwide knew what they were talking about!!)

Unfortunately, the deals offered to brokers are not necessarily the best, as lenders are offering some deals exclusively through their branch networks. Nationwide currently offer deals with a 5% deposit exclusively, so you could get away with a smaller deposit if you so desire by going direct. They also offer 3 year fixed rates by going direct, which would give you a rate of 5.75%.

Unfortunately some brokers will only tell you about the deals they can offer, as they still need to pay their bills!!

I told my customer about the direct deals - hence why I'm skint!!

Gaz1979

Thanks for the info Tiddler, that's great. Well apart from you being skint, that's not so great!

I'll be going for 50% to start with. Allen & Harris are paying 5% deposit for me, with me paying another 5% - So 10% deposit in total.

The original Mortgage is £62500 and I expect to be living there for a good number of years, but obviously things can change.

I guess I'll have to check at work in the morning and see what we are offering, as Nationwide seem to be the best at the moment.

Tiddler_2

No worries -

Who do you work for? Do you qualify for a staff mortgage scheme?

Is it a brand new property with Allen & Harris being the builder? Is it a house or an apartment?

Gaz1979

I work for Nationwide. Our staff mortgage scheme isn't that great though.

It's an apartment.... about a year old and I believe Allen & Harris are the builder.

Just waiting for my application to reach the Housing Association...

kaysmith87

You get a 1% discount as a nationwide staff member. You need to apply in a different way ( directly to the nothampton precessing center) but when i worked there (left a few months ago) lots of my colleges had them as 1% really does make a difference.

The only complication is if you are getting a joint mortgage with a non staff member as you only get the 1% discount on your half.