Mis advised- FURIOUS

ineedhelp2008 · 14 July 2010 at 9:36PM

You are buying 100% of the property though, not 80% of it. Therefore 5% is 7500. 75% is coming from mortgage and 20% is coming from Homestart and you pay the other 5%. We are buying one using the same scheme through a different developer.

Courtmill · 15 July 2010 at 8:59AM

I'm sorry to say but you are all very cynical and have completely misunderstood.

Paying out an additional £1500 when it was unexpected, is going to cause a temporary cash flow issue. It's not a situation that we cannot deal with, but one we should not be expected to deal with.

My point was clearly- we were told from day 1 that our deposit would be £6000... there was no mention of 5%.. anywhere.

We have not signed a mortgage offer yet, because we have not had the offer yet. We are still waiting for Halifax to pull their finger out and actually make the offer. There's been a delay because whilst we hold a freehold for the whole building, there is a leasehold on 3 of the garages underneath our property which Halifax have been querying with our solicitor.

I am just concerned that someone's job which is to "advise" has failed to give important "advice" and "information"

I.E "By the way, The offer we are proceeding with through Halifax means your deposit will be £7.5k, not the £6k that we have been discussing for weeks."

Our mortgage advisor has been in constant conversation with us since this whole thing started, because as first timers, we have had a lot of questions. Time and time again we have talked through the figures, and these discussions were always based on the mortgage being for £114,000 plus £6000 deposit.

Anyway, I'm off down the carboot sales this weekend to flog as much of my stuff as I can afford to live without in order to raise some extra cash to ease the pressure which will inevitably come when we move.

I mean, god, who'd have thought how distressing it would be if you had already scrimped and saved up a certain proportion to find out that it isn't enough?! It'll be fun to see what other unknown costs jump out....
Forgive me for being a nervous first time buyer, I'm sure I'm not the first and wont be the last.

arby · 15 July 2010 at 9:11AM

Courtmill wrote: »

We're buying the house for £150,000.

The original asking price was £160,000.

Halifax have valued the property at £150,000... as "properties of this sort within the area are currently priced between £130,000 and £150,000"

you seem to be so wrapped up in this issue of £1.5k that will actually save you money in the long-run as you won't be paying interest on it for 25 years that you've completely missed the key point which is the Halifax have openly said you're paying £20,000 too much for the place!

I understand why you're annoyed, but you need to get over that annoyance and assess the whole situation from scratch and decide if this is a wise move.

beecher2 · 15 July 2010 at 9:15AM

Well just make sure you read every document which comes from the Halifax, as it is what they say that is important. I'm sure there will be more unknown costs - that's the joy of home ownership I'm afraid, and it can be pretty stressful at times. I'd be more stressed out at the fact that you're likely to be in negative equity from the start, and don't seem to have much in the way of emergency funds.

Courtmill · 15 July 2010 at 9:33AM

beecher2 wrote: »

Well just make sure you read every document which comes from the Halifax, as it is what they say that is important. I'm sure there will be more unknown costs - that's the joy of home ownership I'm afraid, and it can be pretty stressful at times. I'd be more stressed out at the fact that you're likely to be in negative equity from the start, and don't seem to have much in the way of emergency funds.

So I'm quickly learning!

We did have emergency funds... but that is now being taken up by the additional money we're having to pay out. We were all set to have £2000 spare, to help us in the first few months. Now we're going to have nothing spare... Sigh! Time to be nice to some more grandparents!

This isn't the worlds best deal we're getting, but it's good enough to get us on the ladder, and that's the important thing right now.

If you look at the key bits of the mortgage, it sounds alright.

Mortgage is £112500. Interest rate fixed for 2 years at 4.89%, 3.5% variable after that. (I just need to check and see if we can rejig and get another fixed rate after the first 2 years. I need to know what I'm paying)

The life of the mortgage is currently 35 years... we have youth on our side apparently and it keeps the monthly payments down to £570 a month. Not bad for a 2 bedroom coach house with garage and a massive garden!

We've got 5 years interest free on the other 20%. Basically we can step payments, be remortgaging at various intervals and "buy" Persimmon out. We only owe Persimmon this money... the equity loan is not split.

The plan is to save £30,000 in the next 5 years, and then pay off a large chunk of what is left. Hopefully if house prices don't rise too much in 5 years, we'll only owe Persimmon a fraction more than we do now, and can basically buy out nearly their whole portion.

After the 5th year, so in the 6th we have to pay interest, as a separate payment. It's fixed at a low rate, something under 2% and we pay that monthly until we've brought out the 20% share.

Mortgages truely are the most complicated thing I've dealt with, and I'm looking forward to this all being over and done with and just getting into our new home.

beecher2 · 15 July 2010 at 9:59AM

As your term is so long, you'll have paid off next to nothing when your fixed rate comes to an end. This means you may well be in negative equity - keep this in mind. Halifax won't be able to guarantee you a fixed rate in 2 years time, as it depends on their lending criteria at the time, and the SVR will likely be a lot higher than 3.5% - 7% is closer to the 'norm'. Are you able to overpay your mortgage? Try to do so - this is especially important with such a long term, and with the Persimmon debt hanging over you.

arby · 15 July 2010 at 10:10AM

you admit that you're not getting the best deal, but you're going ahead anyway? you need to pay off £30k in 5 years time, but you're overpaying by £20k right now, so in reality, you're paying £20k interest on the £10k loan they're giving you for 5 years. This is why they offer these schemes; as people are so keen to 'get on the ladder'. You need to ask yourself if buying this house is a financial decision or an emotional one. A bit of both is fine, but if it's all emotional then you need to take a step back.

katsu · 15 July 2010 at 10:18AM

Assuming you do not end up in negative equity you should be able to get a new fixed rate mortgage from someone else at the end of the period that you are tied to Halifax (look and see when you do and do not have to pay early repayment charges if you move your mortgage) - but bear in mind that your options may be limited as to who will lend to you due to the Persimmon "loan".

Once you are settled do look at how you can reduce the 35years as such a long mortgage may be cheaper payments but it is a long time and so adds up to a lot more in the end IYSWIM.

Good luck.

arby · 15 July 2010 at 10:22AM

typically you lose 10% on the value of a persimmon home the second you move in, so your house will be worth £135k at the maximum. so you need prices to increase by £15k over the next 5 years, when most people are predicting no gains at best, with falls likely. So you need to work out what you'll do in 5 years when you are in negative equity as that is almost certainly the position you will be in. Are you able to save £6k a year to pay off the £30k? If so, have you considered just saving that for a few years then buying without the severe compromises of this sort of scheme?

Thrugelmir · 15 July 2010 at 10:34AM

I'm sorry to say but you are all very cynical and have completely misunderstood.

Not cynical at all. If anything concerned for you. As others have highlighted there are many dangers with this scheme in a falling property market and quite possibly higher interest rates in the years to come.

Mis advised- FURIOUS

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