Boring mortgage advice

Just wanted to add I would rather look like an idiot on a forum than go to a bank or someone face to face and look like one!!

There are so many mortgage products around.

thr main decision you need to make is whether you choose interest only or repayment.obviously with repayment you are paying the interest but also paying a bit off the capital each month. We took the decision when we bought that as we'd only be here a few years we'd go interest only as we'd rather have smaller monthly payments. As our next house will be out of town it'll actually be cheaper so we don't need a lot of equity from this one. When we're in our forever home we'll switch to repayment.

I don't think I've seen anything about trying to put first time buyers off, in fact there are lots of schemes to encourage them.

The bigger the deposit you have the better your interest rate will be. You'll need at least 10% of the property purchase price for a deposit (generally) but you can put down more and in some cases less but you'll just end up with a higger interest rate.

With regards to buying off family, it just means you wouldn't need an estate agent involved although you will need to make sure the property is valued fairly, which I imagine if it's family they are hardly likely to try and rip you off. It would be a very straightforward process for you as you wouldn't even need to pack!

I'd recommend trying to find an independent financial adviser who specialises in mortgages as they should be able to find you a good deal and can help talk you through the process

Just to add to knees post, hardly anywhere offers interest only mortgages anymore.

I would speak to a mortgage broker. I think people have recommended https://www.landc.co.uk/ before. I don't hink they charge any fees so it'll cost you nothing to have a chat.

That way they'll talk you through all of your options and you will hopefully understand it all a bit better. They will be used to people who are new to mortgages so don't worry about not knowing much about them.

Our mortgage is with nationwide, we'vw been with them for 5 years now and the service and cost has been great. We are on a repayment mortgage and we were in our last house too. When we moved house this helped us as we'd built up a bit of equity so we had a bit of extra cash to put towards our new house.

Thank you very much for your reply. Our plan was to buy a small 2 bed house (which is what we are renting now). The prices around here range from £110-£135,000 for what we are looking for. The next step would be when we want to start a family to move something bigger. So would you advise me to go the interest only route? How does this work?

Does anyone one know how much deposit I would need for a £110,000 property?

Doesn't the new govt scheme support people with deposits between 5%- 20% so lenders are being encourgaed to support people with smaller deposits?

Thank you Holey. Yes, my house is getting valued on Thursday so we will find out then.

Money Saving Expert has a really good free mortgage guide for first time buyers. We brought our place almost 2 years ago and it was a really good reference to know what was happening and when.

https://www.moneysavingexpert.com/mortgages/

Every person I spoke to before we bought our house said to go with Nationwide. We did. Apparently, in the long term, they really look after their customers.

Thank you RK, that's very useful.

If your house is £110000 then you'll probably need £11000 deposit minimum. Don't forget though that you'll need extra on top for mortgage and solicitors fees.

Me personally I'd never go with an interest only mortgage, I'd always go repayment

So what if you have more money to put down than the minimum deposit they require, can you just put down as much as you can afford then you have paid off more in one and have less to repay monthly? Is that how it works?

Yes, and the more deposit you've got the better the mortgage rate will be normally. So it's a win win.

Interest only isn't for everyone. Obviously the massive downside is that you still per the full amount when you come to pay it off. We bought a house to do up so we knew we'd be making money on it. You could easily end up in negative equity though.

Great sounds fairly promising for me then provided nothing else goes wrong for us! Had nothing but bad luck since we got engaged, it's almost like the world is giving us every possible test to see if we really are ready for marriage!

Would defo go to a mortgage advisor!

They don't charge anything (banks pay them when they close the deal and get the mortgage done) and are really REALLY helpful with all questions and ins and outs of the maths.

If you are in Surrey, I have one I can recommend

Good luck!

EF thank you so much for such a detailed response. Definitely got a better idea of it all now.

As I said before we aren't looking to buy just yet. Although we have money for a deposit I'm still at university and not got a 'proper job' yet (I only work weekends) and OH is in no way settled in his jobs and is seeking full time work so he can give up his two part time ones. Once we are sorted job wise we will be ready.

You shouldn't need that much for a house of £110k. You won't have stamp duty to pay and solicitors fees on a house of that price should be way under £1k.

What is stamp duty?

/stamp-duty-land-tax

OH's wage just wouldn't get us anywhere I don't think...It's all good us having a deposit but if we can't prove we can pay said amount every month on his wage they won't let us do it? This time next year things will hopefully be a lot more comfortable for us. I can see how that sounds like a similar situation to you though.

Another one to second Nationwide. And I can recommend Marchwood IFA as a broker, they were awesome for us.

I personally wouldn't go interest only, if the value of your property drops even only a little bit, you will be in negative equity (i.e. your mortgage balance is more than your house is worth.) We are on a fixed rate and overpaying as much as we can while we can. Already shortened our mortgage term by an additional 6 months since May.

It's a very confusing area with mortgages!

When we first bought (five years ago) we went to HSBC with our figures (the house we were interested in, the deposit we could pay, our wages etc) She explained all the options we had and told us the different repayments depending on what deposit we chose, obviously the larger the deposit the better the offer.

The most important thing with our mortgage was that we could pay off as much as we like each month without a charge. This has meant that when we've had spare money we've payed it into our mortgage - meaning we pay less interest then we did originally, so even though our monthly payments are the same, we're actually paying off more each month and we've even managed to knock 5 years off our mortgage. I would highly recommend this kind of mortgage because you don't 'have' to pay more but it works out great if you can.

I would completely avoid interest only mortgages - it's not worth hoping for a financial windfall in order to pay it off at the end.

I echo what everyone else has said, especially about nationwide as H's mortgage is with them and they're great. They were the best value when we were house hunting too.

We looked into doing the 5% deposit government scheme, but it all seemed a bit risky. From what i can recall, you put down your 5% and the government helps out with the other 20% to make a 25% deposit. (In our example our deposit = £10,000 plus governement money of £40,000 and then take a mortgage for £150,000). You then get the government loan interest free for 5 years, and then in the 6th year you pay a fee of 1.75%, and then it's a fee of 1% plus the retail prices index. You pay back the 20% of your house's value if you sell or at the end of your mortgage period. We decided that it was risky as we wouldn't know what the RPI would be in 7 years time and therefore would have less control over it all in our situation.

Nursey, I think they've just brought out an even newer scheme. My understanding is that the give give a guarantee to the bank of up to 15%, so in case you default they have covered the bank by the amount they may lose in a quick sale. So, you don't borrow any additional money, you just borrow the, say, 95% from the bank and pay directly to them. It's up to the bank to apply for the guarantee, not the borrowers.

The one issue I see is that you're currently restricted to only 4/5 banks so there isn't that much choice of lenders. Therefore the rates are probably not that competitive.

ETA- this link explains it better than me. http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10343793/Help-to-Buy-Key-questions-answered.html

Hoddy because you are new to the mortgage thing as well, the term of the mortgage (the number of years you borrow for) will affect your payments.

eg. if you have a 25 year mortgage (traditionally the norm) the payments will be staged over that term. You could go for a shorter term, eg 15 years, so your mortgage payemnts would be higher, or lower if you went to 30 or 35 years (more and more common and you're a young-un anyway).

We bought Dec last year. We've gone for a term of 35 years to make it affordable for us (and also hope to pay it off in chunks) but this is our first place, so will renegotiate new mortgage whenever we upgrade in a few years time.

So how does it work when you want to buy a new house when you haven't paid the first mortgage off? Does it just roll over to the next property? I'm so clueless!!! I promise I'm reasonably intelligent in real life!

Some mortgage providers will port a mortgage to a new property. Ours didn't. When we sold our flat we got a redemption statement (balance) for the existing mortgage, which for arguments sake was £130k to be repaid, we sold our flat for £165k so had £35k left over as cash for us once the bank had been paid. We used some if this for the deposit on the new house and the rest for fees/savings.

it is a confusing business if you've not been through it before.