[Greg]

Hi

Just wondering if there are any money or mortgage experts or just some knowledgeable people who could help me out with a bit of advice please?

Basically, I currently live in a house and pay rent, of which one of the joint owners wants to sell their half. They have asked me if I want to buy it. Seriously considering doing so, but not sure how to go about it. Probably need about £100,000. How would I go about this? What sort of monthly amount would I be paying for this amount of mortgage?

Haven't got a clue about mortgages or how they work so just need some advice on what to do.

Thanks
Greg

[Ian J]

Urban T is the man to ask but I'm not sure whether he ventures into General Chat

[pwood]

I'm no advisor but the first thing you should do is read up on the different types of mortgage available. The BBC website is a good place to start. Most sites have a payment calculator on them so you can get a rough idea of payments based on differening interest rates.

There are thousands of mortgages available and the one commom thread to most is tie -ins. This is the bit you want to be sure of before committing to a particular motgage as the penalties for leaving a provider can be prevantatively severe. IMHO cash back mortgages tend to sting you elsewhere and should be avoided unless you really need the upfront sum.

Normally a single person can borrow 3 times their salary. I have had bad advise from advisors in the past so I tend to do the research myself but ask around your family and friends and see if they can recommend one who they have dealt with for years as a good reliable IFA is worthwhile seeking out.

Remeber also, that you will have to arrange adequate life cover for a mortage. I found Tescos! to be very competative. In the end I took my quote to a broker called http://www.lifesure.co.uk/ who found one with all the bits I wanted for a similar price.

Always question the small print

Good luck in you search.

[T0MAT01]

Originally Posted by pwood

I have had bad advise from advisors in the past so I tend to do the research myself but ask around your family and friends...

The problem is that Mortgage advisors get commision when they sell one so they will often steer you towards one which is also a good earner for them.
I was told to always get advice from at least 3 advisors before deciding.

A good site for info on mortgages is http://www.moneysupermarket.com/mortgages/mortgage.asp

As for your question on payment amount, it depends if you get an interest only or a repayment mortgage.
Interest only on £100k would be about £450 (ish) per month with the current interest rate.

[GaryB]

Also some very good information at:

http://www.thisismoney.co.uk/homes

[sjb]

A repayment mortgage ( i.e. after the 25yrs, you owe nothing ) would probably be approx. £600 / month, depending on type of mortgage ( fixed, capped, variable ).

If you bought half the property, I assume you would still be paying rent on the other half that you don't own, plus your mortgage etc...

You say you'd require 100K, would you be paying some sort of deposit, say 10 or 20% or, are you looking to borrow the full asking price ?

Do you get on okay with the other owner/s ?

Quite alot of things to think about !

Best Regards,

Stan.

[dekoded]

When I got my first mortgage I didn't have a clue! after trying several banks etc I then went to Bradford & Bingley and discovered the have something called 'the marketplace', basically the can provide you with pretty much any mortgage from anywhere and they also give you loads of help and advice.

The only downside is they charge a few hundred quid for their services, but in my opinion it was worth it.

I've now recently remortgaged with northern rock, which was my original lender but that was 3 years ago, I'm now paying £200 less per month! so whatever you do shop around and change regularly.

You could also do a google for 'money saving expert' and you'll find loads of advice

[Razor]

I currently have 3 mortgages and have had a fair bit of experiance with finding a good deal. I would recomend for your first mortgage to be a fixed rate one, I would stir clear of the discounted mortgages with ties ins. ie. Dont go for a mortgage that has .5% discounted for 2 years and then 1.5% over the base rate for 3 years. Try and get a fixed rate .25% above the base rate and fix it for 2 years. Also you will gain a better rate with the larger deposit you put down. Look into the policy and see what penalties there are for early repayment, what are the set up fees etc. You can do either intrest only or repayment upto 35 years if you so wish. Look at the intrest as rent and the repayment as a savings account.

ie £450 per month rent (intrest) and £100 per month savings (repayment). Therefore at the end of the year you would of saved (payed off) £1,200.

The only problem I can see is buying half a house with someone. This may be a bit more tricky to find a lender than if you were buying a property on your own. I personaly would not buy half a property but would look for a smaller property and own the property out right. ie 1 bed flat. This would be far easier and have less complications. Also when you come to resell your not going to have the hassel of selling half a house, unless you can get the property listed as 2 flats and carry out all the required fire proofing which is not cheap. Contact your local council for guidance, it will all depend on floor area, parking facilities, area etc...

For good deals at the moment try looking at GMAC who are offerig 10% deposit @ 4.75% fixed for 2 years. Repayment of £395.83 per month intrest only.

Good luck.

[Greg]

Thanks for all the replies. Certainly given me something to think about. To add a little bit more information the house is currently owned by my parents with one wanting to sell their half. Won't go into too much personal details but I'm sure you can guess what has happened (although this actually happened 17 years ago).

Thanks
Greg

[Razor]

Originally Posted by GregHook

Thanks for all the replies. Certainly given me something to think about. To add a little bit more information the house is currently owned by my parents with one wanting to sell their half. Won't go into too much personal details but I'm sure you can guess what has happened (although this actually happened 17 years ago).

Thanks
Greg

As it is a family member who you will be co-owning the property with, obtaining a mortgage should be no problem. Bascally you approach the mortgage lenders and assuming there is no mortgage on the present property you ask for 50% of the equity. They will see this as you putting down 50% deposit. This means you will get an excellent intrest rate and good terms and conditions. Go on a self certified and you wont have to present wage details which could mess up how much you can borrow. It should all be very straight forward and take approx 6 weeks. Grab a solicitor, which will be needed. I normally pay around £450+vat for this service (I live in London). You shouldnt need to spend any more.

[Greg]

Thanks all and Razor in particular. The house currently has no mortgage. Will let you know how I get on. Thanks.

[Razor]

No problems and good luck.

[krish]

I've a 100K 25yr repayment mortgage taken out very recently; 2 year fixed rate @ 4.39% with Nationwide BS, £500 max overpayment allowed per calendar month, no overhang, so ability to remortgage after 24months
- repayments during this fixed rate period = £549.61/month

I chose this because after also taking account of the mortgage fees, this worked out as the lowest average repayment for the first two years

[booyaka]

As an IFA (independent Financial advisor) a very rough guide to mortgages is for every £1000 you wish to borrow it will cost you approx £6 per month baserd on a repayment mortgage. IT's only a rough guide but a ball park figure.

Also on a single income you will get a mortgage of approx 3.5 or 4 times your annual income at a push.

Deposits are preferable as this then opens up better mortgage rate deals etc.
You need to think wether you are staying put for a while, do you earn bonuses to overpay the mortgage, do you like having a fixed monthly outgoing etc.

Best option is to speak to an IFA or mortgage broker. Normally they will charge a fee for finding the best mortgage for you. The company i am will charge £250/300ish fee (the larger the mortgage the bigger the fee) for their advice but the new lender may also charge a fee on top of that.

Usually get some free valuation or legals in deals from lenders also.

Anything else let me know.

P.S Commission on mortgage is not really an issue these days as most just charge a flat fee.