Dismiss Notice
Attention AVForums app / Tapatalk users
Sadly GDPR means that, from 25th, we can no longer offer access to AVForums via the branded app or Tapatalk.
Click here for more information.

First Time Buyer Mortage Help

Discussion in 'General Chat' started by Petey, Aug 1, 2005.

  1. Petey

    Petey
    Active Member

    Joined:
    Jun 18, 2003
    Messages:
    860
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    31
    Ratings:
    +29
    Hi Everybody,

    Me and my partner are first time buyers and are starting the whole mortgage experience.

    Does anyone have advice on what we should be looking for and a good mortgage lender. Also any pitfalls we should be aware of.

    We would like an interest only for the first 3 years to keep payments low. We would then possibly re-mortgage as our finances will be dramatically better in 3 years time.

    Any advice would be appreciated as we feel a bit overwhelmed by all what is on offer and don't wanna make a bad choice when it comes to such a big financial commitment.

    Thanks in advance to anyone with advice.
     
  2. Moosh

    Moosh
    Member

    Joined:
    Sep 12, 2004
    Messages:
    2,003
    Products Owned:
    2
    Products Wanted:
    0
    Trophy Points:
    86
    Location:
    Bristol
    Ratings:
    +469
    Hi Petey

    My advice would be to save a good sized deposit first and then an extra £5000 for solicitors, surveyors, stamp duty and any unforseen eventualities. As for which bank to trust, some of it is down to gut instinct and to look around for the best deal you can get. There are some banks/building societies that will offer 1-3% but make sure you read the small print.

    When we were looking, we went to a large bank and said that we knew nothing about mortgages and to tell us what the best deal we could get. The lady was very pushy and tried to get us to buy one of those mortgages where you pay into some savings scheme and then at the end of the 25 year term there should be enough money in the kitty to pay off the house and maybe a little bit extra (the name of that type of mortgage escapes me - endowment I think). In the most politest of terms we turned her down and a few months after that the news was full of people who had been missold endowment policies.

    In the end we have an OpenPlan mortgage with the Woolwich which is ideal for us as we can over pay every month to pay off the capital quicker. Also any savings etc. we have are offset againt the mortgage too and interest is calculated daily.

    From what you've said, you'd probably want a fixed rate mortgage to begin with (that way you'll know exactly how much is going out each month) and then after three years switch to an offset (if you do have money left over each month).

    But your best bet is to speak to an independant financial advisor who should be able to sort you out! :)

    Good luck
    Moosh
     
  3. mrmcdean

    mrmcdean
    Active Member

    Joined:
    Jun 25, 2003
    Messages:
    733
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    31
    Ratings:
    +27
    Ask around friends and family for a good mortgage broker - this should give you the widest possible choice of options and believe me there are hundreds, this should help you sort through the crap.

    Perhaps the best piece of advice I wish Id had when I was buying for the first time is that you have so much power in a property chain (if you end up in one). Everybody else is relying on the person below in order to buy the house they want but in the nicest possible way you tend to get treated poorly as you're paying the least and tend to have the least experience. If you stall or back out it can throw the whole chain into trouble, try to use this to your advantage, dont allow yourself to be pushed around and bullied, its doubtful you'll be in a similar position for some time (ive ever).

    Make sure you dont overstretch yourself, if you get a mortgage quote you like the look of remember that rate may increase in the next few years and you'll also face a larger monthly payments once you go to a full capital and interest repayment mortgage. (get you broker to calculate the monthly payments on interest only and interest and capital repayment so you can compare the two so you have an idea of what to expect in a couple of years).
     
  4. Astaroth

    Astaroth
    Well-known Member

    Joined:
    Jun 22, 2004
    Messages:
    3,653
    Products Owned:
    2
    Products Wanted:
    1
    Trophy Points:
    133
    Location:
    London
    Ratings:
    +882
    IFA will be able to give you good advise on these things but check to see if the one you go to charges by the hour or gets commission from purchases you make.

    Getting your first mortgage is a scary process (or at least I thought it was) and it is a huge commitment to get into. If you are looking to switch providers in X years time you need to look very closely at the early redeption penalties - have seen many people stung by massive fees and unfavorable moves in the interest rates that has ment moving has resulted in a more expensive mortgage.

    As mrmcdean says - dont waste the opportunity of being chain free in the purchasing process. Whilst some tactics used are very low you are out to get the property you want at the best possible price not to make friends with the person you are buying from.

    Paying extra off the capital when you can afford to do it is also good but again read the small print as there is normally a cap on the amount you can pay before you incure additional charges.

    I cant advise who to go for as I work for the insurance division of a bank and therefore get staff discount off of my own mortgage and dont think it would be right to simply promote the company I work for (not that I dont want a bigger profit share)
     
  5. the_sanguine

    the_sanguine
    Active Member

    Joined:
    Jul 31, 2003
    Messages:
    1,176
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    38
    Ratings:
    +7
    I'd wait the three years and with any luck, you'll only need to borrow half as much!
     
  6. Jenn

    Jenn
    Well-known Member

    Joined:
    Apr 8, 2005
    Messages:
    6,903
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    133
    Ratings:
    +1,257
    If you are considering going with the Natwest for a mortgage, think about having a personal bank account with them and apply for a Premier Bank Account (cost £9/month).
    As well as vouchers, and preferential prices on a whole range of things, a Premier Account gives you access to preferential mortgage rates (not sure how much lower).
     
  7. mjn

    mjn
    Distinguished Member

    Joined:
    May 24, 2001
    Messages:
    22,097
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    166
    Location:
    Herts, England
    Ratings:
    +9,851
    Not likely.
     
  8. zAndy1

    zAndy1
    Distinguished Member

    Joined:
    Nov 26, 2002
    Messages:
    21,995
    Products Owned:
    2
    Products Wanted:
    5
    Trophy Points:
    163
    Ratings:
    +8,432
    I've always found the Nationwide to be excellent for mortgages, great rates that are always available to existing customers, flexible features like overpayment and payment holidays. I wouldn't bother with Natwest the premier account is a rip off, you have to pay £150 a year for the bloody premier card which is a complete rip off and Natwests rates don't usually compare that favourably. You will usually find Nationwide will lend more than most other places as well which might come in handy as long as you can afford the repayments! Check out the website you can get quotes and see how much you can borrow on there
     
  9. the_sanguine

    the_sanguine
    Active Member

    Joined:
    Jul 31, 2003
    Messages:
    1,176
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    38
    Ratings:
    +7
    OK...maybe 2/3 - 3/4
     
  10. General Skanky

    General Skanky
    Active Member

    Joined:
    Jul 28, 2000
    Messages:
    4,247
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    71
    Ratings:
    +43
  11. UrbanT

    UrbanT
    Distinguished Member

    Joined:
    Jan 6, 2002
    Messages:
    13,265
    Products Owned:
    1
    Products Wanted:
    0
    Trophy Points:
    166
    Location:
    Aldershot, Hants
    Ratings:
    +3,031
    As someone in the industry, the advice I would give you is:

    . don't search on the internet for deals. There are simply to many, and not enough information generally regarding extended penalty tie-ins, compulsory insurances and so on
    . buy What Mortgage. The guides on the various options you have are simple and will give a decent background
    . seek independent advice. Once you have had a recommendation made, DO NOT sign up immediately. Take the quotes away, and check them carefully, particularly against the lenders website
    . do not pay for the advice. Brokers and IFA's receive commission from the lenders, so there would have to be a good reason you would want to pay a fee
    . as posted previously, don't fall for the banks 'have our current account with a monthly fee and we'll discount the mortgage rate' type deals. I have never seen one that is better than what is available from other High Street lenders

    Best of luck with your search :)
     
  12. The Dude

    The Dude
    Distinguished Member

    Joined:
    May 21, 2004
    Messages:
    6,283
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    166
    Location:
    Beverley, East Yorkshire
    Ratings:
    +2,601
    I'm no kind of expert at all... but I'd definitely give a nod in the direction of an interest only mortgage for at least your first place....

    If you're planning on buying another house at some point in the next 25 years, there is really no point in 'buying' the first one at all as far as I'm concerned.

    Go interest only, keep a big chunk of money in your pocket each month, and the value that will inevitably be there come 'selling-up, moving-on' time, goes into the next place... or into your pocket..:D
    I've got another 21 years to save up the capital I owe on my mortgage, and failing that, I'll just sell the place at a massive profit, pay back the capital, and move on, and do it all again...

    To be honest, I don't think I'll ever change this approach now...
    Why buy the place, when you can just rent it to yourself instead... ;)
     
  13. the_sanguine

    the_sanguine
    Active Member

    Joined:
    Jul 31, 2003
    Messages:
    1,176
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    38
    Ratings:
    +7
    The Dude.....what if our friend takes out a massive IO mortgage and then property prices fall by about 20-30%, then how well off is he?

    Generally, property is an excellent investment. However, right now, most people agree that the market is overheated, not because property is cheap but because money's cheap.

    It's all a gamble of course but I can't help thinking that over the next few years, there's going to be a few bargains around
     
  14. Petey

    Petey
    Active Member

    Joined:
    Jun 18, 2003
    Messages:
    860
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    31
    Ratings:
    +29
    Thanks everybody for the advice.

    I have been looking at all types of mortgages. I think an IO for the first three years maybe what we go for, and then get a capital repayment one after that. Just want something to get us started on the property ladder without crippling us financially.

    Whats the deal with mortgage brokers, is this a good route to take as I've heard from some people to steer clear of them.

    Also anyone got a mortgage with first active ??
     
  15. The Dude

    The Dude
    Distinguished Member

    Joined:
    May 21, 2004
    Messages:
    6,283
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    166
    Location:
    Beverley, East Yorkshire
    Ratings:
    +2,601
    House prices are indeed a very wavy line mate.... that has been wavily sloping steadily upwards for at least the last 50 years... ;)
     
  16. stealther

    stealther
    Active Member

    Joined:
    Mar 24, 2002
    Messages:
    2,061
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    66
    Location:
    Lichfield
    Ratings:
    +93
    Hi,
    Just curious as to what you would advise someone with a bad credit rating to do in terms of morgage?

    I am paying £500 month rent at the moment and I cant even get so much as an overdraft untill Ive paid my debt off.
    I was just wondering wether I had any options or if I need to wait 4 yrs till its paid off and build up a good credit rating again?
    I think I know the answer but I want to investigate the possibility of not throwing away £500 a month! :)
     
  17. The Dude

    The Dude
    Distinguished Member

    Joined:
    May 21, 2004
    Messages:
    6,283
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    166
    Location:
    Beverley, East Yorkshire
    Ratings:
    +2,601
    get in there mate.

    My credit rating was absolute dogs**t when i got my first mortgage... I couldn't even open a new bank account, let alone get an overdraft!! 2 current CCj's, 2 old CCJ's, no savings, Nationwide seriously didn't bat an eyelid.

    as they're lending money against something which you can't sell/hide/steal etc, all they seem to be bothered about is how likely you are gonna be to make the payments.. they just don't want the hassle (expense) of taking people to court.

    I'd been in the same Job for 6 mths, and could easily afford the payments based on my salary alone... that was their only requirement as far as I can remember... I had to pay a 1.5% higher rate for the first 3 years because of my circumstances, but that was it basically..

    And once I had a mortgage with them, they offered ME (insisted basically) a new current account and overdraft to go with it..!

    It can't hurt to at least give it a try mate... rent is just money thrown away if you can afford to buy somewhere...
     
  18. UrbanT

    UrbanT
    Distinguished Member

    Joined:
    Jan 6, 2002
    Messages:
    13,265
    Products Owned:
    1
    Products Wanted:
    0
    Trophy Points:
    166
    Location:
    Aldershot, Hants
    Ratings:
    +3,031
    Like builders, solicitors etc etc, there are good, and there are bad. Recommendation is normally the best route.

    First Active are fine as a lender, part of the RBS group of companies. But not the best deals in the market (although not uncompetitive)
     
  19. the_sanguine

    the_sanguine
    Active Member

    Joined:
    Jul 31, 2003
    Messages:
    1,176
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    38
    Ratings:
    +7
    Oh, right...I guess they'll keep going up all the time people can easily afford them then....
     
  20. The Dude

    The Dude
    Distinguished Member

    Joined:
    May 21, 2004
    Messages:
    6,283
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    166
    Location:
    Beverley, East Yorkshire
    Ratings:
    +2,601
    almost right mate, like everything else in this life it's all down to supply and demand.

    they'll keep going up as long as the population does basically... as there's almost nowhere left to build new houses in this country.

    the longer you wait the more you pay, simple as that....
     
  21. Bl4ckGryph0n

    Bl4ckGryph0n
    Distinguished Member

    Joined:
    Sep 11, 2003
    Messages:
    36,209
    Products Owned:
    10
    Products Wanted:
    13
    Trophy Points:
    166
    Location:
    CyberSpace
    Ratings:
    +10,731
    First time I went with a mortgage broker and yes it is a scary process...But investigate the market yourself...The moneyextra link provided earlier is very usefull...I was able to point a cheaper mortgage to the so called brokers...
    In my experience independent advisors are only independent when you challenge them...The remortgage process is really simple...My advice is get on the ladder asap and don't overstretch yourself...Don't go for anything more than 3-3.5 multiples of your income and don't count yourself rich a double income doesn't mean you can go for 6-7 time multiples...Most reputable banks won't allow it and it is for a good risk reason....

    Don't forget that you can check your own credit worthiness at Experian's creditexpert.co.uk, it could make yourself much more confident in asking/demanding the right mortgage or knowing you won't get it....If you are considered more of a risk due to other commitments than you may get a mortgage but at a higher rate...

    But the key is to buy the right property, don't pay overinflated property for nicely done up property, buy a wreck that needs a lot of decorating but is solid otherwise. That way you can gain the most capital comes sale time...Also you can gain experience in decorating and repairing in a relative cheap property so you won't make those mistakes again later in life....All repairs will be much more expensive than you will think, so it is a good lesson to learn as early as possible...

    Also remember that in 1.5 years something called a sellers pack come in place. Basically meaning that you as the seller in the future have to disclose any issues with the property and can be held liable if you didn't mention them....So buy the right property now with all relevant searches and surveys and don't skimp as you may end-up with a lemon that you can't sell in the years to come....
     
  22. mrmcdean

    mrmcdean
    Active Member

    Joined:
    Jun 25, 2003
    Messages:
    733
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    31
    Ratings:
    +27
    somethings going to change in the housing market, perhaps not a fall in prices, maybe the way we pay off a mortgage (moving to longer term deals etc.)

    I bought my first and only house with my girlfriend about 6 years ago, in that time the value has more than doubled whereas our income has increased by approx 50% - Result = at a time when we'd like to be moving into a bigger house due to our 1 year old son, we could just about afford to buy a slightly more expensive terrace house than the one we live in at present and pay twice as much each month for the privilege.

    I cant see things continuing like this as the only way people will be able to afford a house is to increase the amounts people can borrow which puts pressure on interest rates remaining low. (when we got our mortgage it was 2.5 x joint income - is this still the general calculation for total amount you can borrow ?)

    Repossessions have increased by approx. 50% in the first half of this year compared to the last 6 months of 2004 largely due to the small but steady increases in interest rates.

    I spoke to a mortgage broker a year or so ago who was recommending first time buyers go the interest only route to begin with in order to get on the ladder. I cant see how this is a great idea in the long term, many people are now finding out with endowment mortgages its a pretty big risk to take speculating with mortgage payments and your house.
     
  23. Bl4ckGryph0n

    Bl4ckGryph0n
    Distinguished Member

    Joined:
    Sep 11, 2003
    Messages:
    36,209
    Products Owned:
    10
    Products Wanted:
    13
    Trophy Points:
    166
    Location:
    CyberSpace
    Ratings:
    +10,731
    Whilst I can understand the 'affordability' about interest only imho it is false economy as it means you really can't afford it in the first place = overstretching yourself to get a bit more....

    Straightforward repayment, ever payment a bit more becomes yours. When the times come to remortgage because a deal runs out...Adjust so that you 'shave' a few years of the mortgage...It is the biggest monthly outgoing for most, so the earlier you can get rid the better it is...

    And don't forget to budget for your pension top-ups as well, plus house-hold insurance, plus life/disability insurance so your house is safe for your partner etc...

    I must admit that first-time buyers do have my sympathy...I mean how can anyone afford an average house price of £180k ish to get on the ladder....I do think a shift will happen in the short term, the statistics are already showing that there first-time buyers group is shrinking...So where do the people ready to move up sell their houses to?

    I think the attitude against renting is wrong in the UK which has fuelled this price hikes, take a look at other European countries where renting is quite normal and government is fixing gains in entry-housing to stable the market...

    I mean my flat in London, 1996 £180k, 2005 valued at £965k...That is just not healthy, nice for me, but not healthy for the market place...
     
  24. the_sanguine

    the_sanguine
    Active Member

    Joined:
    Jul 31, 2003
    Messages:
    1,176
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    38
    Ratings:
    +7
    Petey,

    Dude has a perfectly valid opinion. However, can I respectfully ask you to remember his first words: "I'm no kind of expert at all..." Do your own research.

    Quite frankly, coming to an AV forum and asking for financial advice is a bit like going to a cabinet maker and asking him to fix your teeth.

    My view is that house prices do generally over long periods go up and if you buy now, then in many years time, it will be worth more than you pay for it today. However, property prices over shorter periods of time do go up and down. Therefore it is possible to buy at the "right" time and maximise your capital gain. In otherwords, let's say you buy today at £150k and keep the house for many years and then sell at £200k. a tax free profit of 33% (less RPI) isn't bad. However, if you wait a few years and prices fall (DYOR as to whether they are likely too or not), lets say the house then costs £125k, then you later sell at the same £200k, you have then made a profit of 60% and furthermore, your mortgage payments would have been about £100 per month less.

    If you want to get a range of opinions check out: http://boards.fool.co.uk/Messages.asp?bid=51402&mid=9458465

    Good luck whatever you decide....
     
  25. The Dude

    The Dude
    Distinguished Member

    Joined:
    May 21, 2004
    Messages:
    6,283
    Products Owned:
    0
    Products Wanted:
    0
    Trophy Points:
    166
    Location:
    Beverley, East Yorkshire
    Ratings:
    +2,601
    and as a precautionary note...

    I'd never advocate using IO mortgages as a means of borrowing beyond your means..
    You can only afford the house you can afford, but my philosophy is to always keep as much of my money in my pocket wherever possible...

    From my point of view, if I buy today and the price drops by 15% tomorrow, it just means i'm stuck where I am until things pick back up....
     

Share This Page

Loading...
  1. This site uses cookies to help personalise content, tailor your experience and to keep you logged in if you register.
    By continuing to use this site, you are consenting to our use of cookies.
    Dismiss Notice