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Help with getting a mortgage

Johnrulez Avatar
banned7y, 11m agoPosted 7 years, 11 months ago
I have never even thought about it before

I am 20 and self employed, is this hard for the bank to assess me with?

What is the most they will give me and what is the best length to get (25 years etc)

Also what is better fixed, or interest, tracker blahblah

As the interest rates are low I'd not want to be vulnerable when they go back up as it can nearly double your mortgage I heard

Help is greatly appreciated
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Johnrulez Avatar
banned7y, 11m agoPosted 7 years, 11 months ago
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[mod]#1
1. What deposit can you get?
2. What value property are you looking at?
3. Do you have any adverse credit?

PM me if you do not want to post any personal details for all to see.
#2
can you garantee ur income
banned#3
magicjay1986
1. What deposit can you get?
2. What value property are you looking at?
3. Do you have any adverse credit?

PM me if you do not want to post any personal details for all to see.


10k-20k
100k-160k
none (well student loan but that is different)
banned#4
csamual
can you garantee ur income


no as i am self employed, thats why i am a bit lost
#5
they will do a risk assesment you got any loans or previous loans or credit as this will help you long as you never missed payments
[mod]#6
Johnrulez
10k-20k
100k-160k
none (well student loan but that is different)


You need to look at your LTV - loan to value. This is for the best rates of your mortgage. At the moment most lenders wont touch you if you only have 90% of the value of the property. £20,000 for £100,000 (80%LTV) would get you a pretty good rate.

Then you will need to decide whether you want a tracker mortgage (which follows the Bank of England base rate) or a fixed rate (which doesnt and is a fixed figure - something usually like about 5.5%). You will probably get charged more of an arrangement fee on a tracker mortgage as because the Bank of England base rate is so low at the moment you are getting a better deal.

You will also have to decide on whether you want to make payments off of the interest and the capital of your mortgage (repayment) or just the interest of your mortgage (interest only). Always remember though that if you opt for interest only then at the end of the term of your mortgage (25 years-35 years usually) you will still owe the initial amount you borrowed minus your deposit.

As far as acceptance goes:

This is based on a multiplication of your income and its usually 3.5x your income or 3x your joint income to see how much they will lend you. They will also approach Experian or Equifax to determine what kind of risk you are. If you have a CCJ registered against you in the past 6 years then you need to have at least a 25% deposit as you are a higher risk of not making repayments on your mortgage.
banned#7
csamual
they will do a risk assesment you got any loans or previous loans or credit as this will help you long as you never missed payments


ryt, how much do u think i need in the bank
banned#8
magicjay1986
You need to look at your LTV - loan to value. This is for the best rates of your mortgage. At the moment most lenders wont touch you if you only have 90% of the value of the property. £20,000 for £100,000 (80%LTV) would get you a pretty good rate.

Then you will need to decide whether you want a tracker mortgage (which follows the Bank of England base rate) or a fixed rate (which doesnt and is a fixed figure - something usually like about 5.5%). You will probably get charged more of an arrangement fee on a tracker mortgage as because the Bank of England base rate is so low at the moment you are getting a better deal.

You will also have to decide on whether you want to make payments off of the interest and the capital of your mortgage (repayment) or just the interest of your mortgage (interest only). Always remember though that if you opt for interest only then at the end of the term of your mortgage (25 years-35 years usually) you will still owe the initial amount you borrowed minus your deposit.


Why would people just pay interest for 25years?
[mod]#9
Johnrulez
Why would people just pay interest for 25years?


It makes it cheaper, they are coming into inheritance like a pension alongside it etc. They take a chance that house prices would have gone up.

Most people dont take out one mortgage and keep it for the whole of their term. Most people remortgage every 3-5 years when better deals come out and then if they can afford it they change to a repayment mortgage.
banned#10
magicjay1986
It makes it cheaper, they are coming into inheritance like a pension alongside it etc. They take a chance that house prices would have gone up.

Most people dont take out one mortgage and keep it for the whole of their term. Most people remortgage every 3-5 years when better deals come out and then if they can afford it they change to a repayment mortgage.


still dont get it, a full mortgage isn't that much more
[mod]#11
Johnrulez
still dont get it, a full mortgage isn't that much more


Interest only is cheaper than repayment. Not by much, but for those struggling to get a mortgage it makes all the difference.
#12
Personally I recommend looking into any legitimate 1st time buyer grants available.
I'm just about to complete on a house I would never have had a hope getting without £29k coming from the Scottish Gov via a local housing association. :)

My undertstanding of the banks mortgage requirements just now is a 1st timer needs at least 25% as a deposit before you'll get anywhere.
banned#13
vinnyabdn
Personally I recommend looking into any legitimate 1st time buyer grants available.
I'm just about to complete on a house I would never have had a hope getting without £29k coming from the Scottish Gov via a local housing association. :)

My undertstanding of the banks mortgage requirements just now is a 1st timer needs at least 25% as a deposit before you'll get anywhere.


do you htink i shoudl go down the road of renting till i get 50k in the bank or something, or can u get trapped in a pit by renting
[mod]#14
vinnyabdn
Personally I recommend looking into any legitimate 1st time buyer grants available.
I'm just about to complete on a house I would never have had a hope getting without £29k coming from the Scottish Gov via a local housing association. :)

My undertstanding of the banks mortgage requirements just now is a 1st timer needs at least 25% as a deposit before you'll get anywhere.


Congrats on the completion. Are you excited?
15% is a reasonable amount as a couple but 25% as a sole purchaser.
#15
It is way harder than it used to be. Deposit is the first big barrier now, gone are the days of the 100% mortgage. For a £100k house expect to have to be able to cough up the £20k (or £15k/£25k using above poster's guidelines) deposit up front. That leave £80k to finance (plus fees), you'll need a provable income of more than £25k to get the mortgage. The more you have for deposit, the better terms you can expect for interest and flexibility.
#16
To be honest I haven't read all the posts but my advice is to see an independant mortgage advisor. Bring all your paperwork and they will be totallt honest with you. Wthout their help I wouldn't have been able to buy my ex out and keep my house. Good luck.
[mod]#17
I think its good that the guidelines are changing.
The single biggest purchase you probably make in your life is a house. It is not very responsible for someone to take out a loan if they cant afford it and the same goes for the banks.
I am VERY surprised there hasnt been a negligence case brought against a big lender when they were offering 125% mortgages.
#18
good luck with your quest, johnrulez.
#19
magicjay1986
Congrats on the completion. Are you excited?
15% is a reasonable amount as a couple but 25% as a sole purchaser.


I am very excited! End of August I thought Myself and GF would have to win the lotto! Then I saw an ad from the housing association on the side of a bus, we were shocked we got approved
then kept being outbid on flats! (here in scotland it's bids over asking price:x ) late November found a lovely house and they liked us :)

Unfortunately the banks around the world messed up big time with bad debt and now every future FTB will need a very clean credit record and a good deposit. :x
[mod]#20
vinnyabdn
I am very excited! End of August I thought Myself and GF would have to win the lotto! Then I saw an ad from the housing association on the side of a bus, we were shocked we got approved
then kept being outbid on flats! (here in scotland it's bids over asking price:x ) late November found a lovely house and they liked us :)

Unfortunately the banks around the world messed up big time with bad debt and now every future FTB will need a very clean credit record and a good deposit. :x


I am pleased for you. I hope it goes very well.
#21
magicjay1986
I am pleased for you. I hope it goes very well.


Cheers, I recall a mortgage rates link you posted might be of use here.

I found this handy for HBOS: Mortgage Calc

Shows what deals they offer, fees get added if you want.
[mod]#22
vinnyabdn
Cheers, I recall a mortgage rates link you posted might be of use here.

I found this handy for HBOS: Mortgage Calc

Shows what deals they offer, fees get added if you want.


Secured my mortgage with Nationwide on a tracker the day before the Base Rate dropped. My rate is 3.13%. I am very lucky and realise that. Nationwide are very good.
#23
We're with HBOS, fixed for 5yrs at 5.09% costing us just under £500pm including the fee.
Which is £50 per month less than our current rent on a one bed flat! we wanted it fixed to allow us to know what we'll be paying.
#24
I agree with a lot of posters here, the DEPOSIT is the first hurdle. If you can live at home and save as much as you can, then try and aim for a 20% depo. The more you have, the better your deal will be. Renting is not a trap if you can save some cash also. Don't forget all your legal and survey fees (budget around a £1000-1500 for both) and if your purchase is over £175k you will pay 1% stamp duty also. As you are self-employed, you will need to get all your paperwork in order - your accountant can do this if you have one.

I have had several mortgages in 20years but have settled quite happily with the Nationwide. They do not have shareholder dividends to pay as they are a building society and seem to offer the best deals with lower arrangement fees too (they wave these fees for existing customers). They allow overpayments also, paying an extra £50 a month can knock 2-3 years off your mortgage. An IFA can help also but make sure he doesn't charge YOU for arranging a deal - he should get his commission from the bank/building soc. You can work out how much you can borrow easily using mortgage calculators on the bank websites.

As for the type of mortgage, the tracker boat has sailed as far as rock bottom rates are concerned, but you could just get a SVR (standard variable rate - it can change!) for now and then get it swapped to a fixed rate in the future when rates start to pick up, which they no doubt will. Nationwide's SVR is an excellent 4% and their fixed rates are 1 - 1.5% higher but offer peace of mind i.e. your repayments are fixed. Make sure you understand the difference between a repayment and interest-only mortgage, definitely go for the repayment if you can. I usually fix for 3 or 5 years. It's not worth fixing for 2 years to save 0.1% when you could paying a grand in fees each time.

Finally, bargain hard. It’s a buyers market and there are some amazing deals to be had, particularly on new builds as developers try to offload stock to get cash in.

Good luck – PM me if I can help more
banned#25
Thanks for the help everyone

I am going to rent till the end of the year (whilst saving the rest of my money) then try and get a mortgage around xmas

Reli thanks so much as I wouldn't have thought about it for a few years as I had no idea

:):)
#26
Johnrulez
Thanks for the help everyone

I am going to rent till the end of the year (whilst saving the rest of my money) then try and get a mortgage around xmas

Reli thanks so much as I wouldn't have thought about it for a few years as I had no idea

:):)


Good idea mate, the property market still has room to go down (in most areas) so later this year could be the best time to buy. Make sure you get your finances sorted and start talking to banks in the summer to get a good idea of what you can afford ;-)
banned#27
tallpete33
Good idea mate, the property market still has room to go down (in most areas) so later this year could be the best time to buy. Make sure you get your finances sorted and start talking to banks in the summer to get a good idea of what you can afford ;-)


Thanks so much for your help and I'll post again later on in the year to say whats been happening

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