Found 5th May 2008
I am a first time buyer and need to get a mortgage. I have read not many people are getting mortgages approved and stuff so its quite difficult. My job is ok so I am hopeful but need your advice on what to do =, which mortgaage brokers are best and, possibly, which types of mortgages are best ?

I have read the moneysavingexpert mortgage guide and this is really my next step in terms of finding out more before I get serious and start talking to brokers. I am in quite urgent need to be honest ...

Thanks guys

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17 Comments

Speak to an Independant Financial Advisor - they're free as they claim commission on the products they sell - that way you are advised on a whole range of products from different mortgage lenders

your best chance at getting a mortgage at the moment is if you have 10% or more to put down as a deposit as mortgages of 95% or more seem to be few and far between (post office do offer a 95%) in terms of what kind nobody knows what intrest rates are going to do so basicaly if you want reassurance your mortgage payments will remain the same during fixed period go for a fixed rate or if you are in a position where you could afford an increase in rates and therefore an increase in payments on a tracker mortgage will not effect then tracker may be worth considering as obviously if rates do drop and from my research a lot of people believe they will then your rate will also drop.
Its important to try and look at the wider picture too ie if you go for a 2 year fixed (like i did ending in july) will you be able to get a remortgage in 2 years at a rate you can still afford. i say this as the interest in last 2 years has obviously rocketed and we are now looking at a monthly increase of nearly £200

When we decided to buy our first house a few years ago, the estate agents gave us all the advice we needed and applied for our mortgage on our behalf which was all free (very easy/convenient) service, same as financial advisors they get commision.

Unless you are totally clueless and really need things explaining to you, then IMHO you do not need to visit a mortgage broker. They do charge hefty fees for basically looking around on the internet for a good rate. They do receive commission, though not 25% - more likely 0.25% of the advance.
Much of the info you need can easily be found on the internet, though you sound like you've done the hard work and read up on the different types of mortgage already, so you also probably know where the best deals can be had for the least amount of fees.
If you want piece of mind - go for a fixed rate, if you're a bit of a gambler and can afford for the possibility of your monthly payment fluctuating in line with the Bank of England base rate, then go for a flexible one.
In the current climate it is unlikely that rates will be climbing again for a while, and even when they do - the state of the economy will probably not let the base rate rise above 6% maximum.
On a £100k mortgage, a 0.25% increase or decrease is approx £15 a month more or less on a repayment mortgage - so base your workings on that.
If you have a 10% or (preferably) more deposit and you have a good credit history, you should have no problems getting a mortgage, just take care - shopping around can leave a trail on your credit report which can reduce your credit score - so choose a lender wisely before approaching for an application.
***BTW - I am not a Financial Advisor - this is only my opinion and should not be taken as Advice. ***

Original Poster

thanks all.

I am currently saving for 10% (can actually complete 10% if I use credit cards but want to keep away from those for this). I read somewhere the same that if you put down 10%, it gives confidence to the lender about you and also theres less of a mortgage to take out so ... better for everyone really.

My next concern is that I am currently on a good salary but need quite a large amount which I think will not tally against the amount I earn. I know a few friends have got mortgages for like £360,000 on a 21k/annum salary so I know its possible but I dont know what they did/said to make that happen. My salary is not that low luckily but I do need a similar amount for my mortgage.

Original Poster

jayhab: sound advice ... sorry, your opinion Thanks

I was told the other day that Abbey are not affected by the cash crisis as they are backed by Santander and are still giving out mortgages

Banned

if you earn a decent amount get the one account...

Original Poster

what are the benefits of the one account, compared to others ? I have heard going directly to a bank is a bad idea full stop.

Also, I just calculated that, for example, a loan of 100000 with 5.25% over 25 years means a total of £181 100 (repayment not interest)!! Hows that ?? (I obviously dont know what the percentage means exactly but I know 5.25% of 10000 + 100000 is not 181 100 !

Banned

Cyrus;2037158

what are the benefits of the one account, compared to others ? I have … what are the benefits of the one account, compared to others ? I have heard going directly to a bank is a bad idea full stop.Also, I just calculated that, for example, a loan of 100000 with 5.25% over 25 years means a total of £181 100 (repayment not interest)!! Hows that ?? (I obviously dont know what the percentage means exactly but I know 5.25% of 10000 + 100000 is not 181 100 !



cause your savings and current account take off from your morgtage and so you are paying less intrest. there is loads of info on the net. it is the best deal for people that earn good wages and are not debt ridden

Original Poster

imranmaz;2037193

cause your savings and current account take off from your morgtage and so … cause your savings and current account take off from your morgtage and so you are paying less intrest. there is loads of info on the net. it is the best deal for people that earn good wages and are not debt ridden



Thanks. So thats a CAM (Current Account Mortgage). But I guess you need to be very organised to do this and the interest rates chared on CAM's are higher than normal mortgages.

Dont see any major benefits apart from paying off the mortgage quicker ...

Banned

Cyrus;2037227

Dont see any major benefits apart from paying off the mortgage quicker ...



erm.. you pay less in the long run..:? plus the amount you have as savings is tax free or something so it works out at 10%

I'm not sure what you wanted from a mortgage? like what is it that you are looking for?

Only advice I can give is find a good IFA, they're worth their weight in gold, (Literally!)

I have a lifetime tracker, at 0.23% above BOE base rate with no tie ins and only a £99 admin fee.

I know you're looking to get a mortgage and more concerned about that rather than the deal, but if the IFA's any good, they'll not only find you a mortgage, but also give you the best options available to choose from.

I can PM you the details of the one I used and you can try to get his advice over the phone or email!

To get a £360k mortgage earning just £21k is called 'telling fibs' to the mortgage lender aka 'Self-cert' - usually used by the self-employed, typically those that would find it difficult to prove their incomes i.e. multiple sources or year-end accounts not readily available.

Generally a self-cert mortgage will cost more due to the lender taking on a higher risk.
You should not need to self-cert, if you have a clear credit record and a sound job and good salary, generally speaking you can look for a mortgage at about 4x your salary - easily. higher than that and the rates will go up, and the lender will want you to put up a larger deposit and probably start adding on Higher Lending Charges - again due to the greater risk to them.

A £100k mortgage over 25 years probably will cost in the region of £180k this is due to the interest being compounded
Eg.
Year 1 Balance is £100k + interest of £5250 @ 5.25% = £105,250
Year 1 payments of £600 per month = £7200 : £105,250 - £7,200 = £98,050

in effect you've only shifted £2,000 off the balance in the first year;
Year 2 Balance £98,050 + interest @ 5.25% £5,147 = £103,197
Year 2 payments @ £600 per month £7,200; £103,197 - £7,200 = £95,997
and so on.....

In the end it will amount to approx £180,000 in repayments.

If you opt for a flexible mortgage and you find that you do have surplus cash, then you can make lump sum repayments which will reduce the amount of interest you pay back in the long run. Some mortgages with Early Repayment Charges do not allow you to make lump sum repayments, others allow you to repay up to 10% of the loan each year in addition to your normal repayments.


***Again - I am not a Financial Advisor - these are my own thoughts and should not be taken as Advice. ***

Banned

ctuk;2036305

When we decided to buy our first house a few years ago, the estate agents … When we decided to buy our first house a few years ago, the estate agents gave us all the advice we needed and applied for our mortgage on our behalf which was all free (very easy/convenient) service, same as financial advisors they get commision.


This is very bad advice. never go via the estate agents as they are generally tied to one mortgage company so you stand little chance of getting the best advice. An IFA is the way to go. You will probably need at least a 10% deposit to get a good interest rate.

Original Poster

Many thanks all. I now understand here the 180k comes from ... forgot its compounded!

WantOne: Sent you a PM!

Thanks again !

Banned

Its hard work at first, but always try to get the lowest term you can. Hopefully, your wages will make the monthly repayments easier over time. Even better if you can get a mortgage that allows overpayments that can be clawed back in times of finanical hardship.

Avoid banks generally. Nationwide gernerally have the best track record.

100,000 over 25 years at 6.5% = £102,000 interest

100,000 over 15 years at 6.5% = £56,000 interest

See the [URL="javascript:PopUp('you_popup','http://img.thisismoney.co.uk/calculators/mortgage_comparison_calculator.html','510','900','1');"]True cost mortgage calculator[/URL]

at thisismoney.co.uk/cal…ors
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