Buying a house for first time

13
Found 22nd Jan
Hi guys, I’m completely new to buying a house and I tried to read about mortgages as much I could but can’t get my head round it. I’m looking for a house in Sheffield 3 or 4bedrooms, I can pay deposit about £50,000, looking to spend no more than 125,000 found a few houses but not sure about mortgages specially there’s different types of mortgages. I can pay max £500 per month. I’m a newbie to this please explain as basic as possible appreciate your help

Thank you
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Best thing is to go to a Building Society , Mortgage advisor or Bank have them explain things to you . You'll get varying advice on HUKD from the aspirational know it alls . But If I were you I'd go to a Building Society or Mortgage advisor - The explanation and advice will cost nothing you can then make your decisions based on facts - Not from potentially duff advice on a shopping forum .
Edited by: "rogparki" 22nd Jan
You will need a mortgage promise before you even look
1.) You need to know your "LTV" (Loan to Value) to see what mortgage rates are available. If you're buying a property for £125k and putting in a deposit of £50k that's a LTV of 60% (e.g. you'd be borrowing 60% of the value and providing 40% of it as your deposit). That's a very decent starting point and you'll have some of the best interest rates available (it doesn't tend to improve past 60%).

2.) You can that start to think about the other variables such as if you'll look at a fixed rate mortgage for a set period of time (typically 2yr, 3yr or 5yr), or a tracker mortgage that moves as the Bank of England Base rate changes. You'll get many different opinions on this. A fix offers security of a known monthly payment amount, a variable may mean you pay back less in interest IF rates don't move.

3.) The final main variable that will impact how much you monthly payment is is the number of years you select to pay it back over. I think 25yrs is typical these days, but if you found your payment coming out at over £500 you could try the same LTV and mortgage rate over say 30yrs (or shorten if it's more than affordable at 25yrs).

I hope some of this helps. Ultimately as you'll be recommended to, start to chat with a Mortgage adviser. First question to them - how will they make their money? If it's a referral fee from the bank or building society that they recommend I'd feel comfy with that. Check they are hole of market and challenge them with alternatives you find via sites like money.co.uk
Edited by: "morgie" 22nd Jan
helptobuy.gov.uk


Look into a help to buy isa
Good luck
There's quite a lot of info on sites like moneysaving expert which will explain the basics, but you are best discussing it with an independent mortgage advisor to assess what is best for your situation. There are online mortgage calculators about the place will give you a basic idea of how much you will be able to borrow and the repayments. Do bear in mind that interest rates will go up and if you know your max budget is £500 per month, factor this in when deciding how much to borrow
As you have a big deposit, you should be able to get a mortgage more easily as banks like those with big deposits. It means they are taking on less risk lending you the money as you already have a large proportion yourself.

they need you to be employed so if you are full time employed it will help. You need a decent salary from your employment as they want to make sure you can afford to pay the monthly mortgage bill after all your living expenses.

you cant have bad credit rating, if you do, then they will have to review your case more carefully as they will do a credit check on you.

you cant be too old. I think they dont lend to anyone above 54 years of age or something like that as they worry you will retire and cant pay the mortgage. This statement about age, i have no experience of, just stating what i have read.

there are essentially 2 types of mortgages. Repayment and interest only. Repayment means you pay the interest on the loan each month plus something on top to slowly pay off the loan. Interest only mortgage means you only pay the interest on the loan each month, and you have to pay off the actual loan when the mortgage comes to an end in 20 or 25 years depending on the length of your mortgage.

the interest on the loan is either variable or fixed. If variable, it can change when the bank review interest rates. It can be fixed for a period, so say 3% pa for the first 5 years of the loan, then it becomes variable. But at that time, you can switch to another fixed rate product.

interest rates can also be a fixed percentage above bank of england base rate, which means it will only change when the bank of england announce a base rate change. These are called tracker mortgages as they track the bank of england base rate.

best pop into your bank and ask for an illustration as to a potential mortgage. They will be able to explain to you their available mortgages and how much you would have to pay back monthly on the loan.
Edited by: "mutley1" 22nd Jan
I would recommend London and Country mortgage broker who will help you through the process and identify a really good deal.

I would always go for repayment mortgage rather than interest only because it means your paying both the original loan and the interest.

Find out a solicitor whom family and friends have used. They should help guide you through which checks and searches will be made on the target property.
have a look on MSE all of the details you need, you will need to decide on what type of mortgage to go for tracker, fixed rate, do you want over payments.

moneysavingexpert.com/mor…ide
The might be a complicating factor.

Excuse me if I'm reading too much into your user name, but do you need to keep within any strict islamic rules on borrowing?
Original Poster
mas991 h, 23 m ago

The might be a complicating factor.Excuse me if I'm reading too much into …The might be a complicating factor.Excuse me if I'm reading too much into your user name, but do you need to keep within any strict islamic rules on borrowing?


Hi all thanks for the information really helps and yes if I can find that will be fantastic, I know the amanah hsbc used to but not anymore
freeislamicapps12 m ago

Hi all thanks for the information really helps and yes if I can find that …Hi all thanks for the information really helps and yes if I can find that will be fantastic, I know the amanah hsbc used to but not anymore


try Al Rayan. As I understand it, an Islamic 'mortgage' is more expensive but its beyond my knowledge.

With a normal mortgage you borrow money and the different options are all about how you repay that money, variable interest rates, fixed interest rates, linked investment products.

Islamic deals involve the bank buying the house and you then buying it from then in installments. tbh it seems to me to be complicating things and adding to costs for no benefit, but I'm not religeous.
mas9921 m ago

try Al Rayan. As I understand it, an Islamic 'mortgage' is more …try Al Rayan. As I understand it, an Islamic 'mortgage' is more expensive but its beyond my knowledge.With a normal mortgage you borrow money and the different options are all about how you repay that money, variable interest rates, fixed interest rates, linked investment products. Islamic deals involve the bank buying the house and you then buying it from then in installments. tbh it seems to me to be complicating things and adding to costs for no benefit, but I'm not religeous.


interesting concept. i have not come across this before.
introduces complication to tax and transfer of ownership of risk.

it would give me a headache trying to put a monetary value on a mortgage like this if one were to take account of all factors over the mortgage period to determine the monthly payment from point zero. if i were the bank, i would consider a mortgage like this to be more risky for me as a lender and so i would want to charge more interest to cover that risk, which is probably why such mortgages are more expensive.

it certainly makes life more complicated for the bank as it means more admin i would guess due to the complication of how such a mortgage works.

religion has a lot to answer for in making people's lives more complicated than they need to be, but i am not religious either so do not wish to upset anyone who is.
Just don't use LET TO BUY or anything the government setup to buy a new build as you'll be paying 20% more then the property is worth. Well worth also getting a proper survey done if it's an older property. Also don't take much notice of new bathroom & kitchens etc as these are cheaper to put in yourself in a style you prefer. Just look at the basic fabric, the area (view morning, evenings and weekends).
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