Mortgage Advice

30
Posted 23rd Sep
Hi there, I am hoping some of you guys could offer some mortgage advice.

I am looking to buy a flat, around £150,000. I am a first time buyer. I have saved around £10000, but would plan to leave a 5% deposit (£7500) or slightly higher (£8000), as I would like to leave money for lawyers fees etc.

I would be a sole applicant but have a good salary of £50,000 per year and have an excellent credit history. I have no debt (finally!). My budget could stretch to £160,000 per month. Ideally I want to keep payments low so this would be more attractive for perhaps paying it over 33 years (taking me to 65?). I have no dependants or any payments coming off my salary.

I have been looking at mortgages and as I am sure you can imagine, things vary immensely. I was looking for some advice. Ideally a 2 year fixed mortgage. I am 32... will I have issues getting a 30 year mortgage? As I mentioned earlier, I am a first time buyer.

Some good deals I have found:

HSBC 2.69% no “booking fee” but doesn’t mention about other fees.

Post Office 2.8-2.88% no fees. The higher rate includes a valuation. Not sure what that means.

2.94% M&S, no fee including valuation.

Yorkshire Building Society 2.83% £495 fee.

Newcastle Building Society 2.59% £498 fee.

I’m confused how this works. Like why would anyone go for M&S above when everything appears to be very similar but cheaper from Post Office?

Are these fees to be avoided?

HSBC seems to be the best deal?

What do you guys think?

Is it easy to switch over to a new deal in two years time? Do I need more money to do this? Do I therefore need to keep saving once I have moved in?

Thanks all for your help!
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I think you need to speak to an all market, independent and free mortgage broker.
He/she will have access to deals not on the high street or less known lenders.
As a first time buyer, I would go for smallest fixed term you can as when you renew, your rate will go down.
However, % you are quoting seem low for only 5% deposit.
AMaky23/09/2019 15:52

I think you need to speak to an all market, independent and free mortgage …I think you need to speak to an all market, independent and free mortgage broker.He/she will have access to deals not on the high street or less known lenders.As a first time buyer, I would go for smallest fixed term you can as when you renew, your rate will go down.However, % you are quoting seem low for only 5% deposit.


Hi there thanks for your input. Reluctant to see an advisor as most take a fee and/or seem to get some sort of kickback from the provider.
shnp23/09/2019 15:53

Hi there thanks for your input. Reluctant to see an advisor as most take …Hi there thanks for your input. Reluctant to see an advisor as most take a fee and/or seem to get some sort of kickback from the provider.


yes they do get commission but most are fee free and if they offer you a rubbish deal, you decline and they get nothing so it's in their interest to get you a good deal.

5 years ago as first time buyers, we found our advisor very useful and as he lived few hours away, everything was done via emails.
when remortgaging, we went straight to lender.
I did all mine myself but I think you should speak to someone as you don't seem too savvy about it. That's a low deposit for that wage and the fact you want a longer than normal (25 year) mortgage even though you're on a decent wage doesn't make sense as it'll cost you so much more in interest for no reason.
dcx_badass23/09/2019 15:59

I did all mine myself but I think you should speak to someone as you don't …I did all mine myself but I think you should speak to someone as you don't seem too savvy about it. That's a low deposit for that wage and the fact you want a longer than normal (25 year) mortgage even though you're on a decent wage doesn't make sense as it'll cost you so much more in interest for no reason.


Two years ago I was in £17,000 of debt (including student loan). I have been paying it off. I know a higher deposit will reduce payments... but it’s not earth shattering amounts. I would need another six months of paying rent to save up another £6000 to get me up to £15,000 for 10% and even then, would have no money left for decoration, lawyers fees etc.
Edited by: "shnp" 23rd Sep
Pop your figures into this calculator, will make your life way easier: moneysavingexpert.com/mor…ys/ & then sort by MSE Total Cost Assessment & filter on the left to show only 2 year fixed deals. There's also a good first time buyers pdf guide, download that and read it cover to cover, will answer loads of your open questions.


in answer to your other questions:
"Post Office 2.8-2.88% no fees. The higher rate includes a valuation. Not sure what that means." 2 options, 2.8% interest you pay for the valuation (valuation fee will be listed somewhere on their site ) or second option 2.88% interest & post office will pay for the valuation. This is why searching for your own mortgage deals without this comparison engine is so difficult & why the introduction of these software has made things way easier.
Are fees to be avoided - not necessarily. you want the cheapest overall deal, which is what that calc finds for you by averaging out fees over the deal length.
Why would someone pay more for the same deal from a different provider? Lots of people will just get the mortgage from their bank account provider & wont bother to shop around. Banks know this, you think they provided you with a free current account for all those years out of the goodness of their heart?
Switching is simpler than buying in my experience, less legal work involved, but still affordability hoops to jump through. Will you need more money to do this - Who knows, depends on the deal you took. I would be willing to put some money in if it meant the deal overall worked out cheaper. Youll just run that same best buys app again .

Hope this helps
sparkeeh23/09/2019 16:06

Pop your figures into this calculator, will make your life way easier: …Pop your figures into this calculator, will make your life way easier: https://www.moneysavingexpert.com/mortgages/best-buys/ & then sort by MSE Total Cost Assessment & filter on the left to show only 2 year fixed deals. There's also a good first time buyers pdf guide, download that and read it cover to cover, will answer loads of your open questions. in answer to your other questions:"Post Office 2.8-2.88% no fees. The higher rate includes a valuation. Not sure what that means." 2 options, 2.8% interest you pay for the valuation (valuation fee will be listed somewhere on their site ) or second option 2.88% interest & post office will pay for the valuation. This is why searching for your own mortgage deals without this comparison engine is so difficult & why the introduction of these software has made things way easier. Are fees to be avoided - not necessarily. you want the cheapest overall deal, which is what that calc finds for you by averaging out fees over the deal length. Why would someone pay more for the same deal from a different provider? Lots of people will just get the mortgage from their bank account provider & wont bother to shop around. Banks know this, you think they provided you with a free current account for all those years out of the goodness of their heart? Switching is simpler than buying in my experience, less legal work involved, but still affordability hoops to jump through. Will you need more money to do this - Who knows, depends on the deal you took. I would be willing to put some money in if it meant the deal overall worked out cheaper. Youll just run that same best buys app again . Hope this helps


As above mentioned, you need to decide a term 2 or 5 years and then calculate all the fees and interest over that term. Will give you an indication of which deal will cost you least amount of money.
Also, speak to some mortgage advisors. Do your own research as well.
Compare your own deal from Internet and advisors, whichever cost you less is better financially. But as you have to take into account the longer than normal term and low deposit, I think it's better for you to seek help from mortgage advisors. Good luck
Watch out for your first mortgage payment.

If its say £1300.00 a month your first payment might be £1800.00.
Do their payments start on the first of the month or the 15th etc.
I moved in on the 15th of December and first payment was 1st January so hit with 50% extra on first payment.
dcx_badass23/09/2019 15:59

I did all mine myself but I think you should speak to someone as you don't …I did all mine myself but I think you should speak to someone as you don't seem too savvy about it. That's a low deposit for that wage and the fact you want a longer than normal (25 year) mortgage even though you're on a decent wage doesn't make sense as it'll cost you so much more in interest for no reason.


Disagree on the longer than standard 25 years making no sense as it costs you much more in interest for no reason. I do this with all my mortgages, in order to minimise my obligatory payments during the year. Then during the year if my business is making good money, I'll use some of my earnings to pay of a 10% as part of my repayment allowance without incurring interest charges. IT means you have more freedom with cashflow, and is a good way of hedging risk, in my opinion.
Some things you should that I will just bring to your attention. You probably will know this but I'm just going to be captain obvious.

If you're buying Flats make sure you know the situation with ground rents, and any service charges re: communal areas/services. I assume you know the difference between Leasehold and freehold?

You shouldn't have any issues getting a 30 year mortgage, if the provider allows it. I recently (well 19 months ago) got one with HSBC for 30 years and I've only just turned 30. As long as it doesn't take you past state "retirement" age you will be fine.

HSBC nowadays include a valuation survey for free, which is good. But you have to go with their surveyor, and they do a standard valuation. I personally, paid an extra £249 for a full building survey as its an old property and I needed some structural assurances.

Also remember to budget for a conveyancing fee - that is what you have to pay your lawyer do draw up paperwork and all of the required searches.

Regarding your question: "I’m confused how this works. Like why would anyone go for M&S above when everything appears to be very similar but cheaper from Post Office?". Your not guaranteed to get the Post office one, they might have stricter rules and therefore you might have to go elsewhere I.e. to M&S.

RE: Is it easy to switch over to a new deal in two years time? Do I need more money to do this? Do I therefore need to keep saving once I have moved in? It's relatively easy. You shouldn't need more money, assuming house prices have risen or at least stayed the same, your loan to value should be increasing. The main thing you need to worry about is what has happened to interest rates in the two years. I wouldn't expect them to go down because they cant really go much further down from where we are at now (0.5% max in reality) but they could potentially go up a lot. A decade or two ago you'd be looking at interest rates at 5-10% so that gives you a reference point. MY advice would be continue saving once you have moved in if you can as that's just good practice and at the end of the year try to pay off some of your mortgage early (however much you can for free)

PM me if you need specific advise, but I would echo what other people have said, go see a mortgage advisor. You can do it yourself, and I have been but I work in the finance industry so I'd say I'm fairly well versed in this which with all due respect you do seem. They're not all ripoff merchants.
bigwheels23/09/2019 16:22

Watch out for your first mortgage payment.If its say £1300.00 a month your …Watch out for your first mortgage payment.If its say £1300.00 a month your first payment might be £1800.00.Do their payments start on the first of the month or the 15th etc.I moved in on the 15th of December and first payment was 1st January so hit with 50% extra on first payment.



One bank I had mortgage with said that they can't take first installment until 21 days after start of your mortgage. That has been the reason for first installment bigger for me so many times. Might be the standard across the board. Can someone please confirm this for hukd forum?
You earn 50k but can’t get a financial advisor!
sdoherty100023/09/2019 17:31

You earn 50k but can’t get a financial advisor!


I can, but don’t trust them to be necessarily unbiased. They often work on commission from offering certain products. I would rather have a good awareness before I approach anyone so that I’m not taken advantage of. Wouldn’t you? I am very financially savvy anyway, just buying a house is obviously branching out to an area of finance I’m not really confident in.
Edited by: "shnp" 23rd Sep
When switching there is a fee to close the account, not all banks advertise this, so factor this in.
rimalpatel00723/09/2019 17:45

When switching there is a fee to close the account, not all banks …When switching there is a fee to close the account, not all banks advertise this, so factor this in.


Is this called an exit fee?
dcx_badass23/09/2019 15:59

I did all mine myself but I think you should speak to someone as you don't …I did all mine myself but I think you should speak to someone as you don't seem too savvy about it. That's a low deposit for that wage and the fact you want a longer than normal (25 year) mortgage even though you're on a decent wage doesn't make sense as it'll cost you so much more in interest for no reason.


I was in similar position with the fixed term, I got a 20 year mortgage but intended to pay it off within 7 - just wanted the security of low mandatory payments (rest as overpayments), ofcourse this meant checking overpayment charges was important too
Think carefully about taking a mortgage out for so many years. Just read an interesting article about this in The Sunday Telegraph - from a couple or so weeks ago. I'll see if I can find it online. I hope such a link is permitted.

telegraph.co.uk/per…0k/
Edited by: "JimboParrot" 23rd Sep
dcx_badass23/09/2019 15:59

I did all mine myself but I think you should speak to someone as you don't …I did all mine myself but I think you should speak to someone as you don't seem too savvy about it. That's a low deposit for that wage and the fact you want a longer than normal (25 year) mortgage even though you're on a decent wage doesn't make sense as it'll cost you so much more in interest for no reason.


Nowt wrong with taking out a 30 year mortgage. Why restrict yourself? Nearly every fixed term mortgage allows overpayments of up to 10% per annum so OP has the flexibility to reduce term if he/she wants. I would recommend getting repayment amount on 20,25 & 30 years and take the 30 year and overpay to make it perform like a 25 or 20 year mortgage.
You get better rates for a 10% deposit, so pay less interest. Have you considered saving for 3-6 months? I’m not sure of your current situation but on £50,000 a year with no debt, you should be able to save quite a bit going forward! This would give you more time to research things.

Also, I’d definitely go through a broker. Who cares if they get a fee from the lender? They earn it by getting you a good deal, and less stressing during application etc. They are also upfront about what they get as they have to be!
AMaky23/09/2019 15:52

I would go for smallest fixed term you can as when you renew, your rate …I would go for smallest fixed term you can as when you renew, your rate will go down.


@AMaky - generally agree with your advice, but unsure about the logic behind the line above, or how factual it can be. If the OP goes for a short term, e.g. 2yr, the rate may be slightly lower than say a 5yr fix, but it doesn't guarentee after 2 yrs they will have a lower rate offered to them. Two other variables that no one can control that would relate to this:

1. No one knows what interest rates will do (but if anything more room to go up)
2. Unlikely starting at 95% LTV that the OP would get to the next "threshold" e.g. even 90%/85% after 2yrs unless the property sees a decent rise in value over the next 2 years.
morgie23/09/2019 19:41

@AMaky - generally agree with your advice, but unsure about the logic …@AMaky - generally agree with your advice, but unsure about the logic behind the line above, or how factual it can be. If the OP goes for a short term, e.g. 2yr, the rate may be slightly lower than say a 5yr fix, but it doesn't guarentee after 2 yrs they will have a lower rate offered to them. Two other variables that no one can control that would relate to this:1. No one knows what interest rates will do (but if anything more room to go up)2. Unlikely starting at 95% LTV that the OP would get to the next "threshold" e.g. even 90%/85% after 2yrs unless the property sees a decent rise in value over the next 2 years.


If OP is banking as much as they state they'll have enough after 2 years to reduce it to 90-85% if not lower.

The trouble it's there is a hell of a lot of uncertainty at the moment not only politically (Brexit, general elections, etc), but also statically there should be another recession anytime (~10 year cycle).
Basically get some financial advice. My advice is take the term to make you pay it off by time you 65. Then overpay as much as you can afford each month. I took a 35 year mortgage and will have it paid off in 19 years if I keep going as I am.

Your probably wondering why I would do this, simple if anything happens and I end up out of work I can stop overpaying, even use the overpayments as payments and have a lower payment to find each month to make ends meet. Hopefully that won’t happen but you never know.

I’d suggest fixing it for 5 years initially as you’ll need some time to decorate etc and need the stability of a fixed interest rate.
Edited by: "cmdr_elito" 23rd Sep
I’m 36 and just taken out a new mortgage on a house after we sold are first home we bought 10 years ago

Paying 2% fixed for 5 years with Ybs so don’t worry about the term as you can always reduce as you settle down by either over payments or remortgaging later down the line

Good luck
Edited by: "ashmac" 24th Sep
Thank you for all the feedback folks. It appears that HSBC appear to be the best deal at present - 2.69% with no fee, fixed for 2 years.

I am not ready to buy, but will consult with a mortgage advisor to see if they are able to get me a better deal.
Yeah, mortgage brokers just take a £500 fee for showing you a list of mortgages, some can be marginally better than you can find yourself but not really worth it.

You do need to spend time searching the comparison sites and also go to the banks own websites as they wont all be on the comparison sites. I would go for the fee free mortgages, because if you work it out, they come out cheaper than the ones with fees.

You also need to check the fine print - Natwest charged me fees I didn't know about when I switched.

Also look at five year fixed deals - I just had a quick look, the rates are less than 2% you can't really go wrong with that small interest rate.
Bigfootpete24/09/2019 12:49

Yeah, mortgage brokers just take a £500 fee for showing you a list of …Yeah, mortgage brokers just take a £500 fee for showing you a list of mortgages, some can be marginally better than you can find yourself but not really worth it.You do need to spend time searching the comparison sites and also go to the banks own websites as they wont all be on the comparison sites. I would go for the fee free mortgages, because if you work it out, they come out cheaper than the ones with fees.You also need to check the fine print - Natwest charged me fees I didn't know about when I switched.Also look at five year fixed deals - I just had a quick look, the rates are less than 2% you can't really go wrong with that small interest rate.


Thank you! That rate on a 95%LTV?
Unfortunately not - I just changed it to reflect what you asked, and it's not as favourable (2.59% was the best), I used the moneysaving expert one, seems better than others though.
33 year mortage, you don't want to be paying out £1000pm in your 60's.

Think about your goals, do you want to move in the future etc.
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