mortgages

[SOSAGES]

Morning - seems when leaving my young lady alone last sunday she decided to browse the internet and apart from the usual holiday/handbags browsing she does she had a look at some places for us to live (news to me)

So due to the way the world works i now have to pay a bank a lot of money every month anyone have any advice for a rookie first time buyer i have noticed that estate agents keep calling me trying to sell me a mortgage from them - my young lady also works for HSBC but it seems no discount comes out of that (tight gits) so if anyone knows anything useful or even feels like giving me a huge amount of cash id be very grateful

*i may have to start a paypal donation thing *

[Bifta]

Go and see an independent financial adviser and whatever you do, try to avoid doing any business with HSBC (unless you want to spend your life on the phone to an incompetent indian call centre)

My lad is going to HSBC today to apply for a mortgage - so if you have any dosh left over from your fund raising, i'm sure he would be grateful for any contributions.

<edit> just saw what Bifta wrote - lol - it won't be my problem

[Chris]

Once upon a time I'd have recommended a site like www.charcolonline.co.uk but it has acquired a reputation recently for not clearly showing all the charges associated with the mortgages it offers ...

Nevertheless, what I found useful was to go through the mortgage picker on that site, trying a few variations on mortgage amount and repayment term, and you will soon get to see which mortgage provider names keep popping up again and again in the list of recommended products.

Then, simply go to the individual websites of those mortgage providers and have a go at the mortgage calculators they have there.

If you fancy some face to face contact, remember that many Independent Financial Advisers or Mortgage Advisers charge you a fee (others get by on commission from the lender), and if you go into a bank or building society the adviser will almost certainly be 'tied' and only able to advise on that bank's own products.


EDIT

A particularly useful feature of the Charcol site is the ability to view the cost of a product over a period of time - say one ot two years, if there's an initial discount, or even the entire term of the loan if you think you might keep it that long.

It is very well worth your while to keep 'total cost' in mind - as a rule of thumb, the better the initial discount, the greater the longer term costs will be. And don't forget to add the costs of all your fees for solicitors, surveys &c. into your considerations!

[SOSAGES]

a few people have recommened northen rock - (i think thats the name)

seems to be a bit of a minefield, to think all of this fuss and money just so she can spend all her time going to IKEA..

[Nugget]

I've got my mortgage with Northern Rock and I've found them alright. The only problem I had (which, it has to be said, was fairly big) was when we pulled out of the first house we put an offer on.

Basically, on the first house, there was a problem with the survey which we couldn't afford to sort out. As a result, we pulled out of that one and put an offer on another (the house we ultimately bought). Obviously, we had the survey done, but it then took months to get the second survey through - put it this way, I complained 4 times, rang them at least twice a day and, in the end, they finally faxed me ................. somebody elses survey report! Another couple of weeks later, I finally got hold of the report.

Fortunately (depending on your point of view), the person we bought the house off had a couple of delays as well and, to be fair, I've not heard of anybody else having problems with Northern Rock (I even recommended them to my brother), so it's worth at least getting a quote from them.

[etccarmageddon]

Originally Posted by SOSAGES

Morning - seems when leaving my young lady alone last sunday she decided to browse the internet and apart from the usual holiday/handbags browsing she does she had a look at some places for us to live (news to me)

So due to the way the world works i now have to pay a bank a lot of money every month anyone have any advice for a rookie first time buyer i have noticed that estate agents keep calling me trying to sell me a mortgage from them - my young lady also works for HSBC but it seems no discount comes out of that (tight gits) so if anyone knows anything useful or even feels like giving me a huge amount of cash id be very grateful

*i may have to start a paypal donation thing *

what are you looking for - I'd suggest getting a fixed rate. make sure you find one where you can overpay.

www.nationwide.co.uk do good fixed rates at the moment.

www.moneysupermarket.com will help you search.

when you find one you're thinking of going for... put the details on here and we'll comment on it!


look out for hidden charges - ie. 'reservation' fees etc - mine had a fee of £290 but no valuation fees.


dont get a mortgage via an estate agent. shop around the net for one.

[SMHarman]

A handy place

http://www.thisismoney.com/undated/ff954.html

You need to think about whether you want a fixed rate > certainly of outgoings, floating or cap/collar > certainty within range.

Most now are more tied to base rate fluctuations, so they cannot hold off on rate falls and process rate rises quickly.

Then repayment (guaranteed to repay the capital) or interest only + an investment product(4:30 @newmarket).

Abbey were doing some good deals 15 m ago when I remortgaged, but have not looked since then.

[Chris]

Originally Posted by etccarmageddon

what are you looking for - I'd suggest getting a fixed rate. make sure you find one where you can overpay.

www.nationwide.co.uk do good fixed rates at the moment.

www.moneysupermarket.com will help you search.

when you find one you're thinking of going for... put the details on here and we'll comment on it!


look out for hidden charges - ie. 'reservation' fees etc - mine had a fee of £290 but no valuation fees.


dont get a mortgage via an estate agent. shop around the net for one.

I wouldn't recommend a fixed rate at this time, as we are at, or near, the top of the current economic cycle of Base Rates. You will in all likelihood fix yourself with a rate that will prevent you from getting the benefit of interest rates which are likely to go down again before the next three years are out.

I would go for a discount Base Rate Tracker over two years (three if you can get it), then remortgage to avoid the full repayment rate at the end of that period and if rates are on the slide at that point, consider a fixed rate then.

I've just got myself a rather nice two year discount tracker from the Royal Bank of Scotland, which I am especially pleased with as I had a limited choice of lenders (I'm buying a timber house!).

[Rob]

Number of things to think of. Do you want a repayment mortgage, i.e. yo pay off all interest monthly together with a small part of the load so the total debt reduces each month, or an interest only loan where the debt stays the same and you just pay interest each month. With the latter you need some other investment vehicle that pays of the loan at the end of the mortgage, i.e. a pension plan (you can currently take 25% of your accumulated pension as a lump sum) or endowment, but neither pensions or endowments have performed so well in the last few years so that maybe is a tricky route, and over the term as a whole you will pay a lot more in interest as the debt doesn't reduce.

Do you want fixed rate mortgage, cashback, or variable rate. When the mortgage rate changes, will that immediately affect how much you repay, or do you only see the change once a year when the mortgage company notifies you of next years amounts. Maybe great if rates increase, but you don't get immediate benefits when the rate drops. If you have a special intorductory deal, how long will you be tied to that company before you can remortgage?

If you have extra money, can you make additional repayments to reduce the debt. Conversely, can you take a payment holiday.

How is interest calculated, daily, monthly?

What about accounts which offset your income and savings against your mortgage interest?

When you do find the property you want, don't forget to budget for stamp duty, conveyancing (solicitors) fees, surveyors fees, removal costs, mortgage application fees etc.

Cheaper mortage rates are often available when you have more equity in the property, i.e. if the value is £100,000, you can deposit £20,000 then the rate will be less than if you can only deposit £5,000. When you have little equity you may have to pay an additional mortage indemnity fee.

Unless the property is really low value, and you know its in good order, don't rely on the mortagage valuation report as a survey. That's only there to tell the mortage company there is adeuate security for the loan. You will want a more detailed survey, perhaps a Homebuyer report, to tell you if there are works on the horizon that could cost you dosh.

[Mr_love_monkey]

You need to think long and hard about what you can afford if things come to the worst - at the moment what the interest rates will do is anyones guess, and anyone that tells you that they know they will do x - is only guessing.
Certainly the rates look like they are going to carry on going up, so you need to bear this in mind.

Fixed rates seem like a good idea, but you also need to think about what happens after - you'll get a good(ish) rate now, for, for example 2 years, and then depending on your mortgage you find that after the 2 years, you are tied in for a further 12/18 months on whatever their standard variable rate is - it's possible that 2 years down the line you could find what you need to pay is a lot more than you originally thought you would.

If you have a lot of cash lying around, then it may be worth looking at one of these combined accounts - where anything in your account is taken off your mortgage... but they're usually variable rates, so be careful.

Essentially what you'll have to do is sit down and work it all out - see what it's going to cost you over the next 5 years - and factor in what you think the worst is that could happen with the interest rates - i.e. imagine if they keep increasing by .25% every 3 months..

But do shop around, there are still some very good deals out there

[Chris]

Originally Posted by Mr_love_monkey

Certainly the rates look like they are going to carry on going up, so you need to bear this in mind.

I really don't agree with this. Remember that the Bank of England's Monetary Policy Committee is not, directly, charged with keeping house prices under control. Its remit is to keep inflation within the Government's target range and to ensure stable economic growth.

House prices have been making the headlines as a reason for interest rate rises, but this is because the MPC sees the danger of a knock-on effect for the wider economy if housing becomes unaffordable. There are, however, other concerns they must take into account. Manufacturing growth has slowed alarmingly in recent months due to the combined effect of interest rate rises and high fuel prices. Further interest rate rises at this point would risk serious harm to this important sector of the economy. Let's also not forget that house sales have fallen flat in the last eight weeks which suggests that the Base Rate rise is now sufficient to keep a lid on house price inflation.

Rates have been at 4.75% for three months now and the widely made prediction of '5% by the end of the year' is looking pretty accurate. It is extremely unlikely that we would see two consecutive rises in November and December, taking the Base Rate to 5.25%. A growing number of economists now believe that 5% is as high as the Base Rate will go in this cycle and the trend over the next few years will be a gradual fall.

[Rob]

Yep house prices may still be rising in the North, but in the South East many areas are starting to see sharp price falls. Undoubtedly the market has cooled. Indeed the RICS latest survey suggests prices are now, on average accross the country falling at their fastest for 9 years. Bear this in mind if buying now, especially if you have limited funds for a deposit. You want to avoid a potential negative equity situation (you owe more than the property is worth).

Interest rates are still at good overall low rates. It may be that eventually the Bank of England might increase the rate again, but at the moment, inflation (apart from oil) is under control, house price inflation is coming under control, so the likelihood of big changes is IMO minimal.

[SOSAGES]

im in the SE - from talking to a friend of mine whos an estate agent he says people are getting paniky and taking silly offers on their property as they think they prices will bomb - but they are fine ..
im tempted to wait to see if they do go down and also would be nice to save a few more 1000 - but i know as soon as i do make the leap and buy something the price will fall ... its hard work being a first time buyer especially as i need to buy somthing that i can resell in a few years and make a profit ..

[Rob]

Originally Posted by SOSAGES

<snip>its hard work being a first time buyer especially as i need to buy somthing that i can resell in a few years and make a profit ..

Ah now that's the crux of the problem. Over the last 20-30 years we have got used to the idea that owning your house is a good way to make money. In the medium to long term that can be true, but in the short term it doesn't hold up well. During the late 1980s property price rises were rampant, yet by the early 1990s there were some massive falls. Prices again didn't really start to increase until mid 90s and whilst they took off again near to millenium, we again saw some "correction" in the early 2000s especially in the South East where prices have been a bit more volatile than the upwards only rises of the North.

Whilst home owning is undoubedly a good long term investment, don't look at it as a sure fire thing. There's no such thing in this world.

Consider also that to make money you have to realise the capital. Thus you have to sell and not wish to buy again in the same area. It's all relative. Bear in mind too, that moving house costs a lot of money with estate agency, solicitors, etc. so just to maintain a status quo the property price has to increase a lot to cover those costs.