Mortgage advisors help needed ..

[mondatoo]

Just wondered if there was anyone who came on blonde that was a mortgage advisor and could give me some unbiased advice

I'm currently in the process of buying my 1st house with my cousin and we had a mortgage promise with halifax and everything seemed to be going along smoothly.We had an interest rate of 5.7% with payments set at £372 and i was well happy with that.However as it then went to the underwriter they realised that my cousin had only being working self employed for 9months so have backed out of the deal cause of this.We have now been giving an agreement with ge money but its at 7.9% and the monthly amount is now risen to £529 mean total repayable for an £80k mortgage is £245k 

So basically was just wondering if anyone who deals in this business would no if it's likely the market will get back to normal within 6months and we would be able to get a much better deal than this or if it's likely that the market is going to be this bad for the next year or more and this is close to best we would get in a years time. Obviously nobody can predict the future but just looking for little bit of advice from someone who knows what they're talking about.

Thanks in advance for anyone's help.

[AndrewT]

An small increase in the % rate from 5.7% to 7.9% means your monthly payments increase by 42%? How does that work?

Why are you buying a house now, just as the market is peaking?

[TightEnd]

the market is going to be tough for at least 2 years. I would not buy a house now. Wait it out if you can, prices are headed down as the economy adjusts to the credit crunch at best and goes into recession at worst

[ACE2M]

tighty, are we being driven into recession by the banks greed?

[TightEnd]

banks greed?


I am not saying we are headed into recession. I think its certain we are in for a rough year at least though

both individuals and companies are too highly borrowed, asset prices are too high and now the availability of credit is shrinking

add to that high oil prices, high food prices and other inflationary pressures and its pretty clear to me that you want to be careful, be saving and waiting for the cycle to turn

as to the banks, well their strategies were the result of Western government policies of cheap credit. They made hay whilst these conditions reigned. Now things are tougher and it wouldn't surprise me to see more Western Banks get into serious trouble from bad debts, much like the Midland Bank did from the last property bust, when it was bailed out by HSBC buying it

[mondatoo]

The reason i'm buying it now is because its my dads and uncle's house which was left to them by my grandma.Also my cousin needs a place to live as he's renting off his dad but they've falling out so he needs to get out(all very complex hmm).The house is valued at 100k but they're selling it to us for 80k so it's a good deal but just a shit mortgage deal.Also i live with my mam and shes selling her house to go live with her partner and i don't want to move with her up there so i want to buy somewhere as i feel renting is a total waste of money.

[Joobie538]

I used to work for Barratt homes, the rate increase sounds normal I'm afraid, if you don't have 12mths worth of books the banks are reluctant to lend to you!

I can put you in touch with a great independent mortgage adviser (he did my mortgage) if you want?

[TightEnd]

The reason i'm buying it now is because its my dads and uncle's house which was left to them by my grandma.Also my cousin needs a place to live as he's renting off his dad but they've falling out so he needs to get out(all very complex hmm).The house is valued at 100k but they're selling it to us for 80k so it's a good deal but just a shit mortgage deal.Also i live with my mam and shes selling her house to go live with her partner and i don't want to move with her up there so i want to buy somewhere as i feel renting is a total waste of money.

i said "delay if you can"...obviously everyone has their reasons and timings.

Renting in a rising market is not great but in a falling makret it helps protect capital and give you flexibility to buy right at the bottom.

If your situation allows it of course.

[AndrewT]

The reason i'm buying it now is because its my dads and uncle's house which was left to them by my grandma.Also my cousin needs a place to live as he's renting off his dad but they've falling out so he needs to get out(all very complex hmm).The house is valued at 100k but they're selling it to us for 80k so it's a good deal but just a shit mortgage deal.Also i live with my mam and shes selling her house to go live with her partner and i don't want to move with her up there so i want to buy somewhere as i feel renting is a total waste of money.

If it's valued at 100K but you're getting it for 80k that's a good enough reason to buy now. Seeing as it's a special family deal, that 80K isn't going to become 60K if the value of the house drops to 80K.

[mondatoo]

Thanks for the replys guys/girls

If it's valued at 100K but you're getting it for 80k that's a good enough reason to buy now. Seeing as it's a special family deal, that 80K isn't going to become 60K if the value of the house drops to 80K.
[/quote]

It's not about the price where paying for the house mate its the bank where getting the mortgage off that is the problem as where getting a poor deal due to all the banks tighting up.

[thediceman]

The lenders are getting so strict on there lending criteria that any appliciations deemed to be a greater risk are either being declined or hit by high arrangement fees plus a high interest rates. Sadly any self employed person with less than 12 months accounts is one of the areas they are getting really strict on. A year ago you could comfortable process it under a self cert mortgage but these are nolonger so easy to obtain at present. 7.9% does seem a tad high and I'm sure there are probably better deals out there.

I'm sure tighty's would be horroried but I'm still buying at present as I believe there are bargains out there if you do your research and negiotate hard. Some of the auction deals I'm seeing at the moment are great puchases. The subject of to buy or not to buy at present is a very personal one and specific to an individuals situation. A blanket hold and wait is not always the best advice even though I agree the market is on a downturn which will probably last for the next couple of years. I'm however an investor looking at the long term but I still find projects that can produce a short term profit. Your purchase is a very specific one and if you are really getting it at 20% below market value I can't see why anybody would pass up that opportunity. That is unless they are convinced the market will fall by greater than 20%, standup Mr housepricecrash.co.uk, and even than that's by some margin when you factor in monies lost in rental expenses whilst waiting for the property market to bottom out. 

Mondatoo, I will check out a couple of sites to see what other products are out there. The availabilty of mortgages are reducing on a daily basis so it is getting harder to find a suitable mortgage especially in your situation. Can you not buy with someone else. One option, but worse case scenio is to take that mortgage and plan to move it to a better deal once the market improves. The risk to this is when will that happen and what new products will be available at any given time. The optmistic view is that lenders make their business from lending and won't always be so nervous. Times will change, the question is when, sadly the answer is who knows.

[Grier78]

Your cousin would need to have three years certified accounts for his income to count towards the affordability criteria of the mortgage. But with an 8-% LTV (Loan to Valuation) you should have no problem in getting a mortgage from any responsible lender. If you earn over £17000 per year then you could get it just on your income and in any case you would want to set up an agreement with a solicitor regarding how much you and your cousin should contribute to the mortgage payments and the share of the property you will own if one of you moves out.

If you went for a tracker mortgage, then they are available for around 1% above base rate which would be around 6.2% APR and with the Bank of England Rate set to fall over the rest of this year this could look like a great deal. There should be no fees to get this apart from a valuation fee of about £120 and possibly chaps fees of around £17.50. Also look for a deal with no tie in or early repayment fees.

Don't go through a broker unless you don't like your money, in which case come play me at poker.

The amount you quoted for the Halifax is far too low for that interest rate and must have been some kind of initial discount rate. You will be looking at payments around the £500 mark for that size loan anything lower is just clever marketing with the expected strings attached.

If you get a mortgage over 25 years, and make overpayments when you can, then you will pay a lot less than £245k in total, but do be aware that in any mortgage for the first 10 years or so you are mostly just paying the interest and making very little capital reduction.

I am not going to recommend an individual lender, but if I did it would have four letters beginning with an H.

[mondatoo]

Thanks for your input thediceman and grier much appreciated(as is everyoneelses).The tracker mortgage idea sounds like this could be a good idea for us with our situation does this work like a fixed rate mortgage where you can try to change to a better deal in 2/3 years time or do u have to stay to a tracker mortgage for the full length of the deal.( i imagine you can but just checking i don't really no much about it tbh).

I was also suprised at how good the halifax offer was it was a fixed rate %  for 1st 2 years am not really expecting to get as good a deal as that but somewhere in between.

Also thanks for the non-recommendation.

[Grier78]

Thanks for your input thediceman and grier much appreciated(as is everyoneelses).The tracker mortgage idea sounds like this could be a good idea for us with our situation does this work like a fixed rate mortgage where you can try to change to a better deal in 2/3 years time or do u have to stay to a tracker mortgage for the full length of the deal.( i imagine you can but just checking i don't really no much about it tbh).

I was also suprised at how good the halifax offer was it was a fixed rate %  for 1st 2 years am not really expecting to get as good a deal as that but somewhere in between.

Also thanks for the non-recommendation.

Normally once its a tracker its always a tracker so its gauranteed to be with in x% of the base rate for the life of the loan, this means that although you wont always have the cheapest possible mortgage it also will never be anywhere near the most expensive. Fixed rate deals can be full of hidden catches like being stuck on the very high variable rate for a number of years following the end of the fixed rate and you have to pay a fee to redeem it and prob can't make any over payments (although this depends on the lender).

The lender I didn't recommend also allows unlimited overpayments and early redemption with no fees whatsoever, unlike some more "hidden in the small print" lenders like the one which is named after a town called Halifax.

[mondatoo]

Thanks for your input thediceman and grier much appreciated(as is everyoneelses).The tracker mortgage idea sounds like this could be a good idea for us with our situation does this work like a fixed rate mortgage where you can try to change to a better deal in 2/3 years time or do u have to stay to a tracker mortgage for the full length of the deal.( i imagine you can but just checking i don't really no much about it tbh).

I was also suprised at how good the halifax offer was it was a fixed rate %  for 1st 2 years am not really expecting to get as good a deal as that but somewhere in between.

Also thanks for the non-recommendation.

Normally once its a tracker its always a tracker so its gauranteed to be with in x% of the base rate for the life of the loan, this means that although you wont always have the cheapest possible mortgage it also will never be anywhere near the most expensive. Fixed rate deals can be full of hidden catches like being stuck on the very high variable rate for a number of years following the end of the fixed rate and you have to pay a fee to redeem it and prob can't make any over payments (although this depends on the lender).

The lender I didn't recommend also allows unlimited overpayments and early redemption with no fees whatsoever, unlike some more "hidden in the small print" lenders like the one which is named after a town called Halifax.

Will have a look in both m8 cheers.I was hoping this would be done quite quickly but now am expecting quite a long process by the looks of it oh well see how it goes will let uz no thanks again for e1s help much appreciated.