First time mortgage queries

[mattuk89]

Me and my partner are looking to buy our first flat, have a deposit of 20k and are hoping to be able to borrow around 150-160k, quick browsing on money supermarket to see the rates show quite a few places with rates at 1.99-2.00% making the repayments very achievable for us, these are fixed for 2 years, with the rate jumping to around 3.5% which jumps the monthly up a lot, what's the best way to go around this, I'm am completely clueless, and just thought I would get a bit of information from you lot before I go to a mortgage advisor.

Is fixed rate the best? It seems to have the lowest interest rate, before the 2 years are up, is it possible to change providers and get a better rate, does this work out cheaper with fees and stuff.

We are in no rush to get a place, but I would like to know exactly how much I could borrow, and the rate, if I apply for a mortgage do I have a certain time find a place before the offer expires? It would be nice to get something in writing and then view a few places and make an offer if we find somewhere nice, I presume it's correct to get the mortgage first before making offers for flats etc..

Thanks in advance

[mcbook]

With fixed 2 year deals it's expected that you'd sign up for a new deal when the 2 years expires rather than just go onto the higher rate. What that new fixed rate deal would be 2 years from now is the unknown and that's where it might be beneficial to get proper advice i.e. is a 2 year fixed deal the product for you or should you be going for a 5 year deal... or even a tracker. Depends on your circumstances.

Forgot to add that within that 2 year period there are usually heavy penalties for switching to another provider so you really need to stick with that deal for the given period.

Edited by mcbook on Wednesday 8th March 19:04

[Jockman]

mattuk89 said:

Me and my partner are looking to buy our first flat, have a deposit of 20k and are hoping to be able to borrow around 150-160k, quick browsing on money supermarket to see the rates show quite a few places with rates at 1.99-2.00% making the repayments very achievable for us, these are fixed for 2 years, with the rate jumping to around 3.5% which jumps the monthly up a lot, what's the best way to go around this, I'm am completely clueless, and just thought I would get a bit of information from you lot before I go to a mortgage advisor.

Is fixed rate the best? It seems to have the lowest interest rate, before the 2 years are up, is it possible to change providers and get a better rate, does this work out cheaper with fees and stuff.

We are in no rush to get a place, but I would like to know exactly how much I could borrow, and the rate, if I apply for a mortgage do I have a certain time find a place before the offer expires? It would be nice to get something in writing and then view a few places and make an offer if we find somewhere nice, I presume it's correct to get the mortgage first before making offers for flats etc..

Thanks in advance

Couple of observations.

The rate at the end of the product only applies if you do not arrange another product. They can read neither the future, nor your mind.

I go for Tracker rate at the moment. It's variable and allows for overpayments at will. Other options / profiles are available and equally valid.

Yes, Mortgage Offers are good in principle.

Sarnie is a very knowledgeable broker. If he posts, listen to him, as well as others.

[alpaca85]

Hi OP,

My partner and I purchased our first house last year and were in much the same position.

First things first - go and see an independent mortgage advisor/broker, who'll have access to mortgages from the whole market.
They'll not only be able to give you a definitive answer as to how much you can borrow, but they'll be able to run you through the benefits of each mortgage type. A decent adviser will also run through the costs of moving - stamp duty, conveyancing, search fees etc - so you'll have a decent idea as to how much you'll have to play with.

Once they've run you through all that you'll be able to apply to your chosen lender for a 'decision in principle' - essentially an agreement from the lender that guarantees that they'll lend you the money (subject to survey) when the time comes, giving you the freedom to head out to start viewing properties with confidence.

As an ex-estate agent, I wouldn't advise going to view anything until you've seen a mortgage adviser, as you'll be their very last priority until you're able to proceed.

Once you've purchased a place and have been here for 18 months or so, it'll be time to revisit the mortgage adviser to find a new deal for the next 2/3 years or so, thus avoiding the rate rise and keeping your payments as low as possible.

That's a very basic guide, but hopefully it helps a little!!

[Crafty_]

Usually the fixed rate period coincides with a tie in, you can pay off the mortgage early during the tie in period (either in cash or obtaining another mortgage elsewhere) but you'd have to pay a penalty fee.

There are also normally restrictions on overpaying during the tie in period to prevent you paying off too much, I think mine wouldn't let me overpay 10% of the value in a year.

If you'd like some help and quotes you could do a lot worse than contact Sarnie on here, this is his job and has sorted out numerous PHers over the years. Never had the need to use him myself but I only ever see positive feedback from those that have.

[mattuk89]

Thanks all for you advice, it's all starting to make a bit more sense now.

Sarnie is the guy I've been looking for but couldn't remember his username, so thanks for the mention, I'll message him tomorrow.

[Sarnie]

mattuk89 said:

Thanks all for you advice, it's all starting to make a bit more sense now.

Sarnie is the guy I've been looking for but couldn't remember his username, so thanks for the mention, I'll message him tomorrow.

I'm here

Feel free to drop me a line, more than happy to chat!

[mattuk89]

Sarnie said:

I'm here

Feel free to drop me a line, more than happy to chat!

Thanks, message sent!

[66Elan]

alpaca85 said:

Hi OP,


First things first - go and see an independent mortgage advisor/broker, who'll have access to mortgages from the whole market.

It is good advice to see a broker but there have been changes to 'independent' and 'whole of market'status. Because I do not arrange second charge secured loans but refer clients to specialists in this area to comply with the FCA I have to say I offer mortgages from a range of lenders although my 'range of lenders' is probably larger than most independent brokers including access to HSBC mortgages which are normally only sold direct.

[Sarnie]

66Elan said:

It is good advice to see a broker but there have been changes to 'independent' and 'whole of market'status. Because I do not arrange second charge secured loans but refer clients to specialists in this area to comply with the FCA I have to say I offer mortgages from a range of lenders although my 'range of lenders' is probably larger than most independent brokers including access to HSBC mortgages which are normally only sold direct.

HSBC are a joke.

I have had this from a client today who has spoken to HSBC before coming to me;

"lead time for HSBC was stated at 3 months but we really want to move sooner (6-8 weeks ideally) "

3 months!?!?!!?

We have access to all of HSBC's products too...........but no matter how good their rates are..........3 months is a joke.

And then there is their underwriting process...........excruciating.....and declining of applications for almost no reason other than they don't like the look of it.

We've stopped recommending HSBC for our purchase applications for all of the above reasons......unless after explaining the above, the client is happy to attempt to apply to them.

[TartanPaint]

Just out of interest, does that feedback apply to First Direct too, Sarnie?

[oxford drinker]

I got an HSBC mortgage just before Christmas - took 6 weeks from application to completion.

[Sarnie]

TartanPaint said:

Just out of interest, does that feedback apply to First Direct too, Sarnie?

I can't comment on them directly.........