Discussion
I'm not sure whether I'll be able to get a sensible answer on here without giving a load of specifics, but it's probably worth a go.
I'm in the process of moving home (couple of months away) but have found a house that has been substantially reduced for a quick sale. They've had problems with broken chains before so I figure I'm going to have to raise cash before selling an existing property.
So, the question is, what's the best way to do this, given that I'd anticipate paying double the amount of deposit I have at the moment in the next 3-4 months once the property is sold? Larger Mortgage? Bridging loan?
The other question is what multiple of your income do most lenders currently give? I'd probably be looking at 3-3.5 times in the short term.
thanks in advance,
D
I'm in the process of moving home (couple of months away) but have found a house that has been substantially reduced for a quick sale. They've had problems with broken chains before so I figure I'm going to have to raise cash before selling an existing property.
So, the question is, what's the best way to do this, given that I'd anticipate paying double the amount of deposit I have at the moment in the next 3-4 months once the property is sold? Larger Mortgage? Bridging loan?
The other question is what multiple of your income do most lenders currently give? I'd probably be looking at 3-3.5 times in the short term.
thanks in advance,
D
Yugguy said:
These days 5x is not uncommon.
Unless you've got a fast vehicle addiction to fund too
I figured the amount would be OK, but I'd also need a flexible mortgage and would prefer not to be hammered on interest rate for that flexibility.
It'd just be until we'd sold the house but it also raises the question of whether there would be a penalty associated with paying that amount of money off a mortgage so quickly...
Currently looking for somewhere as a first time buyer - the standard issue multiple from the banks I've spoken to is 4 times salary, with more available depending on deposit size, etc.
Edited to add: a fair few lenders (Woolwich, for example) allow you to overpay up to 10% of the mortgage each year without penalty.
Dan
>> Edited by DanL on Tuesday 24th January 16:17
Edited to add: a fair few lenders (Woolwich, for example) allow you to overpay up to 10% of the mortgage each year without penalty.
Dan
>> Edited by DanL on Tuesday 24th January 16:17
_DeeJay_ said:
[quote=Yugguy]it also raises the question of whether there would be a penalty associated with paying that amount of money off a mortgage so quickly...
Depends on the terms and conditions, when I paid off a lump sum of my mortgage recently I got stung as the maximum without penalty was only 10% of the original ammount and I needed to pay off more than that
munky said:
These days 5x is not uncommon.
Mortgage Cos offering 5x is a possible sign the market is heading for trouble
That's probably a different subject altogether, though it does certainly highlight the difficulty of first time buyers attempting to get on the housing ladder....
Paying off 10% a year would be too little for us really. We'd probably be looking at 1/3 deposit now, 2/3 mortgage and paying off 1/3 of the original sum in 3 months time.
>> Edited by _DeeJay_ on Tuesday 24th January 16:28
munky said:
These days 5x is not uncommon.
Mortgage Cos offering 5x is a possible sign the market is heading for trouble
very few mainstream lenders offer 5X income in the manner of a straight income multiple calculation. by and large it's the sub prime lenders (first national spring to mind) that will do up to 7.2 X joint income (eek).
if you go to a mainstream (ie high street) lender who works on an affordability calculation (eg natwest, BofS, Nationwide*) then the effective multiple could well be up to 5 or 6 times income. if you bank with that same lender then the multiples can be absolutely huge
*nationwide only do affordability calculations on a joint application.
DanL said:
Currently looking for somewhere as a first time buyer - the standard issue multiple from the banks I've spoken to is 4 times salary, with more available depending on deposit size, etc.
Edited to add: a fair few lenders (Woolwich, for example) allow you to overpay up to 10% of the mortgage each year without penalty.
Dan
>> Edited by DanL on Tuesday 24th January 16:17
the vast majority of high street lenders will allow 10% creps per annum, this varies from original amount to existing balance.
nationwide are an anomaly, they only allow £500 per annum.
northern rock are another, they will allow unlimited creps so long as the mortgage is not fully redeemed (ie at least £1 on the balance) within the tie in period
their terms and conditions are by far and away the most flexible also minimax said:
These days 5x is not uncommon.
Mortgage Cos offering 5x is a possible sign the market is heading for trouble
very few mainstream lenders offer 5X income in the manner of a straight income multiple calculation. by and large it's the sub prime lenders (first national spring to mind) that will do up to 7.2 X joint income (eek).
if you go to a mainstream (ie high street) lender who works on an affordability calculation (eg natwest, BofS, Nationwide*) then the effective multiple could well be up to 5 or 6 times income. if you bank with that same lender then the multiples can be absolutely huge
*nationwide only do affordability calculations on a joint application.
I was waiting for you to turn up! I'm with Barclays and get the impression they're not great on mortgage rates (though they would lend me a fortune). Any thought about the problem of paying back a large lump sum (and the associated penalty)?
>> Edited by _DeeJay_ on Tuesday 24th January 16:35
_DeeJay_ said:
These days 5x is not uncommon.
Mortgage Cos offering 5x is a possible sign the market is heading for trouble
That's probably a different subject altogether, though it does certainly highlight the difficulty of first time buyers attempting to get on the housing ladder....
Paying off 10% a year would be too little for us really. We'd probably be looking at 1/3 deposit now, 2/3 mortgage and paying off 1/3 of the original sum in 3 months time.
>> Edited by _DeeJay_ on Tuesday 24th January 16:28
either a deal with no tie ins (usually higher rates), a deal that allows unlimited overpayments (generally higher rates), or a northern rock deal (see above post re: overpayments)
minimax said:
These days 5x is not uncommon.
Mortgage Cos offering 5x is a possible sign the market is heading for trouble
That's probably a different subject altogether, though it does certainly highlight the difficulty of first time buyers attempting to get on the housing ladder....
Paying off 10% a year would be too little for us really. We'd probably be looking at 1/3 deposit now, 2/3 mortgage and paying off 1/3 of the original sum in 3 months time.
>> Edited by _DeeJay_ on Tuesday 24th January 16:28
either a deal with no tie ins (usually higher rates), a deal that allows unlimited overpayments (generally higher rates), or a northern rock deal (see above post re: overpayments)
I did get a quote from Northern Rock a while ago. I don't think there default offer would be enough (2.5 times income IIRC) though I must admit I didn't push it as my long term mortgage will be far less than that.
_DeeJay_ said:
These days 5x is not uncommon.
Mortgage Cos offering 5x is a possible sign the market is heading for trouble
very few mainstream lenders offer 5X income in the manner of a straight income multiple calculation. by and large it's the sub prime lenders (first national spring to mind) that will do up to 7.2 X joint income (eek).
if you go to a mainstream (ie high street) lender who works on an affordability calculation (eg natwest, BofS, Nationwide*) then the effective multiple could well be up to 5 or 6 times income. if you bank with that same lender then the multiples can be absolutely huge
*nationwide only do affordability calculations on a joint application.
I was waiting for you to turn up! I'm with Barclays and get the impression they're not great on mortgage rates (though they would lend me a fortune). Any thought about the problem of paying back a large lump sum (and the associated penalty)?
>> Edited by _DeeJay_ on Tuesday 24th January 16:35
barclays' rates are not too hot. they use woolwich for their new mortgage business who are...ok but not special..some of their deals are good but you have to fall in to a specific niche really for them to come to the top of the list on any sourcing system
re: paying back a large sum (and especially if this was made known to the advisor prior to selection of product*) you really must have a product that allows you to do this penalty free otherwise you are setting yourself up for a financial fall.
*the advisor should be asking you this sort of question
_DeeJay_ said:
These days 5x is not uncommon.
Mortgage Cos offering 5x is a possible sign the market is heading for trouble
That's probably a different subject altogether, though it does certainly highlight the difficulty of first time buyers attempting to get on the housing ladder....
Paying off 10% a year would be too little for us really. We'd probably be looking at 1/3 deposit now, 2/3 mortgage and paying off 1/3 of the original sum in 3 months time.
>> Edited by _DeeJay_ on Tuesday 24th January 16:28
either a deal with no tie ins (usually higher rates), a deal that allows unlimited overpayments (generally higher rates), or a northern rock deal (see above post re: overpayments)
I did get a quote from Northern Rock a while ago. I don't think there default offer would be enough (2.5 times income IIRC) though I must admit I didn't push it as my long term mortgage will be far less than that.
northern rock will lend a great deal more than 2.5 X income, for example i've just done a deal today with a couple jointly earning £49,000 with a £410 deduction for loans..
410 X 12 = 4920
54000 - 4920 = 44080
purchase price 220000
deposit 25000
balance 195000/44080 = 4.42 X joint income..
..surprising, but true. and it matters not, as during the affordability study it became obvious that the figures stacked up
this is not unusual. and I should add that the rate was 4.45% 2 year fix which currently rates as the 5th best on the market, not bad at all
edited to point out that the better rates from other lenders would not have allowed them to borrow as much
>> Edited by minimax on Tuesday 24th January 16:45
Philbes said:
I have a mortgage with Nationwide and I can pay off any sum I like when I like. If I pay a sum of £500 or more then the remaining repayments are reduced. A couple of years ago I made 10 payments in one year totaling over 30% of the original mortgage.
it depends which deal you have, sometimes they (in common with most lenders) come out with some really good terms and conditions..alternatively you may just not be tied in to the deal and on their variable base rate
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