Can you still get 5% first time buyer mortgages?

[BrendonJ]

My sister (teacher) is looking to buy her first apartment in London.

She is looking to borrow less than £200k and wants to borrow approx 4.8 times her salary and put a 5% deposit down.

Can anyone reccomend any mortgage brokers or banks direct that still have this 5% deposit option (with no mortgage guarantee insurance?)

Many thanks

[Funk]

I may be wrong, but I think you'd have be daft to take on a new property at the moment. Wouldn't she be better off renting until things settle down?

[1066]

When I recently applied for my mortgage (also first time buyer) a few weeks ago, I was told that there are a few 95% deals still available, so she may be lucky. Don't know about the 4.8 salary multiple though.

[Broken Hero]

Two words for her:
negative
equity

With the market as it is, this is completely the wrong time to be looking at 95% mortgages.

[flyingjase]

There will be some deals still out there, however the question is what rate will they be? ie are they affordable to her

With no MIG - you'll be lucky!

I would suggest approaching a broker (can point you in the right direction if you want) who will have a good view of of current products available.

[Seany88]

Broken Hero said:

Two words for her:
negative
equity

With the market as it is, this is completely the wrong time to be looking at 95% mortgages.

But what does it matter whether you put down 5 or 15% deposit? In practical terms if house prices go down, you still lose a chunk of money is it really relevant to differentiate which 'part' of money has been lost i.e. your hard-earned savings in the form of a deposit or the banks?

[Mattt]

Seany88 said:

Broken Hero said:

Two words for her:
negative
equity

With the market as it is, this is completely the wrong time to be looking at 95% mortgages.

But what does it matter whether you put down 5 or 15% deposit? In practical terms if house prices go down, you still lose a chunk of money is it really relevant to differentiate which 'part' of money has been lost i.e. your hard-earned savings in the form of a deposit or the banks?

Well, if you lose your deposit, you can walk away from the house owing nothing.

If you go into negative equity, you are screwed (potentially anyway).

So yes, it does matter.

[Seany88]

Mattt said:

Seany88 said:

Broken Hero said:

Two words for her:
negative
equity

With the market as it is, this is completely the wrong time to be looking at 95% mortgages.

But what does it matter whether you put down 5 or 15% deposit? In practical terms if house prices go down, you still lose a chunk of money is it really relevant to differentiate which 'part' of money has been lost i.e. your hard-earned savings in the form of a deposit or the banks?

Well, if you lose your deposit, you can walk away from the house owing nothing.

If you go into negative equity, you are screwed (potentially anyway).

So yes, it does matter.

True, but 30k whether deposit or not is a hefty amount. I suppose as long as you can hold on financially and in terms of timespan then it shouldn't matter, assuming house prices won't fall off a cliff (in which case its better to rent).

[mcflurry]

IMHO Neg Equity only matters if you want/need to sell the property, or borrow more money against it.

On a day to day basis the value of my house matters not a jot. I pay the Building Society every month regardless

[ginettag27]

agree with above.

Points to consider are:

1) How long are they planning to stay in the property? Ideally 10-15 years, should ride out most of the problems.

2) Will the above be influenced by an outside factor, i.e. loss of job/relocation..

[535dman]

Lets play with some figures here:

Assuming a purchase price of £150k (dont laugh )

a 5% deposit = £7500

gives a mortgage of £142,500

on say a 2 year fixed rate deal on 5.80% reverting to the standard variable rate of 7.65% after 2 years (!!)

Options after 2 years are to re-mortgage with another lender or stick with the same lender paying a ridiculous 7.65%.

Now say the house has dropped in value to £125k your sister will be in negative equity of £142,500 - £125,000 = £17,500.

I don't think any lender would let her re-mortgage the inital £142,500 if the house is now only worth £125k!!

The only option she would have is to keep with the current lender at their mad variable rate and hope house prices rise soon. The above based on interest only repayments. Not sure how much will be re-paid in 24 months on a capital re-payment basis but doubt it would cover the negative equity?

Correct me if i'm wrong guys but thats my understanding of things as of today

Edited by 535dman on Wednesday 7th May 17:11

[JamieBeeston]

BrendonJ said:

My sister (teacher) is looking to buy her first apartment in London.

She is looking to borrow less than £200k and wants to borrow approx 4.8 times her salary and put a 5% deposit down.

Can anyone reccomend any mortgage brokers or banks direct that still have this 5% deposit option (with no mortgage guarantee insurance?)

Many thanks

Is she cute?

I've got a spare room

I doubt you'll find anyone offering 5%, but, Key workers do get special offers / additional funding from Nu Labia...
Have her chat to her Union rep for advice BJ.

[BrendonJ]

Thanks all for the replies.

Yep some people think the market is going down. Personally I think its a great time to buy, ie put very cheeky offers in on 10 properties (ie 25% below asking), get told to fark off my 9 of them, but the 10th one might be getting desperate and could take the offer. I personally will also be looking to do this soon.

I'd still be interested if anyone knows of any specific banks that still offer 5%.

And Jamie, '30 foot' and 'barge pole' come to mind

[ACEparts_com]

mcflurry said:

IMHO Neg Equity only matters if you want/need to sell the property, or borrow more money against it.

On a day to day basis the value of my house matters not a jot. I pay the Building Society every month regardless

Of course it matters what you pay for a property and what the banks think it's 'worth'.
Imagine if you paid 200K for a two bed house today and then in say three years time that same 200K will buy you a three or four bedroom house in a better area? You're stuck paying £1500pm interest only for a 2 bedder when you could be paying less for twice the house.

Anyone want to offer me £200K for a 993TT - it doesn't matter what you pay for it as you can always drive it :OS

[JamieBeeston]

BrendonJ said:

And Jamie, '30 foot' and 'barge pole' come to mind

Rolling pin was the best I've heard it called BJ... but if you think my 30cm is more akin to a bargepole (you got your units mixed up!) then I wont argue..

so send her over


No banks anywhere will be offering anything close to 5% for 95%, not a chance

We got 5.09% last year on 15% deposit with a 1% fee! only chance she has is that key worker thing I told you.

She'll be lucky to get anything < 6.5% i'd say at present..

Be a sport and lend her the money.. or, I'll give her a deposit

[scotal]

Depending on affordability then it is possible to get a mortgage at 95%, at less than 6% without HLC's, but you have choice of 1.

[Plotloss]

scotal said:

Depending on affordability then it is possible to get a mortgage at 95%, at less than 6% without HLC's, but you have choice of 1.

Is that Birmingham Midshires or something like that?

[JamieBeeston]

scotal said:

Depending on affordability then it is possible to get a mortgage at 95%, at less than 6% without HLC's, but you have choice of 1.

Sure.. but BJ already said she's

a) a Teacher
b) looking at 4.8x salary

We both know teachers arent the most fiscally fortunate in this Nu Labia society.. so I'd be very doubtful of getting anywhere close to < 6% @ 95% @ 4.8x without big brother stepping up to the plate as a guaranteur / co-owner / deposit lender or unless she's eligible for some Key worker scheme (which again, I strongly feel is her best bet by far!)

[scotal]

JamieBeeston said:

scotal said:

Depending on affordability then it is possible to get a mortgage at 95%, at less than 6% without HLC's, but you have choice of 1.

Sure.. but BJ already said she's

a) a Teacher
b) looking at 4.8x salary

We both know teachers arent the most fiscally fortunate in this Nu Labia society.. so I'd be very doubtful of getting anywhere close to < 6% @ 95% @ 4.8x without big brother stepping up to the plate as a guaranteur / co-owner / deposit lender or unless she's eligible for some Key worker scheme (which again, I strongly feel is her best bet by far!)

She's a professional, under lenders definitions of it, so there are a couple of people who would stretch the point to 4.8x.

Assuimgn Brendon is in a position to stand as guarantor, then that would be the best bet, however that may impact on his ability to borrow (that might not need to be a consideration i don't know)

Key workers scheme could work well for her, she would have to talk to her local HA to find out if she, and the property she wants to buy fit.

[scotal]

Plotloss said:

scotal said:

Depending on affordability then it is possible to get a mortgage at 95%, at less than 6% without HLC's, but you have choice of 1.

Is that Birmingham Midshires or something like that?

No, BM (as with the rest of the Halifax group) have disappeared up their own arse at the moment.