An idiots guide to mortgages

[HollyBollyBooBoo]

So we haven't owned a home for about 6 years have rented in Uk and abroad since. I know the mortgage market has changed dramatically in that time. Here's what I think I know...

100% mortgages no longer exist

90% mortgages are obtainable but you get stung for them on the rates

80% mortgages are better but therefore if I want to buy a £250k house I need £50k in savings plus stamp duty, moving costs, solicitors fees etc - in what lifetime am I ever going to able to save that much!!

What else do I need to know/consider etc.

[greedychops]

Buy a cheaper house?

Decide if you want to be able to budget each month and go with a fixed rate, or take a risk on variable rates staying low for a while. We went for a fixed rate about 3 years ao and have slightly regretted it, seeing everyone else's payments going down, but at the same time, it was before the election and it could have gone either way after that.

[Bramshott]

this is a good site.

[iamusuallybeingunreasonable]

No idea, same position as you, but need to move to larger house and can't at mo, as even though we have no debt, savings etc, as second time buyers we just can't do it yet... It's not always possible to "buy a cheaper house", especially in London

[greedychops]

I know it's not possible. We are stuck in a two bed house and about to have dc3 but then people used to live in a couple of rooms for a whole family, so I reckon we will survive.

I just think a lot of the problems with the housing Market have been caused by people thinking they are entitled to a bigger house somehow, and then paying way over the odds for them, going way over their budget, getting into debt and then being miserable.

If you cant afford the deposit, fees etc, how are you going to afford ongoing maintenance which practically nobody ever really thinks about.

[twosoups]

What you could do is this

Buy a do-er upper at a knockdown price on a 90% mortgage. Go to "Build Store" for a mortgage with a proposition for the project. They can provide the finance for your project up front. The rates are higher but it's short-term.

Do the house up.

Remortgage the house with a bank. Your loan to rtio value will now be lower (possibly mmuch lower) and you'll get better rates.

[HollyBollyBooBoo]

Oooh very good thought twosoups DH has always loved the idea of a project like that...you've really got me thinking.

[northerngirl41]

Whatever you do, don't use a mortgage broker!!! I've been stung twice - and have vowed never to use one again. The first time we were left scrambling to find a new mortgage last minute and last time the mortgage was £10k short on what we needed in order to buy. Fortunately we managed to sort it all out but I really could have done without that hassle. To my mind, you need to understand the ins and outs yourself and know what is what.

Firstly work out a maximum monthly budget that you could afford to pay. So let's say this is £1,000. Take 20% off that as that'll account for any fluctations in interest rates. Then figure out how much actual cash you an lay your hands on - more is better because you'll get lower rates and the mortgage will cost less per month.

Then go to www.moneysupermarket.com who have really good mortgage calculators from all the main lenders.

Bear in mind that whilst banks give out in principal offers left, right and centre, they will make every excuse under the sun to avoid parting with cash - their aim is to make sure that if you default on the mortgage, they aren't stuck with the property for long. So they'll try and undervalue your new house massively.

[Fiddledee]

twosoups idea is very risky and potentially costly (mortgage rates of at least 6%).In a rising market you can make money by developing, not so in falling market as witnessed by the number of developed houses on the market that aren't shifting. There are lots of doer uppers on the market at the moment as developers (the experts) are not buying, why as an amateur do you think you can make money whilst they can't.

Buy a doer upper to live in and enjoy, in this uncertain market trying to make money by developing in the short term is not a good idea IMO.