to ask about mortgage appointments and deposit amounts(26 Posts)
Tomorrow me and DP have our first mortgage appointment.
We have been asked to bring our last 3 payslips and apart from that I have no idea what to expect.
One key issue which me and DP are confused about is what we say about the deposit amount.
DP thinks we should say we have 'x' amount as a deposit; where as I think we should be less specific and say we are thinking about anything between 10 & 20% deposit depending on the condition of the house and how much work needs doing, and/or whether you get a better interest rate at say 15% would all be factors in how much deposit we put down.
What did you say at your initial mortgage appointment re. deposits?
Thanks in advance for any advice
We are just going for a walk to de-stress our nerves so will be back in an hour or so - not posting and flouncing
I have no advice but interested in responses as we (DH and I) are in a similar position.
Good luck! 🙂
The bigger your deposit (as a percentage of the house price), the better mortgage rate you'll be able to get. I assume you're meeting a mortgage broker, in which case give them the full picture of what you can put down as a deposit and a rough idea of what you'll be looking to pay for the house entirely. They can only do illustrations for you based on actual numbers, not ranges.
Hope that makes sense.
What advantage would there be to not being specific?
You need to be specific of course. They need to be able to advise you accurately.
You need to give a clear and honest picture of what you can afford. It is based on affordability, the higher deposit means a better mortgage rate based on the loan to value. It really will do you no favours to be vague. Lenders will want to know your financial position before they will even think about offering you a mortgage.
Go in with an idea of what your maximum budget is for the cost of the house and the amount you could afford to pay monthly on a mortgage. They can then work up some illustrations for you. You may find putting a higher deposit down so that your monthly payments are lower will be better and then if the house needs work do it as and when you can afford to. Of course if the house needs work before you can move in you may need to increase the mortgage to cover the work. They will go through everything with you at the appointment. For me I find writing down these questions helps me (just because I am a forgetful bugger and would come out and realise I hadn't actually asked the questions I wanted to!)
Yes, best to give specifics as much as possible - it will help them to advise you. They'll also want to look at your outgoings so they can advise on affordability, so its worth having a note of the main bills you pay (particularly things like car loans, credit cards etc)
Give specifics - the broker is there to advise you on all the options re deposits and monthly payments.
Go along with your deposit amount max, monthly income and details of expenditure - you'll be asked to do an affordability check probably where you detail all of your monthly outgoings.
You won't be applying for a mortgage there and then as you haven't found a house yet! So don't stress at all. It's really just a fact finding mission at the moment.
Agree that you need to be specific. They can then give you some examples on what the interest rate will be depending on the loan to value. This will give you a much clearer picture in deciding what is the maximum amount you want to borrow. A good mortgage advisor will be looking out for you best interests therefore no need to hold anything back. Are they an independent advisor rather than attached to a bank/mortgage company?
Why not give him your maximum deposit amount to get the best rate and then a second scenario where you keep back some of your deposit and see what difference it makes?
Thank you all for your quick replies - I haven't even got out the door yet for this walk
It is a bank appointment.
The only reason I thought to be less specific is because if we said we would put down 30k deposit, and then we pick a house which needs lots of work and decide a 10% - 20K deposit would be better as it would leave us more money to do the house up. Will they withdraw the offer because we said we would put 30K down.
But if being specific is the done thing then we should just say our max deposit today is say 30k.
The other issue we have is we don't know the value of the house, because thats reliant on how much they will lend us. So we don't actually know what the LTV would be atm.
Online banks calculators have been telling me they would lend us say max 165k on a 25 year mortgage.
- is it that if we had a 30k deposit our house value could be 195k;
- or the 165k is the house value,
- or that 165k mortgage includes 10% deposit so with 30k cash we can spend 16.5k on 10% deposit and rest in cash so house value is 180k.
Sorry this is mortgages for dummys!
I will tell DP he was right - max deposit amount it is
Thanks again everyone.
If they will lend you 165k you add on whatever deposit up to or over the min amount they require. So if you had 20K, you could buy for 185k.
It would be a good idea to speak to a whole of market broker instead of directly to the bank in the first instance. They can look at the cash available you have and advise on things like ltv and keeping money back for renovations etc.
Assuming you don't have a specific house that you're purchasing yet, this appointment is just to give you a rough idea. So you can say 'this is our deposit, how much can we borrow?' or/and 'this is our deposit and this is what we want to borrow, what interest rates are available and what will our monthly repayments be?'. We'd decided on a figure for our deposit before our first appointment, and gave them the top end of our budget for what we wanted to borrow so we could get s worst case idea of monthly repayments. You're not actually applying for a mortgage at this point, that'll come once you have a property to purchase, so there's no problem deciding on a different deposit at a later date (although this will obviously affect the mortgage rates etc available to you).
The amount they will lend you is just that, so you'd add your deposit on to that (so in your scenario you could buy a house for £195k).
Also, remember there will be many months between this appointment, and completion on your
yet to be seen house, during which time I presume you will be saving like billy-oh, and will have more cash ready.
You will need some money for costs, possibly stamp duty and the like, but don't worry about things like furniture at this stage, you can gather that as you go along - you'd be amazed what people will give you when they hear you have a house
I would go to a mortgage broker rather than a bank. A bank is only going to sell you their products whereas a mortgage broker can usually sell any product from any lender.
Also consider how many years you want to pay the mortgage over.
The amount the bank will lend you is not related to the amount of deposit you have. However, the mortgage deal they offer you will. For example, you'll probably get a better interest rate if you have a 20% deposit than if you have a 10% deposit.
A mortgage broker would be better than a bank as they would give you a variety of options rather than just that banks. Different banks have different ltv ranges for their rates so you may get a better deal elsewhere.
This is just finding out what you can borrow and then once you find a house and decide on exact deposit you want to put down then they will do a specific quote for you
Thank you all for your knowledge
I think I am a little more wiser and slightly less worried now.
I will tell DP we must see a mortgage advisor too.
Ooo fingers crossed for tomorrow; exciting and terrifying all in one
Thanks again for all your replies
We got a mortgage in principle from a bank but then cancelled it and went with a mortgage broker, it's so much better as they can see all mortgages suitable
We ended up going with one I'd not even considered and it saved us £50 a month from the original and one I thought was best
You can ask the bank to map out different scenarios for you - e.g. max deposit and monthly payments of X, what is max you could borrow, or max deposit and house costing Y, what would be monthly repayments; then the same assuming a lower deposit if you needed free cash for work
Yes to a mortgage advisor! We are just buying our first home and our mortgage advisor has been invaluable. He advised us to put down 10% rather than our max saved amount of 16% as the ltv rate would be no better until we reached 20% (which we couldn't do). We arranged everything through him, didn't even need to speak to the bank. We were also told we could lend a lot more at a much better rate than anything we had calculated on line. Good luck!
Just an update if anyone checks back..
We got accepted for DIP for an amount which will mean we can buy in some of the cheaper areas we are looking at Yay!
They were lovely and it wasn't as scary as I first thought.
Thanks for all your help yesterday. It meant I didn't have to ask any of the really stupid questions, and you really eased my nerves
Will go and see an advisor too whilst we start looking at houses.
Goodluck Roofio with your buying process;
and goodluck to lottie too - its not as scary as it seems
Yay! I'm not normally pro advisors but I told mine I was only paying if he found me one cheaper than I had by more than his fee - and he did.
I tried multiple banks before hand to get a dip for the most possible so I knew my max max budget and then got a new dip with the broker once I knew how much i needed. Hope the viewing and buying process is as stress free as possible
Agree 100% with posters who say go to a broker. We had a meeting with our bank, they offered us their "best deal for existing customers" - we'd pay £625 a month. We then went to a broker who then got our mortgage sorted through our bank...for £100 a month less than their supposed best deal, we only pay £522 a month. Our broker only cost a £500 lifetime fee, and saved us £1200 a year! As for the original question, we told the broker how much we had savings wise, and how much we were willing to spend on a property. She calculated rough fees and therefore what we'd have left after those fees, which worked out at 10%.
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