To ask advice on Mortgage rates?

[AreYouHavinALaugh]

Me and DH have just gotten a mortgage in principal, but after working out what we would have to pay back we are unsure whether it is the right move for us.
We would be borrowing 140k
But paying back 290k over 35 years.
This seems ridiculous but as we don't know anyone who has brought a house recently (asking my parents they said they put £100 up for a deposit... so can't really compare)
We have a £7000 deposit so 5% exactly.
Also one default from 5 years ago which we disputed and then eventually paid just to make it go away. It was for £350.

We don't know what to do as we would be at retiring age y the time we pay it off. First time buyers.

Would you go for it? or wait and build a bigger deposit. It would take us about 2 years to get to 10% and by then the default would be past the 6 year mark so not show on credit rating. Just need advice.

A 10% deposit is always better if you are paying cheap at the moment as when you are paying more, it will be harder to save and a chunk of your payments will be going to interest rather than paying off any capital.

Have you looked at how much you will have left to pay at the end of your fixed term, and what your loan to value would be?

Last mortgage we were on, our interest rate was 3.7%, we paid off about 200 capital per month....the other 530 went to interest! That was on a 5% deposit. If we had a 10% deposit, better mortgage offers would probably have been available to us.

Also if you were to wait and save, would your fault not be off the record since it is 5 years past already, and further allow better options? Just a thought!

Thanks @RenegadeMrs we bank with HSBC so good to know. Barclays was the offender in our case, the amount was halved almost. They were throwing money at before the criteria came in, even with two kids and one salary. Afterward they offered us about 2.5 times two salaries for 50% LTV.

Also have you looked at help to buy ISA? One thing we missed out on as we learned about it too late.

@RenegadeMrs it only says that they will give us a draft copy of mortgage agreement when they give us a real mortgage offer. nothing about reoayments in additional info section.

@RenegadeMrs thank you for this! i owe you one :)
Well the adviser put on the form that my DH has 5 dependents- me being one as I am not working with baby atm.

I wish there was a section on where you shop- lidl for food, chairty shops for everything else! they'd give me a mortgage in 2 seconds!

Thats good to know about the over payments. I will call and ask about that tomorrow definitely, I definitely want to over pay as much as we can afford to

Have you got a mortgage illustration? Or an Esis? It should be on those docs? It might be that the product they've given you doesn't allow overpayments. If you can't see it I'd email the broker who gave you the deal and ask them.

Also, about your term, it maybe that you only fit the lenders criteria for the amount you want to borrow if you take out a longer term. They might not be able to offer what you need if you take a shorter term.

@Peggyflo h2b isa are being closed to new applicants from today (Sat 30th). So if you want one you need to act quickly!

yes we have help to buy isas but only £1000 bonus, still nice to have

@Peggyflo
this was my initial thought and it is easy to say we will wait a year or we will go for it but my goodness, in real life when we actually discuss what itd be like waiting that extra year, It is a gamble because living conditions are dire. I lost my mind couple of years ago and got severely depressed. Not being able to go to the shops and giving the kids days off school because I couldn't care walking into a thug on the way out of the building.
We can't go to the local park anymore because motorbikes have taken over, so we started playing in the grass square by our flat and someone threw their rubbish out of their window, almost ontop of us. Including a dog poo bag which exploded all over the place. Havent been out since.

Our community centre and library have closed aswell and my DH has recently told me that he thinks he might be feeling depressed. he says he just feels trapped. So a year might not be long in a nicer place but it feels like a fucking prison. And I don't really feel safe so Ideally we would have waited for a 10% but thought we would try with a 5% because this place is getting so bad. (And ours isn't even the worst one, a girl was raped in the lift about 10 mins down the road)

It's a case of money vs sanity, as well as %5 deposit and 10% deposit.
Noone will even visit us and when people realise we live here they almost always gasp or pat my shoulder and say 'aww poor you'
It is humiliating, but then again it is cheap and 'secure'

I really started saving every penny when grenfell tower set on fire (I sleep with bottles of water under the bed so we can put a damp towel under the door now, kids room too)
And my DH started to get serious about 18 months ago when the custodian was stabbed (minor but obviously they upped and left the job. Noone wants to look after a building where the tenants stab you)
Honestly. It is unbelievable. Shockingly bad here.

our eldest is getting to the age where his school friends are being allowed to play out but obviously he can't because it's just such a bad area I doubt he'd be safe. I don't even go to the shop without dh its a dump.

@RenegadeMrs IT IS A MORTGAGE ILLUSTRATION

oops sorry about caps. dont know what happened there

OP I would advise anyone to go for a mortgage where there is no penalty for paying off a lump sum.

When you're back to work and in a better situation financially, overpay as much as you can and reduce the TERM, not the amount. Over time you will save thousands.

We had a great advisor and got a good deal with Santander.

We have decided we will go for it. Finding out we can change to a different provider or deal after only 2 years. We would be waiting that long to save up for the 10% deposit anyway so I think it'd be worth it. Especially as house prices in our desired are have gone up drastically recently so all in all it just makes sense.

We will call the mortgage adviser on Mon and make a list of everything you wonderful people have told me about. I'll ask about everything and see if we can over pay. We have seen a house online and it really would be prefect.

Thankyou so much everyone for your adviCE, it is very much appreciated .

You do need to be sure you can still afford it when interest rates rise.
And if your circumstances change after the two years you might not be able to remortgage, it's not a given, you still have to meet the criteria in place at the time.

And even the £750 higher sum in two years is a low rent for a home for six people. But you've said you can afford that as you stop saving for the deposit (use that money to overpay).

anyone who has bought a house will tell you never to look at the statements.

Well, I've owned four properties and I would not tell you that. Look at them every time, remind yourself what you owe, do the maths and the budget and see if you can pay any extra off it. I paid my mortgage off by age fifty, on my own, by always overpaying, remortgaging and reducing the term to have higher repayments.

It sounds like you really need to move so I hope it works out.

The regulator (FCA) has just relaxed the affordability rules a bit for remortgaging when you are up to date with your mortgage and not looking to move or increase your borrowing.
www.moneysavingexpert.com/news/2019/03/fca-mortgage-prisoners-announcement/

www.thisismoney.co.uk/money/mortgageshome/article-7621619/Mortgage-prisoners-finally-able-switch-better-deal.html

**
There is no way you will be paying £730 for the next 33 years. You will remortgage when your deal runs out. None of it is as scary or bleak as it seems at the start.**

Not 100% true.
If the value of the house doesn’t go up or reduced and their earnings drop they might end up stuck with the same lender on the standard rate.

You’ll only be able to move lenders to a better rate if your earnings meet their affordability criteria at the time

Ps - you need to start the remortgage process 3 months before your foxed term is up

@VanGoghsDog. I didn’t mean don’t pay attention to them but I meant that certainly to start with the statements make very depressing reading.

the broker will be paid £250 upfront and another £300 when we get the keys. is this the arrangement fee?

Will you be paying this to the broker directly? My broker has never charged me a penny. All payment are taken directly by the mortgage company.

Agree - find a broker that doesn’t take payment. He should be getting his commission from the lender rather than the borrower

I would also suggest not using a mortgage broker that has anything to do with the estate agent you may be buying through.

OP. A mortgage illustration is not a mortgage in principle.

It’s an idea of what you can get. I’m training to be an advisor.

The mortgage brokers you’ve seen, are they tied to a selection of lenders or can the access every single lender?

The 5% fix for 2 years seems high to me as I’ve recently (this week) agreed a mortgage with default on a 2 yr fix at 3.4%

Early repayment charge is not the same as overpaying.

The early repayment is if you pay the WHOLE balance of the mortgage back early or switch to another lender within the 2 year fix period.

The 10% you can overpay by is 10% of the loan value (excluding interest) so you can work this out and factor it into monthly payments. This means you may also buy yourself some breathing space further down the line (within the 2 year period) should you find you need to underpay for whatever reason. This will be detailed in the mortgage illustration.

You say you’re going with a high street lender? In my experience sometimes a specialist lender who deals with defaults are better (see above 3.4% reference).

If all that’s been produced is an illustration I’d be wary of pinning your hopes on the high street lender.

Find out who else your broker has access to. Also don’t forget to have a discussion over protection.

It’s a bit of a hard talk, but if your DH were to be unable to earn, never work again how long would you be able to sustain your lifestyle etc.

You need cover that will look after the mortgage payments/kids etc should the worst happen.

I’d look at a family income benefit plan and add critical illness to it.

@NemophilistRebel brokers charge a fee because of all the administrative work required to get to the offer stage.

The payment from the lender varies. On a 50k mortgage it’ll be in the region of £250 which doesn’t cover the amount of work required to get the mortgage through. Particularly in complicated cases.

Recent case for a 50k mortgage (we log all our time spent) took 32 hours in administration (credit issues etc). This was my time not the broker sourcing 4 options (became apparent that the client hadn’t been entirely honest). So that would have worked out £7.81 per hour.
Less if you factor in the advisers time.

So yes a fee is charged.

It’s not just the mortgage broker you’re lying for, they have admin staff in the background to do a lot of the leg work.

All fees are laid out in the KFI.

Lying for. Paying for

Single
You can get hit with an ERC for overpaying above the 10% limit.

www.nationwide.co.uk/support/support-articles/rates-fees-charges/mortgage-fees-and-charges/changes-to-your-mortgage#tab:sectionChangestoyourmortgage
See the second bullet point. The ERC applies if
“you make an overpayment that is higher than your product overpayment allowance (for example by increased regular payments or by paying off a lump sum)”

Loads of people find it really confusing. I really think schools should have compulsory economics courses.

Absolutely!

The number of clients I've met who just don't understand why they still owe money on a credit card when they make the minimum payment every month, who seem unable to make a distinction between money in the bank and available credit, who take out Provident loans at 300% interest, and borrow more when they've paid a bit off "because the lady said they could afford it" and so on is frightening (also why I've helped lots of people get debt relief orders and a few apply for bankruptcy).

People don't know how to work out if they'll be better off taking a job where the salary is £1,500 a year more but the fares to work are an extra £20 a week, and one colleague had failed to spot that she was overpaying tax because she had been on the wrong tax code (BR) for years and was owed a refund of a few thousand. And those 2 examples were people who were graduates!

Money management should be taught in schools, maybe as part of a general life skills course.

So ERC does not just apply to the whole of the mortgage being repaid.