Moving home - Mortgage LTV

[PurplePansy05]

Hi all, I wonder if you could help.

A couple of days ago, I saw a thread on here which referred to lenders not offering 90% LTV mortgages now due to Covid. It specifically referred to Halifax (I can't find it now, sorry), but I have since checked HSBC who we have a mortgage with and to my surprise it seems the are no available mortgages with LTV 90% for those moving home.

We are not first time buyers, we're thinking about moving home. We'd have at least 60k from the sale of our house (equity + sale profit), but this would have to cover the deposit for the new house, all fees, plus we'd need to keep some money left to pay off a loan and do up the new place. The new house is lovely, great location, but more expensive than ours and needs a bit of work. We were hoping to put down a 10% deposit and use the rest of the money for the above.

Questions:

1. Is it usually the case that if you're not a first time buyer, you have to put down more than 10% deposit? What is usually the minimum amount?
2. If so, has this always been the case or is it just due to covid?

I am so surprised and worried we won't move at all now. HSBC seems to have offers starting at 80% LTV. We can stretch to 85% LTV, but it's far from ideal. We can't afford 80% LTV on the new house, it would take up nearly the whole pot of money that we have available.

Please could someone more experienced help out? We've only owned our current house and not moved before. Thank you in advance.

What term are you looking at? Could extending that by 5 or 10 years or more depending on your ages make a difference?

Have you thought about talking to an independent mortgage advisor? We always use one and they are good at finding you the best deal for your circumstances at no cost to you.

Re term, we'd be ok with anything between 25-30 years. It doesn't appear to make a difference on the Halifax online calculator.

I know ultimately we'll have to speak to the bank directly and possibly use a mortgage advisor, yes. But I'm trying to understand if I'm being unrealistic /stupid thinking we can buy our next home with a 10% deposit?

*HSBC online calculator, sorry.

There are currently 5 lenders offering mortgages with 10%

Once you hit 85% most are lending.

I think they may have removed the 10% deposit deals at the moment to see what happens with house prices over the coming months to see if the pandemic has an impact, to avoid people suddenly going into negative equity quickly, so you might need to hold off if thats a deal breaker for you.

@Ali1612 Wow, I only heard about this on MN, not in the media. I understand the negative equity risk, but in the same, it's quite a big thing for many people, it's all good if the new house doesn't need work, but if it does, this will likely be prohibitive to many buyers like us. I'm gutted because the new house really is nice, but I just don't know if we'd overstretch ourselves.

@Shadowboy This is what I'm trying to find out, do you mind sharing where I can find this information? I tried uswitch but it only showed one where you didn't have to have an existing mortgage with them (First Direct).

We are buying and selling at the moment. There are 90% LTV around but I think the criteria for them has got stricter, and they are difficult to get as they are only producing so many a day? Or something like that, I've heard brokers being on phones for hours trying to sort. Also, as it requires in person valuation it causes delays. Our buyer was trying to get a 90% LTV mortgage but was unsuccessful, thankfully he found another 5% which has made everything much easier and a desktop valuation was done.

We are second time buyers. As we are making a big leap and needed to pay off another deposit scheme we used we only had 5%. So we decided to buy a new build and go for help to buy, it's not for everyone but it suits us for a few reasons and I feel a bit more comfortable having more of a cushion if the market is about to struggle. It also makes our mortgage very affordable as we have 75%LTV rates, we also managed to port our mortgage which meant we didn't have to pay a redemption fee.

The mortgage market is just reopening after being closed for months its natural lenders will be more cautious to begin with , and its probably too soon to know when things will change - it may well be these deals come back fairly soon, who knows?. Im not sure id be moving house or massively increasing my mortgage at this time when the economy is so uncertain.

@Ali1612 just be grateful you have the privilege of not needing to move, not everyone is in that position. It's not like anyone is thinking "hmm global pandemic and Brexit, what an excellent time for us to go on the market!"

To give a bit more detail, a house came on the market in the area that we've hoped to move to eventually and apart from the kitchen, it's pretty much perfect for us. So we're not looking to buy any house or a new built, it just so happened the right one came on the market now, and it's rare houses come up in the area we have in mind. We're both in stable jobs so do not see the reason not to go for it, if we can find the right deal.

I understand the cautious approach, but I think everyone's personal circumstances are different and therefore it's difficult to comment on each other's decisions.

We are purchasing a very unusual property (it’s our 4th so we know what we are doing before anyone jumps on me!) and requires a bridging loan which we have had to get organised through a broker. Whilst we were chatting she ran through some mortgages after I asked her what the mortgage market was like- she listed five. We have a 25% deposit so qualify for better rates thank goodness as the bridging loan interest is unspeakable!!

She did mention Halifax offering 10% but because their offices are in Wales they have been struggling to get the mortgages through the process...

@PurplePansy05 absolutely, if you feel your jobs are secure and you fix for a long period, now seems as good a time as any to buy, you'll have the advantage of just fixing and in a better position than those who are coming out of their fixes in the next 6-12 months.

I would speak to a broker though, I think you'll find it a lot easier to get an 85% LTV mortgage than a 90%, but it's changing everyday, literally.

DS is a FTB and using a broker. He was going with a 30% deposit but in fact the property he picked was a little cheaper than his budget and that had a massive impact on the available loan options. He's got a 5 year fix at 1.6%.
So clearly the LTV makes a big difference to what mortgages are open to you.

I know LTV makes a difference. I asked a specific question if it's reasonable to expect to be second time buyers with a 10% deposit and sadly it seems we'd have to push ourselves to 15% at least.

Currently, you'll struggle to get 10% - it's covered extensively in the media - The Express, Guardian, BBC, Martin Lewis etc. Have all had articles about it.

But, give it a month or so and they'll come back. They're changing on an almost weekly basis.

A lot of the problem is due to the massive backlog of mortgages due to be processed just as we hit lock down. add in worries about negative equity and here we are.

Thanks all. I just searched for various articles and yes, you're right, there was a number of them published around mid-June which somehow passed me by. We'll have a good think about what is best to do. I feel for the FTB big time.

If the banks pulled back their 95% and 90% LTV offering (and I see TSB pulled back 85% LTV mortgages too) then I anticipate they expect house prices to fall by at least 10%, probably more. This gives us even more food for thought.

Try www.landc.co.uk/. They sorted all the difficulties we had with re mortgaging.

When you do decide to look please use a mortgage broker that covers the whole of the market. MoneySavingExpert still recommends London and Country.

They are the experts in knowing who is offering what on LTV etc, saves you looking around as they do it for you. They do not charge a fee. So it is a free service.

See moneysavingexpert bit on mortgages here and their recommendation for L&C.

We have used them for at least 14 years. Brilliant service.

crosspost with theg

I don’t think there’s any difference to a first time buyer with 10% to a second time buyer with 10% sadly. I know some lenders are offering better deals in branch so could that be worth a try?

I think it's better to stretch to 85% anyway; essentially you'll just need to pay for the renovations with credit (which is still cheap currently) rather than take the additional credit in the form of the mortgage. Paying less overall for your mortgage and at a lower interest rate should free up the money to pay for the additional separate loan/card debt.

90% mortgages have disappeared due to uncertainty in the market. This may reduce further.

I know someone that works in the public sector, very secure job, that has recently had his mortgage offer withdrawn, he was well down the line in a sale and purchase about to exchange.

@Roselilly36 seen this so many times recently!

Wow, L&C have a warning notice on their website that there's a very high demand for their service. I now understand why.

@Rayna37 - I think you're right. I guess we were trying to start at the new house with only one large debt, i.e. the mortgage, but it is true that if the mortgage is lesser, some cash would be freed up to finish paying off what we have outstanding on the loan.

I think re house values, we've had our valuation last week and I'm basing my calculations on that, but I suspect we could get £5-10k more which would also help. I'm thinking

I heard of people having mortgage offers withdrawn but only if they had AIPs before the lockdown, which is understandable as the circumstances have changed - maybe not for the borrower, but possibly for the seller (re value) and the lender and as you say, the market is uncertain. We would request our AIP now and I don't anticipate a mortgage offer would be pulled back in few months' time (assuming the transaction goes ok) if there are no major changes from now - hopefully.