[Closed] Tell me about mortgages

There is a really good free guide to mortgages on that Martin Lewis site.

http://www.moneysavingexpert.com/mortgages/mortgage-guide

Fixed rate - you pay the same amount every month
Variable rate - the interest rate can change up and down

Most are fixed for a term, 2 years or 5 years, after which you get moved onto the banks standard variable rate (which is almost always, crap), meaning you go out and look for another deal.

Some charge a fee, but they almost always have lower rates, so if you stay for the fixed term it's usually net the same. Ours was odd, it had a fee, but you could add the fee to the mortgage, making it exactly the same as a fee-free one.

2 years ago everyone would have told you FIX NOW, RATES CAN ONLY GO UP. Then Brexit happened, and they went down. I'd been considerably better off on the variable if I'd taken it, but it could equally have gone horribly the other way. You'd like to think the banks know what they're doing, but in reality they adjust their fixed and variable rates to keep their books balanced, more wisdom of crowds than top down intelligence. Either is a gamble, just in different ways.

For fixed 2 or 5 yr deals, calculate the total cost over that term of monthly payments including the arrangement fee, if any. Then compare one thing against another.

Have a think about adding the arrangement fee to the mortgage balance. Banks will love this as it increases the amount of the loan and will attract interest in its own right. It can be more expensive that taking hit on the arrangement fee as a single payment.

cheers, see regarding costs. i'll be under stamp duty thresholds, but it says estimated other costs at around £1,900. that would be on top of a deposit aye, the mortage doesn't cover that?

Ring a mortgage advisor, don't take advise off here.

London and Country did me good, there's no cost as they get commission from the successful mortgage completion so it makes no difference using a broker or non advice.

cheers, see regarding costs. i'll be under stamp duty thresholds, but it says estimated other costs at around £1,900. that would be on top of a deposit aye, the mortage doesn't cover that?

Depends on the mortgage, ours allowed us to add on fees to the balance and they didn't count towards the loan to value ratio (i.e. we had a 15% deposit, and the mortgage was 85%+all the other fees).

Off the top of my head you will also be paying:
The solicitor
The surveyor
Any indemnities required (insurance against building control or the council turning up and demanding you rip down your conservatory/shed/loft conversion)
Removal van

The cost of those can vary a lot depending on where you are and the value of the house.

There's probably also Scottish stuff to deal with as your processes are different. Speak to the estate agent/solicitor (then ignore their in house services when they try and refer you).

Have a think about adding the arrangement fee to the mortgage balance. Banks will love this as it increases the amount of the loan and will attract interest in its own right. It can be more expensive that taking hit on the arrangement fee as a single payment.

We spreadsheeted everything, it made no difference what you did, the fee free mortgages were exactly the same over the fixed period as the fee paying ones. So as long as you went into the process intending to move in on day 1 with £0 left in your pocket (i.e. paying the fee would reduce the equity/deposit) the overall cost for the fixed period was the same.

London and Country did me good, there's no cost as they get commission from the successful mortgage completion so it makes no difference using a broker or non advice.

For example they don't offer HSBC mortgages.

A bit like comparethemarket.com Vs Direct line.

£1,900. that would be on top of a deposit aye, the mortgage doesn't cover that?

As others have said seek some impartial advice, there are a number of costs and affordability is really important. I.e. how much can I afford to pay back if this changes, or that changes, what can I save for holidays/luxuries.

Our bank wanted to offer a lot more than I wanted to borrow and thought my wife could "talk me up" when we got home.

The size of your deposit will also directly affect the quality of the rates you are offered, bigger deposit makes for a cheaper interest rate, so it is worth spending some time getting that together.

Thanks all, good info. Yes I'm going to go and see an advisor, just trying to roughly wrap my head around things, so i've got a clue when I do go and won't be getting spoken to like a 5 year old.

Any other thoughts please add, all info appreciated! 🙂

re affordabilty, yes I should be fine, the mortgage I'd be looking to take out would be something like 25-35% of my take home wage, so barring 20% interest rates I should be fine there i reckon. well fingers crossed, touch wood and all that jiggery pokery! 😆

regarding that, I'd be going for a 25 year mortgage, but really I'd want to pat it off in something like 15 years, but wouldn't want to commit to a 15 year mortgage, i take it i'd need to be wary of fee's and stuff for early repayment, are there obvious pitfalls to look for there?

With that last point about overpaying, most charge fees for early redemption and some limit the amount overpaying allowed.

Assuming you end up on a 3 or 5 year deal out of 25 years that won't likely cause an issue, but tell your mortgage advisor your plans to overpay and he will take that into account.

Has anyone ever managed to "beat the bank" by fixing?

Fixed rate mortgages have been a waste of time the last few years and will have ended up costing people more money.

The only up-front costs we had when moving were £450 for solicitors plus 50 quid van hire.

No arrangement fee and valuation/survey was added on to the mortgage. We were advised to add the survey fee to the mortgage as if the sale fell through nothing was payable but if we'd paid upfront we wouldn't have ahd it refunded (don't know if that's the same everywhere but were told by two different mortgage advisers)

My Sister in Law, building society for 15 years now on her own,based in Dundee. She works through this lot, email in profile if you want her details. Got me a decent deal when I was potless and paying for a D.I.V.O.R.C.E

https://www.mortgageadvicebureau.com

These blogs may help;

http://howardfm-ltd.co.uk/boost-chances-getting-mortgage-first-time-buyer/

http://howardfm-ltd.co.uk/process-getting-mortgage-first-time-buyer/

http://howardfm-ltd.co.uk/types-mortgage-available-first-time-buyers/

http://howardfm-ltd.co.uk/first-time-buyer-much-can-borrow/

http://howardfm-ltd.co.uk/introduction-mortgages-first-time-buyers/

Something to watch for

The financial advisor is probably independent on mortgages but not life cover. We got sold a fairly rubbish expensive life insurance with our mortgage. No huge big deal we cancelled it and started again a few years later.

Life insurance is whole other can of worms and crictical illness cover even more so. So find out out about these before you buy from your mortgage advisor. It might well be the sale of the life insurance that pays the advisors wages

Don't overstated yourself Joe. Rates WILL go up at some point. It's not if, it's when. Get second opinions and don't trust "advisors" .

Good luck.

You're making probably the biggest financial decision of your life and you're asking strangers of the internet for advice!

Don't buy a house, buy these magic beans that I have for sale.

^^^
But everyone commenting clearly has experience of buying and managing a mortgage, and while we may not be world experts, there's some useful nuggets of info there that seosamh77 may not have been aware of before.

ampthill's advice on accompanying insurances for example, that's a great point. If [i]you[/i] have nothing useful to add, perhaps don't waste your time commenting.

zanelad - Member
You're making probably the biggest financial decision of your life and you're asking strangers of the internet for advice!

Don't buy a house, buy these magic beans that I have for sale.

seosamh77 - Member
Yes I'm going to go and see an advisor, just trying to roughly wrap my head around things, so i've got a clue when I do go and won't be getting spoken to like a 5 year old.

Plus I disagree, biggest decision of my life, it's only buying a hoose ffs! just means I'll be paying less rent and I'll eventually stop having to pay that rent! I will be liable for fixing things mind, which is a bit of a bugger. 😆 Just the ins and outs to learn about it!

Life insurance is whole other can of worms and crictical illness cover even more so.

You might get these through work, worth checking.

That's a refreshingly relaxed attitude! Nice one.

footflaps - Member
Life insurance is whole other can of worms and crictical illness cover even more so.
You might get these through work, worth checking.

tthew - Member
That's a refreshingly relaxed attitude! Nice one.

You're making probably the biggest financial decision of your life and you're asking strangers of the internet for advice!

I think that provided you understand the internet it is a good question to ask. What I like about threads on the internet is that do a reasonably good of representing a range of opinion. You don't necessarily get an answer but you get alot of food for thought, things to watch out for, things to research. IMHO that is the way advice should work.

We can't possibly give a definitive answer. Provided the OP knows that then all is well

OH and another hint.

In your mortgage calculator try putting in some higher interest rates, just to see what it looks like

ampthill - Member
Provided the OP knows that then all is well

Not long gone through this. I messed up the first one and it cost me, we found a house, instructed a solicitor then had the survey done. The survey came back awful, so we pulled out, but the solicitor still (rightly so) his fee's as he had done some work.

Second time I used a broker, paid £599 for mortgage arrangement for the life of the mortgage, so we can pop back rearrange at 2 year and 5 year and he isn't tied to a bank so we got to see all the deals based on our credit checks etc. I also found a solicitor that wouldn't charge us if this failed a second time so we didn't lose out, although I had to really push some days to get him to do some work.