Scary Time In Life. Mortgage. |
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Jan 15 2008, 11:52 AM
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Just from my experience and understanding - so Check it with an expert mate as I'm not
 :Most lenders advise that a mortgage should be less than 3.5 x single income, or 2.5 x multiple income. However most lenders seem over the last few years to have been happy to lend on much higher multiples. As Smells says it is possible to get a form of shared ownership - for instance where a housing company owns 1/2 the property and you take a mortgage on the other 1/2 and pay rent for the 1/2 you don't own. This can be a very good way to buy a home. The interest rate you pay is often related to the ratio of your equity to the mortgage - ie the more you borrow as a % of the purchase price the more you will likely pay as the interest rate. So if you can make a sizable deposit it can help a lot. Also - interest rates can vary from lender to lender - so it can be worth checking around. Smaller Building Societies often, in my experience, offer a better interest rate. Also, some do a 'preferential' rate if you have a savings account/shares. Interest rate is also often related to you as a 'credit risk'. There are some companies that will lend to those with little previous credit rating or some other 'issue' but they tend to charge premium interest rates. Your monthly repayment reflects the size of the mortgage, interest rate and the term (how long the mortgage is paid). At your age mate it wouldn't be unusual to have mortgage term of 25 or more years. Most lenders seem to prefer a term period that will conclude before the borrower retires (but not always the case). There are different types of mortgage available. Two common ones are Repayment Mortgages and Interest Only Endowment Mortgages. With Repayment you pay back both interest on the loan and some of the loan each month. Effectively the amount you owe reduces with each payment -albeit it goes down by a very small amount initially as most of the monthly payment is interest. Interest Only Endowment - which received a lot of bad press in the UK - is where you only pay back the interest. The loan you borrowed is only paid back at the very end - presumably by money you have set aside somehow - so if you borrowed 100000UK over 25 years you still owe 100000 UK at the end of 25 years. Advantage here is the monthly mortgage is lower then the Repayment as you only pay the interest. The big risk - and why it got a lot of bad press - is what happens if you can not pay off the loan. Just me personally - I always went with a Repayment. Most (all?) lenders will insist on insurance - whilst you may have to have it you do NOT have to have it direct from the Lender. You can often get cheaper insurance if you look around. You may also need to consider additional insurance cover for illness, job loss and such like. Most (all?) lenders will insist on a minimum of a Lenders Survey on the property. You should though seriously consider getting a full structural survey. The Lender (and surveyor) may not show you the Lender's Report - and it won't tell you much anyway - a structural survey though could save you from a very expensive mistake. New properties may have some type of building certificate/guarantee. Around Notts - survey may well have to include a coal mines check. Regardless you'll need conveyancing on the property to check all the documentation etc. A qualified conveyancer will almost certainly be cheaper then a solicitor. Could save you several hundred pounds. Stamp Duty - I think duty is not thresholded at 125,000 UK - so you would pay stamp duty/tax (sorry don't know what the rate is, probably 6-7%) if you buy a property over 124,999. If you're looking at property at this mark then it would be well worth your while getting the price below the the threshold. Don't know if they do it where you are but quite a few cities are/have been involved in major city regeneration schemes. If you buy in an area that is targeted for improvement your property can really benefit when it happens. May be worth checking with the council. Buying with your mates can be a great way to start. One thing to think about though is what will happen if one of you wants 'out' in a few years? Will the others buy that guy out and if so how will you do that and account for what has already been paid? Also will you all pay an equal share of the mortgage and all the bills (gas, electricity, council tax, water etc)? Although you're mates you might want some sort of contract drawn up... If you have a friend who's a builder take them to look at the property to advise on possible work and costs. Keep a float of cash available to cover the first few months when you move in. You'll probably get hit with lots of utility bills and other costs. Also I find it's well worth buying extra lighbulbs, bath plugs and things like that for when you move in. Sorry if this all seems daunting - it is a lot to take in but it's worth it in the end .Best of luck. Cheers, Tony -------------------- Get your music professionally mastered by anl AES registered Mastering Engineer. Contact me for Audio Mastering Services and Advice and visit our website www.miromastering.com
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Posts in this topic
OrganisedConfusion Scary Time In Life. Mortgage. Jan 14 2008, 03:16 PM
MickeM Is it going to be your house, your loan and your m... Jan 14 2008, 03:27 PM
OrganisedConfusion QUOTE (MickeM @ Jan 14 2008, 02:27 PM) Is... Jan 14 2008, 03:32 PM MickeM QUOTE (OrganisedConfusion @ Jan 14 2008, 03... Jan 14 2008, 03:36 PM OrganisedConfusion QUOTE (MickeM @ Jan 14 2008, 02:36 PM) I ... Jan 14 2008, 03:40 PM
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Smells Well I have no idea what house prices in nottingha... Jan 14 2008, 03:41 PM OrganisedConfusion It's about 40,000 less per house in Nottingham... Jan 14 2008, 03:44 PM Smells QUOTE (OrganisedConfusion @ Jan 14 2008, 02... Jan 14 2008, 03:49 PM OrganisedConfusion There is a property that is brand new a 3 bedroom ... Jan 14 2008, 03:52 PM Smells yea your right mate, £200K plus, depends on the ... Jan 14 2008, 03:53 PM JasoninOhio No contract...no deal. This is a prime situation f... Jan 14 2008, 05:01 PM OrganisedConfusion QUOTE (JasoninOhio @ Jan 14 2008, 04:01 P... Jan 14 2008, 06:54 PM
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