druddle

I spoke to an IFA today about life/term assurance and he told me a couple of things.

The regulations for advising on mortgages are tigher still, and anyone who wants to advise on mortgages has to have passed a regulatory exam by the end of this year.

Also, insurance companies are changing critial illness cover at the moment. They currently offer guaranteed premiums, with which the premium rate and terms of the insurance does not change for the whole term. But they are going to start loading this by at least 40% as its costing them alot of money, and most wont even give guaranteed policies, only variable ones that they can change the rate and the terms of it.

This will not affect death only cover, just critical illness.

Also remember that if you are both getting term assurance on the sum you borrow, then go for 2 seperate policies not a joint one, cos in the event of having to claim, the other party still has a policy. The cost will be about 5-10% more than one single joint policy. Also go to death AND critical illness cover, as if you have a critical illness and make a claim, you are almost certainly gonna have big problems getting insured again, but if you are covered for both, once you have claimed for a critical illness, your death cover will still be valid.

Finally dont go for the cheapest, look for the one that offers the widest coverage of illnesses (for critical illness cover anyway).

Dave

[Edited by druddle - 12/11/2002 1:43:59 PM]

darlodge

Instead of going to my IFA and pay I'd thought I would ask questions here first

Me and my girlfriend are looking at buying our first house soon. We have a joint income of £28k (20k me, 8k her) which is not great but it’s better than nothing.

Property in Brighton is way too expensive so we are looking towards Lancing, Shoreham way.

We (I) have a few thousand in an account that will be our deposit but we are really looking about a 98% mortgage.

We saw a 2 bed terraced cottage which had largish rooms etc. and looked fab. It is at £124,950.

Does anyone have any hints, tips advice etc. for us?. We don’t have a clue between mortgage types and different setups.

Also, is there a maximum that we can have for our mortgage? I did a couple of online quotes and it varied from £77,000 to £110,000.
I was also told by a guy at work that if you add another person on the mortgage (parent etc.) then the mortgage company will sometimes increase the maximum as they can see that if things hit the fan the money can be recouped from elsewhere.

Cheers
Darren

paul w

Darren,

Go and see an advisor in your local estate agent,most are independant but will try and push their commission based insurances on you,dont go for any of these,you will find them cheaper elsewhere if you really need them,which you probably wont.

The amount you can borrow will vary between lender again your local person will advise.

Dont use anyone who wants you to pay them a fee,there is no need and also see a couple of advisors.

Mail me if you want,i've got 7 mortgages and just doing another,done most of them myself.

Cheers Paul

248SPG

I went through the same thing as you a couple of years ago although on my own and without partner.

I went through an IFA who got their comission for the lenders and not ME!!!!!!

I think I have been very lucky as I have £112K mortgage with an endowment (Sorry dont know how to spell it!!!) with earnings of then £32K. (I have since heard endowments are cr*p but dont really understand it all myself)

Saying that a friend is in the same posistion and apparently a well known high street bank offered him £125K and he is earning around £20K.

The only advice I can give is try not to stretch your means too much but I know it is difficult with the prices nowadays!!!

If you want any details of the IFA's I use mail me and I will be happy to forward you onto them.

They are personal friends of my Family so wont try and screw you over!!

I hope it works out and you are a proud homeowner soon!!! :-)

MooseRacer

I know it's easier to say than do given current house prices, but be very careful with what you commit to.

Interest rates are at 4% at the moment, a 40 year low. My opinion is that they are unlikely to change in the short term, greater financial minds than mine are of the opinion that they will probably rise slightly over the next 18 months or so.

Try, if you possibly can, to make sure that you aren't 'on the edge' financially now, so you have some leeway if rates do indeed go up.

Patt@firstime

Firstly IFA's aren't normally the best people to go to for a mortgage. You need to speak to an independant mortgage broker, there are too many pro's and con's etc on a subject like this to type over the net.

I'm a independant mortgage broker in Coventry and if you want to give me a ring sometime I would gladly help you out (and no, before anyone jumps in-I don't charge) mail me at foxlrfx@aol.com and will give you numbers etc.

Cheers Matt

damian666

I am currently looking at housing association schemes that allow you to buy a house of more value than you can afford.

For example:

* Combined earnings are £28k.
* Normal bank will allow you to buy a 70k house on 100% mortgage
* Housing association allows you to buy 100k house, with a 70%mortgage, they keep 30% of the house, which you pay rent on (very cheap rent.) You can buy their share at a later date, or when you sell the house, only get 70% of the sale price.

We are significantly poorer than yow, but this way we can buy 40% of the house we want and still plan for the future and not cripple ourselves with a huge mortgage!

Might be an idea.

damian666

http://www.escis.org.uk/list.asp?ssc=43&a=5

List of housing assoc. in your area.
Good luck!

chiark

Just a rhetorical question really, but is the best time to be buying a house given the nervousness about a burst that is, in some people's eyes, due?

London house prices fell last month...

damian666

IMO you should buy a house now (winter) as house prices are unlikely to drop significantly in the next year or so. However, December/January house prices tend to be less for some reason (too tired to speculate)

Dont forget the previous interest rate comment!

fast bloke

ygm

Dave P

Personally I would stick to a repayment.

An endowment is linked to the performance of the stock market. You basically pay a monthly premium which is invested for you. They guarantee you a sum assured (which is usually less than your mortgage) and then pay you bonuses. The old theory was you would come out at the end of your mortgage with your mortgage paid and a lump sum. The reality for many people today is the endowment doesn't cover the mortgage.

A repayment however is a payment of capital and interest each month which is normally supported by a simple drop dead insurance policy.

Try a mortgage broker, or do your own research on line. My understanding on fees was that the lender pays the advisor not the borrower.

Not sure what lending rules are, used to be 3 of 1, 1 of the other, or 2 1/2 the joint.

Be warned... don't over stretch yourself. Be sure you can afford the monthly repayments and factor in ALL other costs, council tax, food, tv licence etc.

Also factor in a small increase in lending rates. Views are mixed but many think we have reached the bottom. If interest rates rise, house prices will probably fall. If you can't then afford the mortgage you are stuck in the negative equity trap and your home may be repossessed.

Sorry to be downbeat but many youngsters don't appreciate what high interest rates mean. 8 years ago I sold my old house for £52,000 a loss on the £74,000 I paid and a bigger hit on the £97,000 they were going for at the peak.

I'm not saying don't buy, just be sure of your finances.

Dave

rb5 286

iTrader: (2)

just over a year ago i, along with my wife (girlfreind then), bought our 1st house. the house was £88,500 and we had no money for a deposit. the estate agent (who also ran his own financial services firm) was very helpful and showed us the whole list of lenders @ 100% mortgage so we, along with his advice, could choose wot we wanted.

we went for a 3 yr fixed rate at 6.45% apr on £90,000 which was £635 p.m. this way we knew wot we would be paying for the first 3 years.
Note: We made sure that there was no redemption fee

last month we remortgaged, house valued @ £135,000,
£100,000 mortgage, fixed rate @ 4% for 2 years over 24yrs @ £100 less a month then before.

I aint no expert on mortgages, in fact i aint got a clue!!! but i do know that some lenders are giving up to 6x ur earnings at the moment and there are so many different ways being offered to 1st time buyers @ the mo because of the high house prices.

Wish u Good luck and all the best. hopefully u'll have a nice xmas pressie, a new house!!

darlodge

Many thanks all. I'll have a read of all the answers and type up my next list of questions later this evening

Thanks again.

Darren

chiark

Oh, advice: I wouldn't touch an endowment with a barge-pole. YMMV, but after having some oik of a salesman try to mis-sell me one and refuse to actually listen to what I wanted, I'd be wary...

The person that found the mortgage was brilliant, the financial advice that followed was a poorly disguised selling routine for legal and general Endowments.

You will see pretty graphs that start slow and go all curvy, and told that if your endowment over-performs you could be left with a tidy sum, but I'd rather pay a certain amount a month and know that it's paid off in 18 years

MattN

well I bought my flat on the 11th December 2001. So today is my first anniversary, and, I'm currently sorting out a new mortgage which is saving me 70 quid a month, as interest rates have droped since last year, my flat is worth more so it puts me in a lower mortgage vs value band.

At the time I was told the most I could borrow was 4x salary (even less this time but is a self cert).

When I first took the mortgage and all the other bills on I was earning a bit less than you and to be honest whilst I could pay the bills put petrol( a lot) in the car and have a bit of cash for going out it was a bit tight. Things like my exhaust falling off did cause problems as I simply had no money to pay for them.

With the size of the mortgage your looking at things may be very tight. i was only on a single income but your looking at a much bigger mortgage than me no council tax relief etc.

Also, a 98% mortgage is going to be tough, most lenders will only give you more if you have at least 5% deposit.

Have you considered all the costs of moving as well? Stamp duty etc.

chiark

Just another thought. Is it worth having some form of agreement drawn up in the event that you split up?

Sorry to be quite so doom-laden, but...

Hope you take this in the way it's intended

Tiggs

"Also, a 98% mortgage is going to be tough, most lenders will only give you more if you have at least 5% deposit."

sense this not does make!

MarkO

Nick, joint mortgages tend to be done in two ways - either proportionally (you decide, but it's usually done on the basis of salary) or 50-50. There's a name for both ways (which I can't remember, unfortunately!) but you usually have to specify it legally as part of the mortgage application/agreement. So it's unlikely to be a problem.

And besides, any pre-nuptual agreement has to be vetted very carefully, as most don't actually stand up when tested in court.

MarkO

Tiggs:
It does make sense. What he's getting at is that to borrow beyond the usual 3.5x salary (or 2.5x joint salary) most lenders will usually require a 5% deposit or more. So by getting a 98% mortgage, they're effectively limiting themselves to those multiples (which, IMO, isn't such a bad thing, given the current position in the economic cycle).

MooseRacer

Marko - do you actually know what position in the current economic cycle were at?

I reckon you could make a fortune if you do

P20SPD

iTrader: (1)

It also depends what profession you are in. Professionals like Accountants(), solicitors, barristers, etc can have multiples of 4+ together with partners income.

MarkO

Yep. It's called the "things can only go downhill from here" position.

You know, the position where everyone's still saying that everything's going to be alright, but at which the faeces is already on an unstoppable collision course with the spinning blades of the air-moving equipment....

Let's be honest, redundancies are getting more and more common right now. House price growth continues furiously, despite being totally unsustainable. And rates are unlikely to drop, so will either remain the same or rise .

So IMO now is definitely not the time to jump in and start taking 100+% mortgages based on 4x salary or more....

MattN

spot on MarkO.

darlodge

Cheers all.

We both have Monday off work so we are going to drop in to a few mortgage brokers, estate agents etc. and see what info and advice they can give us.

I have already decided that we are not going to get an endowment policy and we are not going to anything until March when hopefully we will have saved a little more money saved adn we will have a better understanding of the costs involved (TV, heating, electric etc.)

Many thanks
Darren

LeeMac

iTrader: (1)

You may be able to borrow more than you can afford by getting a fixed rate for five years, although rates are low at the moment fixed for five may be same as norm rate but who knows in a couple of years so see if you can afford a 100k mort over 25 or 30 years on a fixed prob cost around +/- £600 a month and look for a house that needs modernising/updating, so after a couple of years the house will be worth a LOT more getting you on your way up and what you owe down, many mortgage details when applying will vary borrowing 100k will end up about 200k when you look at what you pay over the 25-30 year period dont worry about that because if you get a house that needs doing up you will sell it and when youve made a few quid you can start looking at these in detail. Hope this helps

fast bloke

Leemac - please feel free to borrow some of these .................................................. .................................................. .............................

druddle

Regarding the agreement in case you split up, i think its called a Declaration of Trust. Me and the Enemy have one for our house, so that if on dies the other gets the whole house and if we split, we bith get out what we put in then its split.

I was advised to do this by our solicitor.

Dave

Dave P

Also you can get your parents to guarantee your mortgage. My brother and I did this. The only problem with it is that if you get made redundant and can't pay.... your parents have to.