Grown-up type mortgage question

[Jem]

With renting you have to cough up a month in advance when you move somewhere.

We exchanged and completed on Friday for our new house  but there's nothing gone from the bank in terms of mortgage payment .. so does it work the other way with your own home? I.e. does the payment come out at the end of the month instead?

[samhs]

normally 4-8 weeks after you complete in my experience - so if you time it right, you get up to 8 weeks without having to make a payment (other than the huge downpayment obviously!)

[Jem]

Ta dude

[Dom]

What are the mortgages like these days? Are there mostly fixed or variable mortgages around? I've not had a look in a long time and I suppose everything has changed.

[spannaa]

Mortgage guide 

[Jem]

What are the mortgages like these days?

Expensive? :p

[Dom]

Mortgage guide  

Yeah I know all the basics, such as the various types, but that doesn't mean that they're still offered. It seems to me that from one week to the next, mortgage people will chop and change their "products" based on various things, so I just wondered what the current trend was this week.

Like, about a year ago when I first looked into them, virtually nobody was offering capped rate mortgages for some reason. There were also fewer places offering discounted mortgages. But as I say, that probably changed the week after I went and saw an advisor.

It all costs too much money anyway. I don't like the fact that everyone's lives these days revolve around borrowing 50 million times your salary to buy a building that you could probably build yourself for less than half the price. Banks and building societies make way too much money from us, and there's nothing being done about it because everyone needs somewhere to live, so they've got us all by the balls.

[spannaa]

AFAIK, they're all still offered if you shop around.

Which one you go for depends on your circumstances though.

[Jem]

Go to an IFA. Best thing we did Didn't cost us a penny, either, and the guy was lovely.

[spannaa]

Go to an IFA. Best thing we did Didn't cost us a penny, either, and the guy was lovely.

Yep, that's what we did too.

There was a fee (reasonable) as the mortgage company he recommended doesn't pay him commission.

[Dom]

Yeah I saw an IFA (at least that's what he said he was) but he wasn't whole-of-market, so I knew right off the bat that he wouldn't be looking through the whole portfolio of available mortgages. I'll probably have to try and find someone else next time.

[rutty]

Go to an IFA. Best thing we did Didn't cost us a penny, either, and the guy was lovely.

Yep, that's what we did too.

There was a fee (reasonable) as the mortgage company he recommended doesn't pay him commission.

That's what we did too. He was very useful because we were messed around by the Abbey and he spent ages finding us alternatives.

I think you'll be lucky to find many mortgages with less than a 10% deposit. If you can put down 15% or more then the rate drops a lot, otherwise the banks ramp up the interest rate

[sickpuppy]

Go to an IFA. Best thing we did Didn't cost us a penny, either, and the guy was lovely.

It does cost, the costs are paid from your mortgage repayments and do add up to quite a lot over time. Not that you notice as such.

[Jem]

It does cost, the costs are paid from your mortgage repayments and do add up to quite a lot over time. Not that you notice as such.

No mention of that in any of the costs breakdown (which included everything else .. fees, completion charge bla dee bla).

[spannaa]

No mention of that in any of the costs breakdown

If you're paying your IFA a fee/commission, it should be documented in your mortgage Key Facts Illustration (Section 13 'Using a mortgage intermediary').

[familychoice]

What are the mortgages like these days?

Expensive? :p

Er...I think not. When I first looked into buying a house (well I say house, it was more of an arrangement of fallen masonry) the interest base rate was 15%, and when I bought my first house we were paying about 10%.

Mortgages are dirt cheap now in comparison, they have been for years, but it's not going to last.

[spannaa]

Agreed.

When we bought our first house in 1988, the mortgage interest rate was around 12% but that rose to just over 16% a couple of years later.

When we finally move, we'll be paying 2.79%

[Dom]

The thing I don't understand about mortgages at the moment is that a lot of people are having their house repossessed because they find themselves unable to afford the monthly repayments. Sometimes it's because the their interest rate goes up and so the monthly repayment goes up slightly, but sometimes it's because of things like an increase in food, fuel and electricity/gas. But what seems counter-intuitive to me is that when the banks face slightly harder times than they're used to, they stop lending to new businesses etc (which I guess is understandable to an extent) but they also get much stricter with new customers and their repayment plans.

But surely if people are struggling to repay their mortgages, then they should reduce the monthly repayment amount, not put it up, so that people can continue to afford to repay their mortgage. I know that means that some people will be paying it off for longer than they planned, but isn't that good for the banks too, what with the extra interest they'll gain over the extra time?

Surely allowing people to pay slightly less each month and letting them keep their houses is preferable to jacking up prices because you don't think you're making enough profit, and then repossessing people's houses because they can't afford to pay their mortgage?

I know that model has always worked before, but that was while house prices were rising. Before, it was almost a guarantee that a bank could earn back all the money they've lent (and then some) simply by taking the house and selling it. But these days, houses could be worth less than the amount borrowed on them originally, and so the bank wouldn't earn back all the money they lent if they repossessed, and then sold, the house. So again, surely it's best if it doesn't come to that?

It boggles the mind. If I was running a bank right now, I'd be doing everything I could do make sure people could keep their homes and repay their mortgage, simply because if I had to repossess their houses to try and get back the money I'd lent them, I know I'd never get it all back due to the house pricing slump.

[Dom]

Agreed.

When we bought our first house in 1988, the mortgage interest rate was around 12% but that rose to just over 16% a couple of years later.

When we finally move, we'll be paying 2.79%

You have to bear in mind how much more expensive the houses are today though, compared with 1988. 12% of 1988 prices might actually be less than 2.8% of today's prices...

[spannaa]

It is less, but you need to factor in earnings too.

A 12% mortgage on a house bought in 1988 took a much bigger proportion of our earnings than a 2.8% mortgage would take from our earnings if we bought the same house now.

[familychoice]

As Spanna says wages were lower then, plus mortgages were very hard to get. I wasn't able to buy house until I was 30, and my parents were in their late 40s before they bought one.

[Jem]

If you're paying your IFA a fee/commission, it should be documented in your mortgage Key Facts Illustration (Section 13 'Using a mortgage intermediary').

Yep, the key facts thingy says they're paying him a commission, nothing about us paying

Er...I think not. When I first looked into buying a house (well I say house, it was more of an arrangement of fallen masonry) the interest base rate was 15%, and when I bought my first house we were paying about 10%.

Mortgages are dirt cheap now in comparison, they have been for years, but it's not going to last.

Yes, thank you captain obvious. I replied in jest.

We're better off buying than we were renting, as I may have mentioned in t'other thread we had. Costing us over £100 less p/m on mortgage vs rent for starters.

The "expensive" part for us was actually putting down a deposit. We put down just over 30% (but had to, to get the best rate).

[spannaa]

Yep, the key facts thingy says they're paying him a commission, nothing about us paying

They may be paying him, but as most mortgage products are designed with the broker's commission built in, you're actually paying the commission indirectly.

Even if you cut out the middle man and went directly to the lender for exactly the same mortgage, you wouldn't get it any cheaper.

[robwhizz]

With our first mortgage we used an IFA working out of the estate agents office. She assured us she was unbiased even though she was free and took commission from whatever lender we went with.
She mis-sold us an endowment mortgage because we were a little green and put out trust in her. Ended up costing us a fortune because we were locked in for 5 years.
We opted to do everything our selves in subsequent years - bloody hard work.

With our last move though, we were buying a house when Northern Rock had just gone under and lenders were twitchy. It was a little out of our price range and we had a another secured loan on our house.
We found an IFA that doesn't work on commission, but is paid directly (although, only after his consultation and we agree to go with his advice). He was amazing. Got us a mortgage we couldn't get directly ourselves, sorted out the secured loan and handled all the paper work and solicitors (he put out to tender for solicitors and got a great price to handle the buying and selling - those savings alone more than paid for his services).
Without him there is no way we would be in this house now. We see him once a year to go through our finances and look at the best way to go forward. Absolutely brilliant.

[Dom]

The "expensive" part for us was actually putting down a deposit. We put down just over 30% (but had to, to get the best rate).

Christ on a bike. I know this is a personal question, but if you don't mind me asking, how long did it take you to scrape that together? I've been saving (well, "saving" in a rather loose sense of the word) for nearly four years, but I don't think I could quite put down a 30% deposit for the type of house I'd need.

[Jem]

They may be paying him, but as most mortgage products are designed with the broker's commission built in, you're actually paying the commission indirectly.

Even if you cut out the middle man and went directly to the lender for exactly the same mortgage, you wouldn't get it any cheaper.

I wondered if that was what sp meant but given that logic, we'd be "paying" anyway, so doesn't make a difference.. might as well use one, sort of thing

Ours also sorted us out with a bargain life insurance doodaa, which I must follow up on.

@Dom: it was mostly Karl's money TBH. His mum is an accountant so has been squireling his money away since he was knee high to a grasshopper. My own savings are piss poor in comparison! (I have about £6k, and that's 6 years worth of savings; although some of what I had was eaten up while I was on maternity leave.)

[Dom]

@Dom: it was mostly Karl's money TBH. His mum is an accountant so has been squireling his money away since he was knee high to a grasshopper. My own savings are piss poor in comparison! (I have about £6k, and that's 6 years worth of savings; although some of what I had was eaten up while I was on maternity leave.)

Ah OK. And I guess some of the savings get eaten up with the various fees as well, mores the pity. The savings I had since being a nipper were spent on Jack Daniels in my first term of uni many moons ago, so I started with not a lot. Well I suppose I can consider myself not doing too badly then. Got £17k saved after 4 years of employment. It should be a lot more to be honest, but I'm a sucker for shiny trinkets.

[Jem]

Fees (although as first time buyers this was quite low) / replacing the flooring in the front room / the valve that's gone on the heating / new sofa / replacing the rotary line that the previous owners took after signing it over to us .. yeah

[rutty]

Savings: £0

[Matt]

Life is too short for savings 

Would rather enjoy life having what I want, we always seem to muddle through somehow, a lot by working bloody hard, some by luck and some just sheer grit. Keeps us on our toes