Some help might not go a miss.

[turbo pete]

My friend :rolleyes: needs to move out of his rented home leaving his kid and missus behind.

Who can tell him about mortgages as he will need to buy his own pad.

Who else can tell him how to work out how much child maintainance costs will be. Is there a formula?

Any advice appreciated. In fact any advice about house buying would be good. pitfalls etc...


:(

[Chris_Lacey]

My advice regarding house buying would be...

Try to avoid places with an onward chain.

Don't buy a nicer house in a poorer area because trying to sell on will be much harder, and you'll make less money.

When buying ignore the estate agents summary of an area, look around the area yourself, pop into the local shop and ask about, look in the paper to see if any stories about wrong doing appear to take place in that location.

On a mortgage...

Don't get a cash back mortgage unless you have to, they charge high APR on the cash back, and a lone from the bank although worse over the short term for repayments, is better than a mortgage that doesn't suit you.

Mortgage for slightly more than you need, so that you can deal with the "alterations" of the previous owner...

In the current economic climate, a fixed rate mortgage would be better than variable rate, hous prices are stabilising, and the economy is looking a little bleak, interest rate rises will happen soon...


And that's about it, all of my advice is through personal experience though, so don't take it as gospel! :)

[NikB]

Tell him to talk to a financial advisor, they don't charge you as they work on commission from the mortgage companies. They should come out to visit you and most now have laptops with all the mortgages that are currently on offer and they update them regularly. They can use this information to search for the best for you. I found my FA on Yahoo, just did a mortgage search and then asked for further help and they found me a local guy. He is going to save me ~200 squids a month!!!

Hope this helps

Nik

[turbo pete]

cheers

[Billy]

It's worth having a full structural survey on older houses, or at very least, the most comprehensive survey that the mortgage company offer.

Using a licensed conveyancer rather than a soliciter for the transaction and searches etc, will save a fair wack.

As Chris says, avoid cash back offers, but I'd add avoid any offers at all if you can help it and that includes all the low-start, small deposit, payment holiday option etc variations, as you pay for them all.

Fixed rate is a matter of personal choice, but again you pay for it. Getting a rate fixed for a decent length of time isn't cheap and may prove impossible at the moment. Ours is fixed rate, renewed every 2 years which comes in 1/2% above the variable rate, which costs a tenner a month in effect but means I don't have to keep up to date with the world of finance on any serious level (very boring). I think 7 years would have been about 3-4% above the variable rate. Which is a lot.

Probably doesn't need saying but don't get an endowment mortgage.

I don't know what you pay for "Intelligent Finance" type set-ups, but I can tell you that there's a lot to be said for banking with your mortgage company. We use HSBC, originally because they were the cheapest mortgage, but it turns out that one major benefit is that the mortgage gets paid (and all the insurance etc) even when we're up to or over the overdraft limit. Easy life.

Despite their high street bank multinational image, HSBC are actually rather good for mortgages and seem to win awards for them every year, for what it's worth. Small local building societies can be the cheapest sometimes, but long term security is an issue.


The most important thing though is the house. If you buy a house with a view to making a profit in a few years then you're asking for trouble. If you forsee selling in the near future for whatever reason then you have no choice, you have to buy a house that will sell easily which is, by definition, not easy. You won't get a bargain, you won't be able to haggle and you'll have to be quick.
We bought what might be described as a difficult to sell house. Been on the market 18 months, in need of work (lots!), originally priced at 55k but dropped to 45k a year later, we got it for 35k with no real haggling. Probably worth 75k when it's done, but selling it wouldn't be easy as it's too small and cheap for the area (nothing under 100k and not much under 200k!)
But it doesn't matter if it won't sell, 'cos I don't want to move.

Or in other words, buy a house to live in, buy stocks to invest in, and go to the bookies if you want a gamble....

[Billy]

Oh, and one other thing.

As a first time buyer, you are a valuable commodity in two ways.

1. You are new business for the mortgage company, so you get various bonuses for that.

2. You represent the potential end of a chain to the seller, so haggle on the strength of a quick sale.

[turbo pete]

BILLY
you could do an faq on this:D

turbo pete

[Wak]

Agreeing with Billy on deals, you pay for them one way or the other, it's best to avoid fixed rates too imo, especially at the mo when rates are low. When the rates go back up and you don't notice cos your payments are fixed you could have a hell of a shock when the fixed period finishes.

Happened to me, while my mortgage was fixed the rates rose about 2.5%, I didn't care until the fixed period finished and I got stung for an extra £100 per month, which was a lot when I was only paying about £250 - ouch! The bestards wouldn't let me do another deal either without me paying the tie in penalty of 3 months payments

[Phil L]

I wish I had a mortgage of £350 :(

Independent financial advisors may not be entirely independent. They may still push a particular mortgage so best to see a few of them.

Stay away from endowments (ironically you could argue, values can only go up now...but thats a different subject) and get a short tie-in period (no more than 2 years, I reckon) so that you can change your mortagage after 2 years without any penalties, if you wanted to.

I'll be looking at those combined current/mortgage accounts next. Not suitable for everyone, but any surplus cash in the account counts against the interest calculated...useful if you have a cash lying around at the end of each month. Slightly higher rates but overpayments, loan holidays and loans against the mortgage are allowed. Requires strict financial control to stop you loaning extra money all the time.

Don't know anything about child maintenance...doesn't the council give you money for having kids??

[Jeff]

General consensus (including the regulators, they ssued a consultation paper on the subject) is that a repayment mortgage works out cheapest in most scenarios. However that is based on your repayment vehicle only growing at 7% (may be tricky getting 7% growth in the current market but we are in a bit of a slump)

Things may seem bleak now, but a mortgage is such a long term thing that things are almost bound to improve over the next 15-20 years. Getting in while the market is low is sensible but scary.

Overall, if your friend is a gambling man or reckons he know the market he should look at interest only, if not then suggest repayment.

As for fixed, capped, variable, discounted etc, etc. you will require a crystal ball to know which is best. Personally I think discounted but the IFA I work for don't sell mortgages so I'm no expert.

[Martin T]

May I suggest waiting for the oncoming house price crash which will allmost certainly happen in the next year? Save youreself thousands.

[Wak]

Originally posted by Phil L
I wish I had a mortgage of £350 :(



That was a few years ago, it's double that now:eek: