Mortgages

Questions and Answers

Mortgages?

Q) Hi does anyone know a mortgage lender that will lend against a timber framed house? Why do lenders have a problem with them? went for a mortgage with northern rock and payed out money then got survey back and basically wasted all that money for nothing! Me and my partner have a joint income of around £250000 a year. Northern rock are sadly the only lenders who will give us money the highest they would lend was £118000. Its not a log cabin! just a normal house that uses timber to built its frame.

A) I'm surprised at this, most lenders don't care about this sort of thing. As long as the valuation and survey's OK I don't know why they would do this. There are thousands and thousands of timber frame houses in the UK and I think there would be a lot of worried people if this were the case!

How do percentage rates work on mortgages?

Q) I am looking at mortgages and i don't understand how the percentage rate works. Why do I have to pay double the amount of loan if the percentage rate is 6%?

A) The percentage rate is the percentage you are charged on he outstanding amount of the loan *per year*. If you borrow £100,000 and pay of once per year (to simplify the calculations) you will attract £6,000 of interest. So if you pay £12,000 per year the amount remaining will drop to £94,000. The next years interest at the same interest rate will be £5640 so if you pay £12,000 again the the amount remaining will drop to £87,640. As you see it goes down quite slowly. When you get a morgage the bank will work out how much you can afford at the current interest rate over the period you want to borrow and tell you how much you can borrow to buy a house.

Does anyone know any mortgage brokers that deal with future mortgages?

Q) I am looking to get a mortgage with future mortgages but I have phoned them and they only deal direct with brokers so now I need to find a broker. Or any brokers that could get 100% mortgage for people with bad credit?

A) I know that Manning Staintons deal with Future Mortgages as this is who we have our mortgage with. As far as I know Manning Staintons do provide an independent financial service. It may be worth contacting them!

I want my first home! Where do I start finding out about mortgages and other issues for first time buyers?

Q) My boyfriend and I are thinking of buying our first home, I'm a student, therefore minimal income (until summer 2008), he works, and we know nothing about buying property. We started saving up recently and have a few hundred pounds but from now on we want to start saving more every month until next year, when we want to get a mortgage. I have seen banks offer mortgages with 0% deposit required, should I be wary of these? How about interest only mortgages? There's so many types of mortgages, it's hard to figure out the advantages and disadvantages of all. Apart from a deposit, what other kind of money allowances should we make (I know we should put money aside for stamp duty, furniture and repairs/diy for the new house). Is there anything else we should think about? Any other useful information? Thanks! By the way we do live in England. Someone in another board told me about first time buyers classes that are available, I've had a search on the web and haven't been able to find much in my local area (Buckinghamshire) has anyone else heard of these? Yes, I we fairly young (23 and 24), but my boyfriend and I have been together for 6 years so we have had a while to think about taking this step, it's just the financial side that's the scary bit!

A) OK.. here's my thoughts. First: A mortgage is going to be a 30 year commitment. This means that for the next 30 years you will be committed to working for and paying for a home that will be co-owned by your boyfriend. You haven't made the commitment for marriage.. how can you make the type of long term financial commitment that will affect your credit and financial well being with out a strong commitment (ie marriage) to your partner? I would work this out first. Now.. let's talk about first mortgage. Understand that a 0% down mortgage is financine 100% of the value of your home. This means that from day 1 you will have absolutely no equity in your home. Therefore you will owe more than the home is worth for at least 5 years or more and then after that only have a very small amount of equity. Therefore if you decide to sell the home in less than 10 years you will lose money in the investment unless the real estate market rises a lot in that area. This feeds into the first statement I made above.. let's say you two buy this home (no marriage) then the relationship falls apart and he moves out. If you can't make the mortgage payments and he doesn't provide you with assistance.. you lose the house and both of your credit ratings will be destroyed. Simply because you won't be able to sell the home for what is owed and you won't have the cash to make up the difference. When it comes to a new home purchase here's my formula for success: 1. Have at least 10% for the downpayment. 2. Have the full amount needed for all closing cost. 3. Have enough money available for any needed repairs that will need to be done prior to move in. 4. Have enough money available for any furniture, appliances, etc that you might need when you move. 5. On top of 1 through 4, have at least a month's and a half mortgage payments in a saving account that you can draw on should a problem arrise that affects the financial stablity. 6. Work out a budget prior to buying the home. Include in this budget the mortgage payments, homeowner association dues, increase in utility payments, repairs etc. 7. Request your credit report and credit rating. Resolve any and all problems there that you can to push your credit rating as high as possible. 8. Shop around for a lender with the best terms. 9. Get a pre-approval letter from the lender with your maximum available loan amount. 10. Use a realator unassociated with the seller of the home you are wanting to buy and unassociated with the lender you have selected. Hope this helps and good luck!

Can two people get two separate mortgages to pay for one house?

Q) For example, a house costs £200K. Person 1 gets a mortgage for £90K. Person 2 gets a mortgage for £110K. They pool together these two mortgages to pay the total £200K for the one house. Is this a viable option or do banks insist that only one mortgage can be valid on any one house?

A) Sorry but it can not be done that away. What you would do is a 80/20 mortgage or however you choose to do it. But, lenders want to be in the First Lien Position, with the lesser amount mortgage being in 2nd lien position. Why would you do this anyway, unless you can not qualify for the first montgage. You can do a co-applicant on the loan application, and get a 100 percent loan. With the 100 percent loan you will have MI insurance on anything over 80 percent of the loan amount. Unless you add a .25 to .50 to the rate to not have MI insurance. That is if you go conforming. If you go sub-prime you will not have MI insurance on your loan. Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down. Try to find someone (broker) that will pull your credit one time, and submit your loan application to company's that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). The GFE will tell you the up-front closing cost associated with your loan. The TIL will tell you the terms, rate associated with your loan. This is a estimate only - not the final - but it does help you figure things out.

What will happen with Northern Rock mortgages?

Q) What will happen with Northern Rock loans and mortgages? If they are secured, will the rates still apply? And unsecured loans - what will happen to them?

A)

How do mortgages work in this situation?

Q) If we want to buy a new house, do we approach our current mortgage company and ask for an increase in our loan?? Then do they give you a mortgage promise and we produce that so we know we can realistically put an offer in on another property?

A) You'll need to get a different mortgage. Mortgage companies don't increase a limit like, say, a credit card. You can get "pre-qualified" for a loan but "pre-approved" is better. Once you've given the info to your mortgage company, and they're okay with it, they can give you a letter that shows how much you're pre-approved for.

Are there mortgages available from a UK bank for Australian property?

Q) We have an investment property in Australia that is mortgaged through an Australian bank. After our move to the UK last year, we would like to have this property mortgaged with a bank in the UK. Is this possible?

A) Yes, it is, i'm a Real Estate Agent in Sydney and a lot of our clients properties are mortgaged through Hong Kong Banks etc... many through Rabobank and other non bank lenders as well.

What is the difference in the repossessions process between buy to let and residential mortgages?

Q) I know that buy-to-let lenders will be more willing to repossess, due to the fact that the borrower does not live in the home - but I need further details!

A) You should discuss any (fixable) problems you have making payments with the lender .. If they can see your problems are temporary and you are making efforts to resolve the situation, they may agree to freeze interest or (temporary) reduce payments until eg. you find a new tenant OR sell the house (or some other house) to raise cash & pay off the mortgage If you keep making at least SOME payment (even if not the full amount) they should again be more willing to compromise .. however as a 'rule of thumb' if they see no way out or think you are not making an effort and/or you have missed 3 months in a row they WILL start proceedings to repossess .. If they repossess they will load all their costs onto what you owe and then sell the house at auction for a massive discount (after all, how did YOU buy the house in the first place ?) ... you will then be a LOT worse off than if you had sold privatively, since for one thing, you may never get another buy-to-let Mortgage and for another your other lenders might start getting 'twitchy' ... So very few 'buy-to-let' properties are ever repossessed ... = most owners manage to sell up before it reaches that stage ...

mortgages? What is the simplest way of working out how much a month?

Q) Me & my boyfriend are thinking about buying a place together and i want to know the simplest way of working out how to calculate a mortgage basically to see how much we'd be paying each month.

A) My girlfriend and I bought a flat a year ago, and was in the same boat as you. You will find many websites that gives you mortgages also have a calculator on them. I just did a search and found the following site http://www.mortgages.co.uk/calculator/mortgage_calculator.html Good luck!