Be Excellent To Each Other

Anyone got any advice on mortgages?

I'm thinking of the first direct offset mortgage but wondering if it's better to pay £1000 up front to get 2% variable above base rate for life or if it's better to go fee free for 2.29% above base rate.

Amount I'm going to be owing is about £60,000 and I'm probably looking at a 25 year term.

the lower percentage with the fee is better I beleive

Get the cheapest one.

Don't get one.

That's my (probably very foolish) approach.

For 60k, that 0.29% difference will only save you about 170 quid in the first year, and less in each successive year as you pay off the total. I'd imagine the usefulness of that 1000 quid up front will be more that the 15 quid each month you'll save, especially if this is your first house ( the amount of crap we had to buy when moving into our first house was staggering ).

If you do go for the £1,000 one, you can probably add that to your total mortgage. Don't pay it before the mortgage starts, or you'll lose it if the sale doesn't go through.

And get a mortgage advisor. Our is pretty good, and he's free (he gets commission from the mortgage companies).

I noticed today that first direct are doing an 85% LTV mortgage for 4.1%. Things seeme to be looking up. Unfortunately that includes house prices.

The mortgage is an interesting one being as it's an Offset situation.

I get a mortgage at £60,000 but it's interest only. But I only pay interest on the difference between savings and mortgage. So if I have savings of £10,000 I'm only paying interest on 50,000 and so on.

You don't get interest on your savings but it still seems a pretty good deal.

It's a good deal if you wouldn't do anthing with your savings other than put it in the bank.

<Dad mode>

I assume you have the means for paying back the capital if you are going for interest only?

</Dad mode>

He's not saying that, is he? I assume it was just a case of offsetting against the total that interest is being charged on.

Yeah, on an offset account (I think) if you have £10k in savings you earn no interest on that and also accrue no interest on £10k of the mortgage. If that's available now it's got to be well worth doing.

Or am I (as usual) having a critical understanding failure?

It's the same understanding I have of it.

It sounds like saying "I would like to pay this massive lump sum off my mortgage right now please, but keep a record of the amount, because I wish to retain the right to take it back at any time."

Which is damn nice of them.

I am looking to get a mortgage myself in the next few years, but can't understand the reasoning behind going for interest only. If I can't afford the full payments now, where am I going to suddenly find a lump sum from in 25 years' time?

Depends upon how much the interest rate is, and how much you've set against the house.

You are basically gambling that the price of land will increase in value, and that interest rates will stay low. The banks are gambling that interest rates rise faster than the cost of land.

Still, it's an accident waiting to happen.

Many mortgages have an initial 3 or 5-year interest-only period, which is good for first-time buyers getting their feet under them.

When I was selling my house I asked Halifax if I could switch to interest-only and they said "fuck no, unless you prove you're investing to cover the capital part if we call it in." That was just before the mental times set in.

Seems to me to make minimal difference. It's like repayment anyway. I'll still be putting the same amount in the bank and saving it but this way I get a much lower interest rate. The rate of 2.29% over base rate (fee-less) is the cheapest I've found but is only available on a Loan to Value of 65% or lower.

So if I just keep saving my money as I was going to do with a repayment mortgage, I should be able to pay it off in the same amount of time, right? I just have to be able to save £60,000 in 25 years.

By my calculations, I need to save about £46.15 a week to accumulate 60,000 in 25 years.

I've a friend with one of those offset mortgages who has been able to save a fair bit of cash off his offset mortgage by some clever financial juggling. His bills and so on come out of his account just before his next paycheck, and all his day-to-day spending goes on a credit card which is also paid off in full just before the paycheck. In this way he has most of his wages sitting in his offset account for the whole month, reducing the amount of interest paid by a fair chunk other the course of a year.

If you are that disciplined then sure, I know i'm not!

The other thing to be aware of, is that with a repayment you are paying down the capital all the time, so you will be paying less interest as time goes on as the capital drops. With interest only, you will always be paying interest on £60k, unless you regularly pay off part of the capital.

Offsets are great for the convenience, but they also mean you won't be getting any interest on your savings, so if you think you can beat the interest rate offered by the banks on your mortgage on your savings elsewhere, then you might be better off doing that?

Personally I would be quite happy with an offset mortgage, as i'm pretty lazy and couldn't be arsed with moving money around to maximise interest returns, so if you can get one on a deal you are happy with, then go for it.

Interest only worries me though, the capital has to be payed back sometime, and you aren't saving anything over a repayment on monthly costs if you put the equivalent monthly cost into a savings account, it will actually most likely cost you more in the long term, due to compound interest on the £60k stake that doesn't reduce.

Not wishing to prejudge anything, but a lot of the reasons people go for interest only, is that repayment is too costly and they can't afford it. That is an extremely risky game to play, especially as interest rates are likely to rise in the next few years, can you still afford to pay the mortgage if the interest rate doubles? Not saying this applies to you as I don't know your situation.

Right just used the beebs mortgage calculator..


Interest only @ 2.75 (including 0.5 base rate) on 60K per month is: £137.50
Over 25 Years that's a total payment of: £41,250

Interest only @ 2.50 (including 0.5 base rate) on 60K per month is: £125.00
Over 25 Years that's a total payment of: £37,500

As far as I can tell the break point of paying an extra £12.50 a month is after 6.66 years (at the current rate). So it will take you 6.66 years before you end up paying more back more than the grand to the bank than the lower rate would have saved.

Basically it's only worth paying the 1k for the lower rate if you plan on sticking to the lower rate longer than 6.66 years.

I think I've got my numbers right. Might be worth checking though.

That's also assuming the base rate never changes. Also worth noting I have a mortgage at 6.5% which probably makes me stupid.

The thing is as I put more money in the bank I'm paying interest on a lesser amount so how does that work out?

I don't see why I would change from just 2% above base rate. Seems a fair deal. Unlikely to find anything cheaper and it is a 'for the duration' deal. They say the interest is calculated daily so the more you have in your account the less you pay each day.

I really am that disciplined with the money. I'd just be treating it as me paying off the mortgage. I'm pretty good at budgeting my money. I wouldn't spend more than my allowance each week.

You need to check that very carefully, and make sure there's no limit to the amount you can offset.
Really, honestly, get a mortgage advisor.

The offset limit is a very good point. I do have a mortgage advisor appointment tomorrow actually.

Good news. Much as I trust the Beex masses I'd be rather wary of getting myself into a 25 year contract on their advice

Gutless.

Not even this?

I Grim... do hereby sign up for 25 years with Holly Willoughby



_____________________ sig

_____________________ date

I don't love her anymore, according to the paper she is a Nazi...

What are you? some kind of nazi lover?

If she's a Nazi then yes. Yes I am.

I don't like her... sorry

More for me.

How dare you, get out!

Sorry...

She just not do it for me...

Scarlett Johansson on the other hand

Now you are just being greedy, at least give scarlett the two hand attention she deserves...

I'd rather put a large deposit down on Holly as I know my interest wouldn't vary.

You can keep both Scarlet and Holly. I can't stand either.

I've checked with First Direct and they say that there is no limit to what you can offset against the mortgage. So it's sounding very interesting.

I have the perfect mortgage advice, and know exactly what you should do, but i'm not going to tell you now, you've upset me.

Anyone have an recommendations on how to choose a conveyancey solicitor?

Buying our flat. Very scary. Especially as first of our friendship group to do so, so have very, very little recommendations to go on.

There's no choice to be made, they're all useless twats.

Ours have been useless, and despite the fact that we're moving a week on Friday we still haven't exchanged.

Soon I will be making a post about formal complaints.

Just go with one recommended by your estate agent, as then you can shout at them too, at least.

Yours should be easy to sort out as a) you're already living there, and b) I assume there won't be a chain (at least I can't think of any reason why there should be).

As Grim... says, if there's an agent handling the deal ask them.

It will take longer than you think it should, though, but the costs should be fixed pretty much beforehand.

Were not doing it through an agency (is that a bad thing?) as we know the landlord and that way we could offer less etc.

Were thinking either someone local so we can enter the building and complain (but more expensive), or the people our mortgage people recommend (who are at the other end of the country, but cheaper.).

To be honest, buying a flat you're living in from someone you know is pretty much at the 'piss easy' end of things, so I wouldn't stress about it too much.

He's still a weird landlord. And lives in germany. But yeah, it helps.

The solicitor I used was the father of my girlfriend of the time and he lived on the Isle of Wight. So distance doesn't matter too much.

Buying seems easy - it's the selling part they seem to struggle with.

That's what I don't really understand, it's a lot fewer stuffs to do.

Also, we've got a decent mortgage deal from looking ourselves from Britannia which works out at about £100 more than our rent a month (fixed for 3 yrs), but I feel we should also ask a broker to see if they can beat it.

I have no idea which broker to contact, nor has anyone else I know in london. You liked your's Grim, and they must be london bound? If so could you let me know there name? PM if need be. They're the free ones that take commission from the lender right?

I'm constantly amazed at just how fucking bad they are.
We agreed on the sale way back in, Christ, April time. The cunt that is buying our place (let's call him "Cunt") had his solicitor request all the documents they needed from the management company for the block of flats I live in (stuff about ground rent, lease terms, that sort of shit).
Last week - last fucking week - they realised that they didn't have one of the documents they need, so now there's a panic because it takes ten days (somehow) for said document to be produced. Add this to the fact that because Cunt didn't want to move until the end of this month people further down the chain have had to get a bridging loan, and people are getting really pissed off now.