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Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
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Question
My partner and I are hoping to buy our first home using Help to Buy and have been looking at new build properties. We are ready to put in an offer on one particular house which we both love but the estate agent has warned us as we will need a deposit to reserve it and then we must exchange contracts within 28 days. Is this normal and is it possible get a mortgage arranged in this time?
Answer
It’s very normal on a new build purchase to part with a reservation fee (usually around £1,000) which you stand to lose if you do not ultimately purchase the property. Likewise, the 28-day completion is a standard requirement. Twenty eight days is definitely possible as long as you chose an efficient lender (they vary quite dramatically in terms of how quickly they move things along). I would also suggest that you do some preparation work before you part with any cash. I would recommend that you obtain a mortgage agreement in principle which will help to reassure you that you can actually get a mortgage, but it will also let you know what paperwork you will need to provide to get a mortgage offer. This will mean that you can pay your deposit with some assurance that your mortgage will go to offer, but also that you can have your paperwork ready to avoid delays on your application.
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Question
Is it better to choose a mortgage with or without fees? We have noticed some of the fee-free options tend to have higher repayment costs over the term of the mortgage. But, obviously, the fees can also work out to be expensive if averaged out. What’s the best course of action? As background, my partner and I are first time buyers looking at purchasing a £350k house with a £20k (approximately).
Answer
Fee free deals look appealing, but in the long run they tend to be slightly more expensive. It really depends on your finances. If you can afford to pay the fees up front I would advise you to do so, some lenders will even allow you to add the fees to your overall loan amount. Your best bet is speaking to a broker who will be able to work this out for you. You can give our expert residential mortgage advisers a call on 0345 345 6788.
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Question
We are currently searching for a new house – which will be our second property as homeowners. We were thinking about getting the mortgage in place before we started looking but wondered whether this might put us at a disadvantage if, for example, the house we found ended up being more expensive than our deposit plus the mortgage we had been accepted for? There is also the risk the offer runs out. What do you usually advise in this situation?
Answer
You would be unable to obtain a mortgage offer secured against the property you are buying, if you have not found a property to buy. What you can do is obtain an agreement in principle based on the maximum you can afford, and then apply for a lower loan amount once you find the right property. The agreement in principle does not cost anything to produce and does not commit you. However, if you want to raise money against your own home, and then purchase the new property with cash, the way to do this is apply to borrow the maximum amount possible, and then reduce the mortgage offer down once you know where you need to end up. I am afraid that the offer running out is not something you can really work around – lenders will sometimes offer a grace period of few weeks but no longer.
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Question
I have seen a cracking mortgage deal for which I think I might be eligible, but I still have around four years left on my current five-year fixed-rate mortgage. There are no early repayment charges on my current mortgage so I think I should be able to switch. However, would there be any repercussions that I haven’t considered?
Answer
Even though you aren’t tied into any early repayment charges, I would image that you will still have to pay an exit fee if you decide to settle up before the end of the five-year term. It’s worth checking your contract before you decide. You will also need to check the fees involved with taking out the new mortgage. Once you have all of these details you will be able to work out if you will be in a better position making the switch. We would be more than happy to look into this for you, just give us a call.
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