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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
Would I be eligible for a ‘below 1%’ mortgage?
I have been looking online for a mortgage deal as I am due to remortgage in December. I know it’s a long way off, but I want to be prepared.
One thing I have noticed is there are some really good rates – some below 1%. I am currently paying 1.89% on my two-year deal but wondered if I would be eligible for one of these below 1% mortgages I have spotted in the media.
I took out a mortgage for 90% of the property in December 2019 and the property was valued at £340,000 at the time. I haven’t had a valuation but two houses in my street sold for nearly £400,000 earlier this year!
What are my chances of getting a good deal?
Answer
Firstly, even though your remortgage isn’t due till December, now is the perfect time to start the process! Secondly, rates are incredibly low right now, so you’re doing the right thing by wanting to lock in early.
I think your current loan to value is around 76% from the numbers you’ve given me. Pricing here starts from around 1.19%.
To access the sub 1% rates, you’d need your LTV to be 75% or below meaning, you’d need the property to value around £410,000 or reduce your borrowing a little. I recommend speaking to a mortgage broker who can go through all the figures for you. Good luck!
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Question
Pay off debt or boost deposit?
I would really value your advice please. I have been living with my partner now in rented accommodation for a year and we’re looking into buying a home together.
Unfortunately, he has a poor credit score because of some unpaid bills and debt problems about three years ago.
He’s always been generally bad with money and I am helping him improve his budget and repay the debts. However, I am really concerned this will impact our chances of getting a mortgage.
There’s another layer to our situation too. I have about £30,000 saved up for a deposit and this should mean we can get a loan for about 85%. His parents are offering us £10,000 to boost the deposit.
I would like him to use this to pay off the debt but he thinks it would be better off boosting our deposit and reducing our monthly payments. We are in loggerheads over this so I would really value an expert’s take on this please.
Answer
Without all the numbers, this is a tricky one to answer. My best advice is to speak to a mortgage broker who can run the numbers for the different scenarios (larger deposit with debts vs smaller deposits debt-free) to determine which is most financially suitable.
In terms of clearing the debt, you need to consider the overall costs. If he wants to pay them back with a minimum monthly repayment, you need to look at how much this will cost in the long term with interest.
You’ve done the right thing seeking professional advice, so hopefully, this will help you choose the most suitable path to take!
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Question
How do I find out how much I can borrow?
I am renting and throwing heaps of money down the drain in the process. I can’t decorate, or knock through to make my dream kitchen diner and basically I am fed up!
I have decided I really want to buy my own place but I am not sure if I would be eligible for a mortgage. Can you please tell me how I work out how much I can borrow?
If it helps I am paying £1,300 a month rent for a three-bed flat. I would want something similar which, in my area, costs about £350,000.
I earn £32k a year and I am 29. I also have £5k in savings. Is there an equation or something I can use? Do I need to save up more? Am I living in a dream world?
Answer
Mortgage lenders work on affordability calculations that consider your income and monthly outgoings to calculate how much you can afford to repay every month, giving them a maximum borrowing figure.
Generally, a rough guide to this is 4.5x your income. From the numbers you’ve given me, your maximum borrowing is around £160,000, so either you’ll need to consider a smaller property for now, continue saving or look at shared ownership schemes.
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Question
Saving for a mortgage – any advice?
I am not sure if I need a savings or mortgage expert to help but I have seen your column and hoped you could help!
I am 22 and have been working for five years and am earning a reasonably good salary. I live with my parents because I don’t want to rent as it feels like I’d be paying out money when I could be saving it.
My parents are planning to move in five years when my youngest brother goes to uni, so I figure I have five years before I need to move out. How can I successfully save for a deposit for a home in five years? Are there any savings plans which are specifically for deposits on a first home?
Answer
The Lifetime ISA replaced the Help to Buy ISA but is essentially the same thing and is very popular with first-time buyers. Interest earned on your savings is tax-free, and the government will top up your savings by 25% (up to £1,000 per year).
I suggest opening one of these or another tax-free savings account with a reasonable interest rate to help make the most of your money.
More practically, work out how much you can save each month and set up a direct debit the day after you get paid into your savings account.
That way, the money is automatically saved without you having to think too much about it. Good luck!
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