Hi,

Is it still possible to get a decent deal on a 95% mortgage? I've heard lots of mixed stories, some people saying don't even bother if you haven't got a 10% deposit???

We've finally found a house, had an offer accepted etc. but would like to use some of our savings for legals, a small amount of decorating and furniture etc. Its probably worth mentioning that were not expecting to complete until the end of the summer (late august / sept)

Is it possible to get a mortgage arranged now, keeping the deal until we complete?

A few details:

First time buyers, joint application. Joint income of £45,500 per annum.

House = £103,000

We have approx. £10k in savings

5% deposit = £5150, so would leave us approx another £5,000 to use on setting up home.

Any advice?

Thanks in advance!

Hi...without the higher lending charge for 95% products Bristol & West are the best option...6.99% for 5 years, 978 arr.fee. I would also think about Bank of Ireland variable currently 7.09 but should drop over the next year, this has no arr.fee for a few quid a month more.

Fixed deal approx..693p.m over 25 years repayment.

Variable approx..697p.m over 25 years repayment.

Kent Reliance have the lowest rate 6.45% for 3 years but have a higher lending charge and a 399 arr.fee.

---

Regards

Ian

Hi GB2000,

I'm a FTB and agree Bristol & West are the best option. However, the Post Office has a rate of 5.89 fixed for 3 years at 95% with a £599 arrangement fee. Post Office Mortgages are provided by Bristol & West. We have applied with them and have found the service to be excellent.

I think that for a FTB with a 5% deposit the PO rate of 5.89% is very good in today's market.

P.S. I found out about the PO deal from the moneysupermarket.com FTB mortgage best buys!

Hi,

thanks for your advice. A couple of quesitons:

1. could we apply for the mortgage now to get the deal as it stands at the moment, or do they normally keep the deals open for so long?

2. Would it be better to wait a little bit longer? I know if base rate drops lenders are slow to pass this on, but are the rates likley to drop? we are probably looking at august time to complete.

3. Could i put a 6% deposit down and avoid the higher lending charges? or does it not work that way? :)

4. If (in an ideal world) we could muster up a 10% deposit, what sort of difference would it make? just out of interest.

thanks

Halifax will accept a vendor gifted deposit upto 5% so if you pay 5% on top you could qualify for a 90% deal with them as long as the property values up e.g house on market at £100k. You offer £95k and it is accepted and if you pay additional £5k you have a 10% deposit. I would reccomend you use a mortgage broker as this has to be structered properly but i do this quite alot. You could get a fixed rate with halifax at 6.54% as it stands today and avoid hlc.

Thanks for your info carlos,

Its a private sale (the woman is going through surgery at the moment - which is why we are waiting - and might poss. run on a little longer than expected, although I don't think it will) and we have agreed a price of £103,000.

The house was originally on the market for offers over £110,000 but we have agreed £103k with the vendor because we are doing it as a private sale without estate agents etc. (I know there are houses in the same street which have sold for more than £103,000 recentley so the value should be in the property)

I doubt she'll accept any lower than £103,000. but are you saying that we could 'fudge' the figures so that we could get a better deal on the mortgage? i.e. mould the figures so that the vendor still gets the £103k, but the mortgage company think the house is being sold for £103K + 5% to match our deposit? so the house would sell for £108,150, but the vendor would 'gift' £5,150 'back' to us to make an overall deposit of £10,300? is that right?? I'm confused!

Assuming we'd have to persuade them, whats in it for the vendor?

Can we start to arrange the mortgage now knowing that we will not be in a position to complete straight away?

Hi GB2000,

That's pretty much how it works. If the vendor wants 103000 you would need to property to value 5% more than that and that would count as the vendors gift. They don't have to do anything as long as it is no more than 5%. You then pay the other 5% yourself making up 10% in total. There are 2 main pitfalls with doing it this way however. The first is in the current market house valuations are low rather than high so sometimes you may not get it valued at the level you want. The second is the vendor has to be careful what they say when the valuer comes round, if they ask the sale price they must give the figure before the 5% discount in you case £108,150. If they blurt out that they are selling at $103k then it is very likely this is what the property will be valuesd at. The vendor doesn't get anything for it other than the sale of the house at a figure they are happy with, what more could they want??

Hi Carlos,

Just been reading up on gifted deposits and it seems more common in new builds e.g. developer incentives etc.

It sounds as though the vendor would need to be on board for the whole thing to work.

Given that the vendor had the house on the market for offers over £110,000 orginally and within the last six weeks a house was on the market in the same street for offers over £117,000 then I think the value should be ok.

The vendor has discussed leaving curtains / appliances etc. with us and would negotiate on price. so i wonder if the following would be a good move?

Value the house at £110,000, ask for a gifted deposit from the vendor of 5% plus curtains appliances etc. meaning that the vendor would potentially get £104,500 for the house, and we put a deposit down of £5500 equalling a total deposit of £11000? This would give her an incentive to keep quiet and say the right thing when the valuer is around and also mean that we have negotiated some appliances etc.

When do you think we should apply for the mortgage? So far we have only agreed on price and that she has given us her word that she'll sell to us. She has also said that when all her surgery is done it might be possible to use a solictor she uses as it is her friend to speed things up? can we do that?

Solicitor of a friend? Never! lol. If this wasn't England I'd say this all sounds like a big scam. Undervalued house because of an operation, use my solicitor friend...

Re your mortgage. Inflation is high and interest rates are unlikely to go down for at least 3 or 4 months.

The vendor has not insisted that we use the solicitor but merely suggested that it may be possible to use the same solicitor (if this is legal???) to speed up the process, as the vendor is aware that we are waiting to move in. Originally the lower price was agreed on because the vendor wanted to move before commencing treatement however, we agreed on a lower price than asking price on the basis that we were happy to wait for the vendors treatment to finish. Given the fact that the vendor is going through chemotherapy at the moment they do not want to move whilst all this is going on.

I can see how this would seem dubious to someone, but the vendor seems 100% genuine and we are in constant contact.

Thanks for the tip RE. interest rates.

Is it possible to apply for a mortgage now, to 'lock' yourself into a deal, even if you have no definitive completion date?

Mortgages are offered and the offer is open for x amount of months, depending on the supplier. It's possible to get the mortgage offer now and not use it till after the summer.

You cannot use the same solicitor, simply because of the conflict of interest involved. However, some years ago, I used a solicitor from the same practice as the vendor, to buy out my freehold. This was an old family firm. Normally I would never use the same practice as a vendor - it simply isn't good ethics.

Incidently there are many conveyancing firms online that offer very good value for money, much cheaper than high street practices.