My wife and I have been saving for a house deposit and have at last built up enough to be able to put down 10pc of the purchase price. We’ve looked online at the different deals available and are getting a bit confused about what might be the best choice for us. We like the idea of a fixed rate for a few years but can’t decide whether a two, three or five year fixed rate is best. Also, we might need to have some sort of flexibility built in as my wife is working part-time while our children are young but hopes to go back to full time working later. What do you suggest?
Diane Fish of Smith & Pinching responds:
Getting your first mortgage is always a challenge, as you may be unfamiliar with the terminology and find it hard to work out what will be best for you. I strongly recommend that you take advice from an independent mortgage adviser so you can talk through the various options available.
I can’t tell you here which type of deal would be the best for you as I would need to look in detail at all aspects of your finances. The deal with the lowest rate may not actually be the most suitable for you, for example, as other factors such as fees may be less favourable. Fixed-rate periods are a popular option and may give you some certainty. Future plans may play a part in terms of fixed rates taken and the flexibilities offered with these products.
It’s important to realise that having saved for a deposit doesn’t automatically mean that you will be able to get a mortgage. Lenders usually base their offers on what you can afford to repay, so we would need to work out and analyse your income and expenditure. This is exactly where an independent mortgage adviser can be indispensable.
If affordability is an issue, there may be opportunities in the government’s Help to Buy initiative. The Shared Ownership and Equity Loan schemes are generally offered in connection with new build properties and are helpful in getting you onto the housing ladder.
Your home may be repossessed if you do not keep up payments on your mortgage. There will be a fee for the mortgage advice. The precise amount will depend upon your circumstances, and the type of lending taken. Smith & Pinching’s minimum mortgage advice fee is £700. Any opinions expressed in this article do not constitute advice.
For more information, please visit www.smith-pinching.co.uk
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