Has any one one here had experiance of 125% First time buyer Mortgages?
Answers:
It's so frustrating that some people buy second and third homes, therefore pushing the price up for people like you. It's unfair.
Anyway, my advice is to be very careful. You say 'our' only option. I guess you mean your husband, but if not, make sure you know what happens if anything goes wrong and someone wants out. You're starting in negative equity, so I would only do this if you plan on staying in the one place for many years to come.
In the long run, property always increases in value. You just need to figure out what happens if interest rates rise or one of you are out of work for a few months etc.
If you get a property, then default on the repayments and lose the property, you'll obviously have no home, still have debt and be stuck with a bad credit rating.
Banks are great friends until you're in a little trouble. Then they screw you over as if it's a personal vendetta.
Good luck!
Hi we got one of those when we bought our first house, two years ago. It was just after i finished uni so no money saved up for a deposit, but we've managed fine. The extra money we needed do do uo the house (when we moved in it had no central heating, double glazing, furniture.) but the house was cheap to buy so we didn't borrow a fortune. and the extra 25%, if you need it, would be much cheaper to borrow this way than a conventianal load etc, though you will be paying it back for a lot longer.
You shouldn't really be able to borrow more than you can afford because the mortgage companies base what you can borrow on your earnings..
Had a look at them. but chose not to touch them with a barge pole.
I rented for a bit longer then got a 'standard' mortgage instead. I think it's one of the best financial decisions I ever made.
Dont do it.
All it will take is a small increase in interest rates and you will find yourself in deep trouble with missing payments.
Cut out the things you dont NEED and save up for a bigger deposit. You wont regret it
it gives you negative equity right from the start
extremely dangerous. I would not advise unless you are very sure that you can keep up the payments because your earning capacity will grow rapidly.
If it's borderline, don't even think about it. You will end up losing your home, bankrupt, and with no chance of a mortgage in the future
There are three mortgages lenders out there that offer 125% mortgages. You will need the services of a good whole of market mortgage brokers such as http://www.mortgages2.co.uk as they will advise on the best mortgage products available.
You should get a good three to five year fixed interest mortgage arranged for you and you will be safe from any interest rate increases.
Hope this is helpful
The 125% FTB mortgage is probably the Northern Rock Together Product which works along the lines of the following:
You purchase a property costing £100,000
They lend you up to £95,000 in the form of a secured loan (95%)
They lend you up to £30,000 in the form of an unsecured loan (30%) at the same rate as the mortgage.
You make one payment each month, which consists of the secured and unsecured loan payments added together.
I took one of these out four years ago, as it was the only product which enabled me to get onto the property ladder. It was a good move as my property nearly doubled in price and I've now got equity. It basically depends on what happens to property prices over the next few years. Despite what it sounds, you aren't actually in negative equity in terms of the product - you have a secured and unsecured loan, effectively like having a mortgage + personal loan.
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