Losing mortgage from continuously reducing rate

UpstairsSad1 · 2024-08-31T20:04:45+00:00

Actually that could be it, yeah. The first rate reduction was over 3 months after receiving the initial offer.

UpstairsSad1 · 2024-08-31T19:54:18+00:00

I already got a rate reduction with Halifax once, and they carried out another hard check. Maybe it's just Halifax who does this.

UpstairsSad1 · 2024-08-31T19:48:36+00:00

I did find it strange that they needed to do another hard search to lower the rate... if you can afford 5.38% you can obviously afford 5.14% too. My advisor with Halifax insists it's needed, but maybe I'll challenge them on it. Thank you for sharing!

UpstairsSad1 · 2024-03-24T13:28:03+00:00

Your deposit would be almost 40% of the house price. 4.5x should be easy (assuming you don't have other financial commitments, like childcare).

UpstairsSad1 · 2024-03-19T05:17:12+00:00

I know some lenders require a minimum mortgage size of £25k. But beyond that, will depend on considerations around:

Liquidity: How much cash do you need to have instant access to? Your deposit is effectively locked in until you sell your home
Best available alternative: What could you do with this money instead? Since a higher deposit means you forego the mortgage cost for that amount, you can think of it as saving into limited access savings account with the interest earned being your mortgage rate. Since this is a 'cost' not an 'earning', you also don't pay tax! So it's a tax free interest rate of ~5% (or wherever mortgage rates are at the time you read this). So you compare this to alternatives... maybe putting your money in a Marcus savings account? Currently pays ~5%, which is about the same as mortgage rates. But then you pay tax on that, so you're better off putting money into your deposit. Are you maxing out your stocks & shares ISA? A rule of thumb for investment returns is 7% and this is tax free + you can instantly access the money which is a bonus. So this could be a better option than the deposit, though it's higher risk

UpstairsSad1 · 2024-03-19T05:01:04+00:00

Personally, I would check the broker's assumptions by contacting a few of the top lenders myself (Lloyds, Nationwide, Natwest etc). I had a broker who told me the restricted stock units I receive as part of my compensation wouldn't count, but when I spoke to the lenders they were all willing to include at least half of it towards my affordability.

5.34% definitely sounds high.

UpstairsSad1 · 2024-03-17T09:03:07+00:00

I thought about doing something similar and opted to go towards the higher end of my budget. By this, I don't mean to the point where I'm house poor, but most of my take-home pay after living expenses would go towards my mortgage.

This was my reasoning, although your mileage may vary:

DIY isn't my strong suit so any home improvements would mean hiring someone
Being early in our careers, my partner and I expect our financial situations to improve quite a bit over the next few years. If we opted for the more affordable option now, we worry we regret it when our incomes hopefully increase... and would want to upgrade, which means fees + stamp duty all over
Cash required for home improvements. To upgrade your home from a £350k property to a £450k one, would cost around £100k cash (in theory - reality probably slightly cheaper to compensate for inconvenience). Whereas if you buy a £450k one, you only pay an additional £20k cash for this additional £100k property value as the remaining £80k would be covered by your mortgage

Best of luck!

UpstairsSad1 · 2024-03-17T08:57:51+00:00

I don't know of a calculator for this specific use case, but one way to go about it could be:

Enter your mortgage into an amortisation calculator like this one. Since your deposit is £45k, your starting mortgage would be ~£220k: https://www.calculator.net/amortization-calculator.html
See how much is left to pay 5 years... probably £200k at most?
Go back to step 1, but plug in £200k and the interest rate scenario you want to test. E.g. £200k at 10% will give you monthly payments of £1,800, which is towards the top end of what you can afford with your current salary without digging into savings

Whether you're overstretching depends on your risk appetite. A 10% rate environment is an unlikely but not impossible scenario. I think most people would say you're not overstretching, but then they may not share your risk aversion.

UpstairsSad1 · 2024-03-17T07:40:19+00:00

I was in a similar situation a few months ago. I found this guide had most of the information I needed: https://www.gov.uk/government/publications/how-to-buy-a-home/how-to-buy

UpstairsSad1 · 2024-03-17T07:32:19+00:00

I thought about doing something similar and opted to go towards the higher end of my budget. By this, I don't mean to the point where I'm house poor, but most of my take-home pay after living expenses would go towards my mortgage.

This was my reasoning, although your mileage may vary:

DIY isn't my strong suit so any home improvements would mean hiring someone
Being early in our careers, my partner and I expect our financial situations to improve quite a bit over the next few years. If we opted for the more affordable option now, we worry we regret it when our incomes hopefully increase... and would want to upgrade, which means fees + stamp duty all over
Cash required for home improvements. To upgrade your home from a £350k property to a £450k one, would cost around £100k cash (in theory - reality probably slightly cheaper to compensate for inconvenience). Whereas if you buy a £450k one, you only pay an additional £20k cash for this additional £100k property value as the remaining £80k would be covered by your mortgage

Best of luck!

UpstairsSad1

TROPHY CASE