Another Mortgage Question - Self Certification......?
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From: The Dark Side of the Moon...
Another Mortgage Question - Self Certification......?
Whats the crack with this then?
Following on from this post in another thread;
Whats the deal here with this self certification mortgage then?
I earn (or will when I start back again next week) £16k basic, plus bonus worth around £4-£6k a year - so £20-£22k roughly.... If I went to a mortgage lender I'd get 3 times that, so only £60-£66k...
But what if I went down this self certification route? Could I tell em I earn £50k and get a mortgage for £150k? Someone else said you have to put down 15% as deposit (which on £150k = £22,500) so if I went in with £22,500 and told em I earn £50k a year, will they give me a mortgage for £150k?
Following on from this post in another thread;
Originally Posted by Simon@FF
Self-Certification Mortgage, mate. You write down what you 'earn', they have to believe it...
I earn (or will when I start back again next week) £16k basic, plus bonus worth around £4-£6k a year - so £20-£22k roughly.... If I went to a mortgage lender I'd get 3 times that, so only £60-£66k...
But what if I went down this self certification route? Could I tell em I earn £50k and get a mortgage for £150k? Someone else said you have to put down 15% as deposit (which on £150k = £22,500) so if I went in with £22,500 and told em I earn £50k a year, will they give me a mortgage for £150k?
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From: Edinburgh
Originally Posted by chip-3door
Ballpark figure on 150K if you got interest only, would be 700 a month or so mate.
Self cert stuff is getting tighter now, but yes you can still do it with the right lender i believe.
Self cert stuff is getting tighter now, but yes you can still do it with the right lender i believe.
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From: The Dark Side of the Moon...
Originally Posted by EIL132
Originally Posted by Thrush
What would I be looking at, ballpark, as a monthly repayment?
Originally Posted by chip-3door
Ballpark figure on 150K if you got interest only, would be 700 a month or so mate.
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From: The Dark Side of the Moon...
I don't get interst only or repayment mortgaes either I read all this but got very confused
I read all this but got very confused
Differences between a repayment and interest only mortgage
With the interest only mortgage none of the initial capital you borrow is paid off. In order to pay off the initial capital that you borrow with an interest only mortgage, you must ALSO pay into an investment vehicle such as an endowment policy or an ISA. The results for the interest only mortgage only shows the interest you pay and does not include payments made into a separate investment vehicle.
With an interest only mortgage the total interest you pay over the term of the mortgage is substantially more than with a repayment mortgage. This is because you are not paying anything off the initial capital you borrow with an interest only mortgage. The interest you pay every month remains the same and does not go down with time. With an interest only mortgage the money you pay into your investment is supposed to pay off the initial capital you borrow.
In contrast with a repayment mortgage, each payment you make reduces the outstanding capital by some amount, and therefore the interest you pay during the term of the repayment mortgage reduces with time. Enabling the Show Repayment Schedule check box in the mortgage calculator will show breakdown of the interest and capital payments over the term of the repayment mortgage.
If you choose an interest only mortgage you want the investment vehicle reach at least the value of the initial capital you borrow plus the extra interest you pay, before or at the end of the term of your mortgage. The following example shows the reasoning more clearly.
An example for comparative purposes
If the initial capital you borrow is €100,000 and the interest rate on your mortgage is 6% over 25 years the monthly payments on a repayment mortgage is €644.30 and the monthly repayments on the interest only mortgage €500.00. The difference between these monthly payments for a repayment and interest only mortgage is €144.30.
The total interest you pay on the repayment mortgage is €93,290.42, whereas the total interest you pay on an interest only mortgage is €150,000. The extra interest paid back on the interest only mortgage is €56,709.58.
If you take out an interest only mortgage and you invest the monthly difference (€144.30) you have saved into an investment vehicle, you would want that investment vehicle to pay off the initial capital you borrowed (€100,000) plus the extra interest you have paid on the interest only mortgage (€56,709.58). In this example, you would want your investment vehicle to be worth €156,709.58 (i.e. €100,000 plus €56,709.58).
If the interest earned on the investment vehicle over the period of the mortgage is the identical to the interest you are paying on the interest only mortgage (i.e. 6% in this example) then you are no worse off, i.e. your investment vehicle will be worth €156,709.58.
With the interest only mortgage none of the initial capital you borrow is paid off. In order to pay off the initial capital that you borrow with an interest only mortgage, you must ALSO pay into an investment vehicle such as an endowment policy or an ISA. The results for the interest only mortgage only shows the interest you pay and does not include payments made into a separate investment vehicle.
With an interest only mortgage the total interest you pay over the term of the mortgage is substantially more than with a repayment mortgage. This is because you are not paying anything off the initial capital you borrow with an interest only mortgage. The interest you pay every month remains the same and does not go down with time. With an interest only mortgage the money you pay into your investment is supposed to pay off the initial capital you borrow.
In contrast with a repayment mortgage, each payment you make reduces the outstanding capital by some amount, and therefore the interest you pay during the term of the repayment mortgage reduces with time. Enabling the Show Repayment Schedule check box in the mortgage calculator will show breakdown of the interest and capital payments over the term of the repayment mortgage.
If you choose an interest only mortgage you want the investment vehicle reach at least the value of the initial capital you borrow plus the extra interest you pay, before or at the end of the term of your mortgage. The following example shows the reasoning more clearly.
An example for comparative purposes
If the initial capital you borrow is €100,000 and the interest rate on your mortgage is 6% over 25 years the monthly payments on a repayment mortgage is €644.30 and the monthly repayments on the interest only mortgage €500.00. The difference between these monthly payments for a repayment and interest only mortgage is €144.30.
The total interest you pay on the repayment mortgage is €93,290.42, whereas the total interest you pay on an interest only mortgage is €150,000. The extra interest paid back on the interest only mortgage is €56,709.58.
If you take out an interest only mortgage and you invest the monthly difference (€144.30) you have saved into an investment vehicle, you would want that investment vehicle to pay off the initial capital you borrowed (€100,000) plus the extra interest you have paid on the interest only mortgage (€56,709.58). In this example, you would want your investment vehicle to be worth €156,709.58 (i.e. €100,000 plus €56,709.58).
If the interest earned on the investment vehicle over the period of the mortgage is the identical to the interest you are paying on the interest only mortgage (i.e. 6% in this example) then you are no worse off, i.e. your investment vehicle will be worth €156,709.58.
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Self-certification is available with lots of lenders still and it basically means that they will not verify the income figure you put down. However ALL companies have reasonability checks in place so you have to ask yourself would anyone doing your job earn £50k?
Mortgage lenders have income multiples to protect clients as much as themselves, i sincerely hope you're not seriously considering borrowing 150k on your salary...just as an idea most lenders standard rate is around 6.5% thats £815pcm mortgage payment, add council tax and your salary is gone
Mortgage lenders have income multiples to protect clients as much as themselves, i sincerely hope you're not seriously considering borrowing 150k on your salary...just as an idea most lenders standard rate is around 6.5% thats £815pcm mortgage payment, add council tax and your salary is gone
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From: The Dark Side of the Moon...
Got a good set of points the Bish - thanks....I'm just looking at gaffs, and £60 is gonna get absolutely FUCK ALL down this end of the world...
£150k still won't get you a lot either....
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From: The Dark Side of the Moon...
Trouble is - out of my close mates (that I would even consider buying a place with, half are involved or engaged so wanna move in with their woman, and the other half that are single wanna stay at home where it's cheap so they can go out on the lash every night
To be honest tho, even if I was involved (single at the mo) I would be wanting to do it on my own anyway, as I wanna live on my own at first (never done that before
) before commiting to buying a house with someone.....
The other thing is, buying a place with a mate - you're talking a LONG contract - 25 years!!!
Naturally you and your mate ain't gonna wanna live together for 25 fooking years! One or both of us is gonna get married in that time and will move on - bit fooked then if you're the one left behind bearing all the mortgage repayments
To be honest tho, even if I was involved (single at the mo) I would be wanting to do it on my own anyway, as I wanna live on my own at first (never done that before
) before commiting to buying a house with someone.....The other thing is, buying a place with a mate - you're talking a LONG contract - 25 years!!!
Naturally you and your mate ain't gonna wanna live together for 25 fooking years! One or both of us is gonna get married in that time and will move on - bit fooked then if you're the one left behind bearing all the mortgage repayments
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Self Certification has Tightened up considerably since it became regulated by the FSA ! All lenders have to take a sample ( some 10% ) of all applications to investigate with accounts !!
Be warned , if you cant substantiate these claims you will be black listed by other lenders !!
Be warned , if you cant substantiate these claims you will be black listed by other lenders !!
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From: The Dark Side of the Moon...
This is the thing - I could go out tomorrow and rent, thats not a problem, but I don't wanna go down that route. I worry that if I start with the whole renting thing then I won't be able to stop. You can pay as much if not more renting every month as you would on a mortgage - chap I worked with just started renting a place up the end of my road - new built apartments, very nice, but a 2 bed flat with a fooking 15ft living room and kitchen the size of a dog kennel is costing him £800 a month in rent!!! Okay with his missus it's £400 a piece plus bills, but I'd rather spend £600 or so ona mortgage, then in a few years actually have something to show for it!
I fear that if I start pissing money away in rent, then when I do find somewhere I wanna buy, I won't have the money to do it as I won't hev been able to save the money for mortgage while paying rent..... Then I'm stuck renting
To be honest, it's cheaper to stay at home where it's costing me a couple of hundred a month - and when you're talking about renting a "room" rather than a flat, it's roughly the same thing living at home - but at least here the kitchen and toilet is mine aswell
I fear that if I start pissing money away in rent, then when I do find somewhere I wanna buy, I won't have the money to do it as I won't hev been able to save the money for mortgage while paying rent..... Then I'm stuck renting
To be honest, it's cheaper to stay at home where it's costing me a couple of hundred a month - and when you're talking about renting a "room" rather than a flat, it's roughly the same thing living at home - but at least here the kitchen and toilet is mine aswell
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NEVER borrow outwith your means, first step to disaster. Buy a small 1 bedroom flat to get underway. When you have got a better income, or find a girlfriend/multiple income or you have paid off a large chunk try and move up. The easiest way is to start buying property outwith your locality/area where prices are cheaper.
or you have paid off a large chunk try and move up. The easiest way is to start buying property outwith your locality/area where prices are cheaper.
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From: The Dark Side of the Moon...
Can anyone shed any light on this?
http://www.propertyfinder.com/2/pf/p...95062&from=map
Just looking at stuff on the net - this isn't far from me and is even closer to work than it is now.... But I don't get how a 2 bed flat is going for £30k? I'm guessing this is owned by an auctioners and it's the start price of £30k, but will probably end up going for £60/80/100k.....?
http://www.propertyfinder.com/2/pf/p...95062&from=map
Just looking at stuff on the net - this isn't far from me and is even closer to work than it is now.... But I don't get how a 2 bed flat is going for £30k? I'm guessing this is owned by an auctioners and it's the start price of £30k, but will probably end up going for £60/80/100k.....?
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From: Peterborough
lease hold.. so there is probably a monthly/yearly lease to pay aswell as the 30k- could be 30k plus 3k a year for example??
freeload is the one you want where you own the land aswell that youre property is on.
james good idea start off small and work up....
freeload is the one you want where you own the land aswell that youre property is on.
james good idea start off small and work up....
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Self cert in a lot of instances is a matter of you saying YES i can afford the payments 'I certify that payments of X per month are affordable' in a lot of instances employers referances or for self employed sight of accounts will not be required.
IFA's dealing with mortgage cases day in day out know which lenders to place your application with and the lending criteria required in order to gain the most favorable outcome for your specific circumstances.
As with all cases each application depends on the specific circumstances of the client, whats right for you may not and is not likely to be same as it is for the next man.
IFA's dealing with mortgage cases day in day out know which lenders to place your application with and the lending criteria required in order to gain the most favorable outcome for your specific circumstances.
As with all cases each application depends on the specific circumstances of the client, whats right for you may not and is not likely to be same as it is for the next man.
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From: Classic Ford
Originally Posted by B8
Self cert in a lot of instances is a matter of you saying YES i can afford the payments 'I certify that payments of X per month are affordable' in a lot of instances employers referances or for self employed sight of accounts will not be required.
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Dont forget you will have to pay above the base rate % with a self cert mortgage.
My mort (bank of scotland - highly recommended) is i think about 0.9% above the base mortgage, so your repayments on a self cert mortgage tend to be more than normally quoted around.
I had to go self-cert as i was newly self employed (6 months) with less than 2 full yrs of accounts, however there were still no checks to verify my income according to my accountant.
Also you will need to save more for a deposit as all the self cert mortgages wanted at least 20% down.
hope that helps
dave
My mort (bank of scotland - highly recommended) is i think about 0.9% above the base mortgage, so your repayments on a self cert mortgage tend to be more than normally quoted around.
I had to go self-cert as i was newly self employed (6 months) with less than 2 full yrs of accounts, however there were still no checks to verify my income according to my accountant.
Also you will need to save more for a deposit as all the self cert mortgages wanted at least 20% down.
hope that helps
dave
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From: The Dark Side of the Moon...
According to HSBC, I can borrow roughly £75k (based on projected earnings of £20k per annum, would have to get Autoglass to confirm that my bonus earnings would be stable at about £4k a year of course) which using their fixed rate for 3yr (4.99%) then 5.50% over 20yrs is £312 a month...
Is that good? Or not? I can see me paying that ammount, or more, on rent (+ bills on both circumstances of course - do you pay council tax when you rent?) but at least I'd end up with something to show for my money if I went with a mortgage right?
Is that good? Or not? I can see me paying that ammount, or more, on rent (+ bills on both circumstances of course - do you pay council tax when you rent?) but at least I'd end up with something to show for my money if I went with a mortgage right?
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From: The Dark Side of the Moon...
So if I'm paying £350 a month - what am I actually paying off? Pay that for 20yrs and at the end of I haven't cleared the £75k I borrowed?
Whats the fucking point of that then?
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What I dont understand is why I can afford a good £200 more a month mortgage repayment on what I currently pay, but I cant get a mortgage for the increased amount 
Is that a genuine reason to get a self cert mortgage? my overtime varies massively so do I have a genuine claim of not knowing my exact income?
I dont want to borrow massively over my budget and can easily afford the £200 extra, I already know my cost of living so I've already worked out my budget and the only thing holding me back is how much I can borrow
Is that a genuine reason to get a self cert mortgage? my overtime varies massively so do I have a genuine claim of not knowing my exact income?
I dont want to borrow massively over my budget and can easily afford the £200 extra, I already know my cost of living so I've already worked out my budget and the only thing holding me back is how much I can borrow
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From: The Dark Side of the Moon...
Mortgage Loan
The monthly mortgage repayment for a Capital Repayment loan of £75000 over 25 years on a Fixed rate for 5yrs at 4.99%, then 5.50% (Premier) would be:
£438.23
The overall cost for comparison is 5.5% APR variable
______________________________________
Still not the END of the world, but a bit more expensive
The monthly mortgage repayment for a Capital Repayment loan of £75000 over 25 years on a Fixed rate for 5yrs at 4.99%, then 5.50% (Premier) would be:
£438.23
The overall cost for comparison is 5.5% APR variable
______________________________________
Still not the END of the world, but a bit more expensive
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You need to also take into consideration if the interest rate went up, even by a small amount. So if you could easily afford £200 a month more now, if in a few months (for example - assuming not fixed rate) the mortgage rate increased you'd be buggered !!!, this is what happened to people in the late 80's !!
I'm in the same boat as you, i'm looking at working abroad to pack the cash in to get a nice big deposit !!
I'm in the same boat as you, i'm looking at working abroad to pack the cash in to get a nice big deposit !!
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From: Peterborough
thrush pretend its 75k worth of savings.... at 5% interest in a year youd get given £3750 interest and be a pretty happy chap no doubt....
if you lend 75k at 5% then you have to pay them the interest... therefore the £312 a month = 3750 total.
and you still haven't knocked down the original sum of 75k - on the higher figure on the repayment mortgage you are paying the £312 interest and £126 off the balance... so basically 75000 + 3750interest.... less payments of £5256 (£3750 and £1512) - so at the end of the first year... you'd have a balance left of £73488.
the interest on this amount would be slightly lower - with your repayments the same you pay more of the balance and this continues until 25,30 or 35 years later you aint got no more to pay off!
interest only is a bit of a swiz as you are only paying the 3750 per year
if you did it straight... it would be £312 interest and you would then have to save an extra £250 to make 75k in 30 years - i.e. £562
so you'd basically pay the interest only bit and then have to save in the background just enough money in interests accounts, endowments etc to try to invest enough money to pay it off....
bit of a gamble if the bit extra you are investing doesnt make enough money to generate 75k at the end then you're fooked!!
if you lend 75k at 5% then you have to pay them the interest... therefore the £312 a month = 3750 total.
and you still haven't knocked down the original sum of 75k - on the higher figure on the repayment mortgage you are paying the £312 interest and £126 off the balance... so basically 75000 + 3750interest.... less payments of £5256 (£3750 and £1512) - so at the end of the first year... you'd have a balance left of £73488.
the interest on this amount would be slightly lower - with your repayments the same you pay more of the balance and this continues until 25,30 or 35 years later you aint got no more to pay off!
interest only is a bit of a swiz as you are only paying the 3750 per year
if you did it straight... it would be £312 interest and you would then have to save an extra £250 to make 75k in 30 years - i.e. £562
so you'd basically pay the interest only bit and then have to save in the background just enough money in interests accounts, endowments etc to try to invest enough money to pay it off....
bit of a gamble if the bit extra you are investing doesnt make enough money to generate 75k at the end then you're fooked!!
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From: Peterborough
Originally Posted by Matt J
What I dont understand is why I can afford a good £200 more a month mortgage repayment on what I currently pay, but I cant get a mortgage for the increased amount
Is that a genuine reason to get a self cert mortgage? my overtime varies massively so do I have a genuine claim of not knowing my exact income?
I dont want to borrow massively over my budget and can easily afford the £200 extra, I already know my cost of living so I've already worked out my budget and the only thing holding me back is how much I can borrow
Is that a genuine reason to get a self cert mortgage? my overtime varies massively so do I have a genuine claim of not knowing my exact income?
I dont want to borrow massively over my budget and can easily afford the £200 extra, I already know my cost of living so I've already worked out my budget and the only thing holding me back is how much I can borrow
also bear in mind that the 3.5% figure that is common may of been based on things when the rates were alot higher - interest rates are actually pretty low at the moment and have been for a good number of years...
how would you be fixed if the interest rate was 8-9% would 3.5 times be more reasonable adding a few hundred quid already to your mortgage.
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Originally Posted by cos jon
You need to also take into consideration if the interest rate went up
So is self cert a good idea for my situation or not?
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From: The Dark Side of the Moon...
So if I pay £312 every month for 20 years I end up paying £74880, but I still owe £75k, and I don't own the house/flat I live in right?
But if I do it on a capital repayment mortgage, and pay £438 a month for 25years (300 months) I end up owning my house/flat totally, but I will have paid £131400 for a house only worth £75k.....????
Neither of those make any sense
I don't get it - people say you can make money from houses, but if your paying £131k for a house you can only sell for £75k, surely you LOSE money?
But if I do it on a capital repayment mortgage, and pay £438 a month for 25years (300 months) I end up owning my house/flat totally, but I will have paid £131400 for a house only worth £75k.....????
Neither of those make any sense
I don't get it - people say you can make money from houses, but if your paying £131k for a house you can only sell for £75k, surely you LOSE money?
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Originally Posted by Thrush
So if I pay £312 every month for 20 years I end up paying £74880, but I still owe £75k, and I don't own the house/flat I live in right?
But if I do it on a capital repayment mortgage, and pay £438 a month for 25years (300 months) I end up owning my house/flat totally, but I will have paid £131400 for a house only worth £75k.....????
Neither of those make any sense
I don't get it - people say you can make money from houses, but if your paying £131k for a house you can only sell for £75k, surely you LOSE money?
But if I do it on a capital repayment mortgage, and pay £438 a month for 25years (300 months) I end up owning my house/flat totally, but I will have paid £131400 for a house only worth £75k.....????
Neither of those make any sense
I don't get it - people say you can make money from houses, but if your paying £131k for a house you can only sell for £75k, surely you LOSE money?
My house would of been bought for roughly 65k by the previous owners, they did all the refurb themselves including new EVERYTHING and sold it within a couple of months to me for about 82k, thats how you make money form property.
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From: Exeter, Devon
Would a self cert mortgage work if you said that you would rent a couple of rooms out - maybe £150 to £200 / month (or more if this is reasonable) ?
Putting £300-400 in your self then £300-400 in from your tenants should get the mortgage paid (on a repayment also probably).
Point is, then you own the property, the tenants are just tenants (and you don't necessarily need them to be good friend - cos your not actually buying with them).
Depends if a self cert. would accept this - bit like a buy to let that you live in also.
Putting £300-400 in your self then £300-400 in from your tenants should get the mortgage paid (on a repayment also probably).
Point is, then you own the property, the tenants are just tenants (and you don't necessarily need them to be good friend - cos your not actually buying with them).
Depends if a self cert. would accept this - bit like a buy to let that you live in also.
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From: Exeter, Devon
Originally Posted by Thrush
I don't get it - people say you can make money from houses, but if your paying £131k for a house you can only sell for £75k, surely you LOSE money?
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From: Peterborough
Originally Posted by Thrush
So if I pay £312 every month for 20 years I end up paying £74880, but I still owe £75k, and I don't own the house/flat I live in right?
But if I do it on a capital repayment mortgage, and pay £438 a month for 25years (300 months) I end up owning my house/flat totally, but I will have paid £131400 for a house only worth £75k.....????
Neither of those make any sense
I don't get it - people say you can make money from houses, but if your paying £131k for a house you can only sell for £75k, surely you LOSE money?
But if I do it on a capital repayment mortgage, and pay £438 a month for 25years (300 months) I end up owning my house/flat totally, but I will have paid £131400 for a house only worth £75k.....????
Neither of those make any sense
I don't get it - people say you can make money from houses, but if your paying £131k for a house you can only sell for £75k, surely you LOSE money?
you are borrowing 75k off someone for a long period of time.... 5% charge in interest every single year for everything you still owe against the balance. if you ONLY pay £312 then you will never be eating away at the balance and get charged the 5% on 75k for every year.
BUT you are forgetting that 75 house in 25 years time will go up in value...! last couple of years I think house prices have gone up 16% a year...
16% every year is perhaps a bit too unrealistic but say on average it went up in value 8% then after 25 years..... your house would be worth £514k!!! and you only paid £131k with mortgage and interest?? £383k profit?? and there's no money in houses??
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From: Peterborough
although incidently.... if youre on 20k now and have a cost of living rise of 3% every year then you'll be on 41k a year by the time your mortgage is ready to expire... and what is 483 a month when youre on 41k? fook all thats what!
thats why your parents houses and mortgages etc all look fine and dandy if theyve been there for years!
thats why your parents houses and mortgages etc all look fine and dandy if theyve been there for years!
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I don't mean to upset anybody but buying now is crazy and the house market is so unsteady it will pay to wait!!!!!!
as this table shows house prices are already falling!!!!!!!
http://www.hbosplc.com/economy/includes/UKQ42005.doc
another table i found on the web!
http://www.fsponline-recommends.co.u...105b&u=appsk05
and the house market is so unsteady it will pay to wait!!!!!!as this table shows house prices are already falling!!!!!!!
http://www.hbosplc.com/economy/includes/UKQ42005.doc
another table i found on the web!
http://www.fsponline-recommends.co.u...105b&u=appsk05
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From: The Dark Side of the Moon...
Okay Melv, now it's making sense 
I ain't too god when looking at finances and stuff, so when I look at a house for sale at £75k, and I end up paying £131k I'm like
But that last explanation makes a lot of sense I guess....
Would I also be right in thinking I wouldn't actually pay £131k, it would be less than that cos I would only be paying the interest of 5% of whats left in the balance, so by paying a little of the inital chunk ammount every month the ammount of interest in £ drops aswell?
ie, 5% of £75k = £3750, but in 10years time say I only have £35k left to pay, then 5% of £35k = 1750. So as the ammount I am clearing goes down, so does the actual ammount of interest in money goes down aswell, in which case I end up paying (for arguments sake, cos I can't be arsed to to every single calculation) £98,566 rather than £131k.....???