David Hollingworth is mortgage specialist at London & Country
Rodney and Grace should first sit down and work through their budget carefully as they could face bigger bills than they anticipate. With legal and survey costs and stamp duty land tax not to mention funds for furnishings and everything else that goes with setting up a new home. When they know how much they can spare as funds to put down on the property they will get a better picture of how much they need to borrow and how much the mortgage is likely to cost.
Both the student loans should now be being repaid as their earnings have exceeded the trigger point for monthly deductions from pay. These deductions will clearly affect the amount that they can borrow but the levels should remain within 4x joint income. This should certainly be achievable from plenty of lenders, particularly those working on an affordability basis. However, they do need to ensure that they are comfortable with the level of mortgage payment.
Alan Lakey is senior partner at Highclere Financial Services
With a deposit of over 20 per cent they are well situated for a wide choice of providers. Using the income multiple basis they will be limited to around £195,000 whereas using affordability calculators over £210,000 is available.
In general terms they can expect purchase fees of around £4,200 as well as an application fee.
Even at the £250,000 purchase figure this suggests they can borrow £210,000 and still retain over £10,000.
My preference would be Cheltenham & Gloucester (C&G) which offers a choice of fixed rates, notably 4.95 per cent fixed for two years. Whilst there is a £999 product fee there will not be any higher lending charge. Up to 10 per cent annual overpayments can be made without triggering the early repayment penalty. C&G will be able to lend £210,000 and this satisfies what I consider to be the essentials – good lender, good rate and the ability to retain an emergency fund.
Arron Bardoe is sales director at flexible-mortgage.net
They should discuss setting the property up as tenants-in-common, as this would protect their individual contribution in the event of a relationship break up. They also need to consider wills and trusts on life policies to properly administer their estate and keep the survivor in their home.
I will assume £5,000 would be spent on the fees and I would look to avoid a HLC. The student loans repayments would reduce their total assessable incomes by £1,404. Unless the clients express otherwise, I would look at a fixed rate over two-three years. This would provide a guaranteed payment and allow them to review their options in the short term should their situation change (such as marriage, children or changes in their jobs).
A suitable product at the time of writing would be C&G’s 5.25 per cent two year fixed. It has no application fee and so works out cheaper than their 4.95 per cent deal on this loan size. C&G would also allow for a higher loan, which may be enough to get them a two bed property, which is more likely to meet their longer-term needs.
