Mortgage advice - The next chapter

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chameleon

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Well, I finally got the confirmation from my solicitor that we have a done deal. i have been looking at mortgages for so long I swear I am Pooping in percentages!
Anyway, found an excellent deal from First Direct, a lifetime tracker of 2.39% above base rate, with only a £99 fee. Brilliant. Went through the application only to come to a shuddering halt :(
Turns out they will NOT touch flats with a freehold. This is comparatively rare in england but up here in Scotland Freehold (or Feuhold up until recently) is quite common. You do not have a lease or pay ground rent while you own the flat, it is absolute ownership. FD basically said no lease, no mortgage.

This is a problem I have never heard of before. Surely freehold is better than leasehold as it will never run out?

Im back to square one now and the clock is ticking :( I WILL find a deal but it'll probably cost me more than I wanted...

Anyone care to explain the way of thinking to me?
 
Basically down here in England, the person that owns freehold normally holds title to the entire block so when the leases (normally something like 99 years) run out it reverts to them.
So you I susspose the mortgage comapanies see flats as something like a long term rental :shrug: but I do know that freehold flats can be hard to sell because of the repsonsibilites that go with them
 
I can see several issues with freehold flats, the main one being who takes responsibility for external & internal maintainence, lets say the roof had a leak then which freeholder has the repair done and who actually insures the structure as a whole against subidence & flood
 
In my 15 years working in property law in Scotland (not as a lawyer I might add), I've never come across a long leasehold flat in the way that is common in England.

The titles of freehold flats contain detailed maintenance provisions, if they don't then the lawyer will most probably advise against purchasing. Very rarely are the maintenance provisions not up to scratch. I would think they are therefore much safer than an English long leasehold.

I think the case here is more likely that the bank doesn't want to lend in Scotland and this is an easy get out. This is becoming increasingly more common unfortunately and is reducing the amount of availability, especially for first time buyers :(
 
Aye they certainly do seem to be putting as many hurdles in the way of first timers: big deposit etc... They have gone from one extreme to the other.
As I understand it. Everybody in the block is equally responsible for anything that affects the whole building, be it the foundations or the roof etc. A recent development is Common Hold which works a bit like that. Equal shares for everybody.
Looks like its gonna have to be the RBS after all
 
Think I just got a good deal from ING, got 2.15% above base rate lifetime tracker. Cost a bit up front but it all seems to have gone very smoothly. Just gotta get their survey done n sign their bumf. Job done!
 
God, so pleased farm and house in mortgage free :D

All ours:thumbs:
 
Honestly don't know if I would go for fixed or tracker at the moment. I wouldn't touch tracker unless I could afford base rates of 7-8% in the next 5 years. Tough call at the moment, although prices being static/falling real terms, means it's a good time to just sit and build up deposit more.
 
I doubt base rates will shoot up that much over the next few years. The economy is gonna be pretty unhealthy for quite a while to come. I can see .5 to 1% coming quite soon but I think they will hold it at that for a bit. There are more than enough people struggling to make ends meet at the moment without the gov making it even worse!
 
chameleon said:
I doubt base rates will shoot up that much over the next few years. The economy is gonna be pretty unhealthy for quite a while to come. I can see .5 to 1% coming quite soon but I think they will hold it at that for a bit. There are more than enough people struggling to make ends meet at the moment without the gov making it even worse!
Click to expand...

Putting interest rates up isn't simply a case of the government doing people over.....inflation needs to be kept under control, and it has consistently been 'surprising' economists by remaining stubbornly high for a while now.
 
I must admit I dunno where that is coming from either. Everybody is supposed to be skint and struggling to make ends meet so where is all this inflation coming from? I guess SOMEBODY out there has money to spend.
 
Just a thought, here...I'm struggling to 'really' remember as it's a while ago that I was a mortgage broker, but in the 'old days' (say 5-10 years ago!) before all this madness, 2.39% above base was, basically the standard variable rate. So, if base was 5% most SVRs would be in the region of 7-7.5% perhaps even less. I remember when base rate trackers became popular, you'd probably get a deal of base less .5% for a year or two followed by base +1 or 1.5%.

Point is, be careful what you get sucked into when things are as they are because, in the long term they may not be as good as a basic 2 year fix or non-lifetime tracker followed by the ability/flexibility to shop around.

If it's a deal you can leave when you like (or after, say 5 years) without too bad a penalty, fair enough, but there was a case of a bank (won't post which as not 100% sure with my senile brain) which had a 15 year fixed rate with INSANE redemption penalties and which had looked great when interest rates where over 10%....but being stuck on a crappy 8% (or whatever, may have been higher) when everyone else is paying 4 or 5% is no joke.

I can't help with the freehold/leasehold aspect I'm afraid. Hope you get that sorted out but some of the lenders have very inflexible rules and, as lending is tight right now, they get to call the shots more than ever.

Lastly, re inflation, some of the issues have been caused by fuel costs remaining high, which in turn has increased the cost of food as it needs to be transported to the shops - unless you are a hermit in a cave with a nice allotment for your tatties and a few chickens for your meat, you are affected by inflation and it's not all because of demand for items which are non-essentials. That's probably why that wotsit from the Bank of England (with his nice pay package) is bleating at the rest of us to spend our way out of recession. I think consumer confidence does need to return more but you can't just demand it of people if they are still concerned about what their short term future holds.
 
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Well, I've read the small print and there aren't any early repayment penalties so, if I come into a lump sum (heaven forbid!) I can shorten it a good deal. Most of these lifetime trackers seem to be like that. You tend to pay up front with a fee and gradually make it back over the years with lower payments.
ING even had a checkbox for feuhold (as was) so that problem is out the window.
I reckon I'm safe enough for the forseeable future. I can switch if the ****/fan interface error hits.
 
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