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Banks and building societies have cut back on their most riskiest lending activites and that includes self certification mortgages. There are only 22 self cert mortgages left and they only offer fixed deals. The lenders offering these deals are Standard Life Bank, The Mortgage Works and Platform (through selected brokers only).

Unfortunately the maximum they will lend too now on self cert is 75%, so to move to one of these lenders you will need to find another 5% of the property value. The other bad news is that the rate you will have to pay is at least 6.24%.

If you can’t get a new deal then you will move to the Mortgage Business standard variable rate. Otherwise your only option would be to find a way of proving your income and getting a standard mortgage.

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Because the loan was secured by real estate it is technically a mortgage. If you do refinance you will be looking at a either a new conventional mortgage or a new home equity loan.

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5.25% is what I saw just yesterday.. Heck just call your local bank, or credit union… Don’t go to a broker till you have a little info in hand. The call is free.

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Yes! Well… No, not since you just told us it will be rented out. Investors will consider it a second home if it is;

A) not going to be rented out.
B) farther than 50 miles from you primary residence.
C) in a place where people would typically vacation.

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Bank CD’s are a horrible place to keep your money. You can get similar rates without even tying up your savings. Simply open an online savings account and link it to your regular bank account. You can transfer money back and forth and most only require $1 to open one. Most don’t charge fees either. I think the best one is Etrade’s complete savings account but HSBCdirect.com is good too.

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Dear Navid:

No. Your loan is secured by a mortgage on a particular piece of property. If it is assumable, it means that the person purchasing your home from you may be able to assume the balance of the mortgage, and continue paying the loan. You, as the seller, are no longer responsible for the mortgage payment. Not many lenders do this any more. Most assumable loans are FHA/VA.

If you don’t need to sell the house for a downpayment, you may want to consider renting it out. However, you’ll now be responsible for 2 mortgage payments. Please note that most underwriting guidelines count only 75% of your rental income.

I tried to look up a portable loan on E-trade. The information is 3 years old. I’m not sure if they still offer this program. When they offered it, there were some criteria that needed to be followed: 1. You need to have 20% down. 2. The loan was adjustable. 3. You hade to have a certain credit score. 4. The home had to be owner occupied. 5. You could only transfer the loan once.
In addition, they noted that it did not have the lowest rate and was more of a loan offered to “provide peace of mind”

I am sorry to say that I could not find more updated information on E-trades website and was on hold for over 5 minutes trying to get an answer.

I hope this helps you. Please contact me at amkornele@yahoo.com.

Best of Luck!!

Anne

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The one I work for, of course. Just be sure to look at more than rate. Check the closing costs. All things are not always equal. If it sounds too good to be true it probably is. Don’t fall for the “It won’t cost you anything.” They are just putting your costs back in your loan.

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They are stealing money, they are the thieves here, not victims protecting themselves.

The only way to walk away from a second mortgage would be to declare bankruptcy and give up the house. If they keep the house they keep the mortgage.

A second mortgage is not going to be forgiven like a first, and the banks will use whatever means their state allows to recover their funds. The easiest is wage garnishment, at least they get paid faster.

As judgments get 10% by law, no matter what the interest rate promised was, this loan can get very expensive very quickly if anyone is scummy enough to try to steal it from the bank.

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Nope….unless you try to pursuade some horny bank manager

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The previous answers suggesting this is illegal are wrong. It is illegal for non-authorised individuals or businesses to offer financial services (eg loans, mortgages, etc) on a commercial basis. But there is no prohibition on private arrangements, even where interest may be payable. The main reason that private mortgages are rarely seen is that most private individuals do not have that sort of money to lend. However, anyone who paid close attention to the Paul McCartney / Heather Mills divorce will have heard about the private loan secured by mortgage given by McCartney to Mills.

Anyway, in everyday language a “mortgage” is a loan obtained to buy a property. But technically a mortgage is a specific kind of charge given over land (or a house), by the landowner, as security for a loan. In your case the landlord is proposing to “lend” you some money to buy the property. In practice this money won’t actually change hands, because you will “pay” it straight back to him to fund the purchase. But legally that is what will happen. In return you will grant him a mortgage, which will give him the right to repossess and sell the property if you don’t keep up with repayments.

You should not require a “deposit” provided he is happy with this. Most commercial lenders require you to provide a certain fraction of the total price (the deposit) because it is one way of making sure they get their full money back if you default on the loan.

Surveyor’s fees: Commercial lenders require at least a basic valuation, which you have to pay for. Again, this is to make sure they are not lending so much that they will not be able to get their money back. Other than that its entirely your decision whether you have a survey. But as with any mortgage you are committing for a long period of time. If the property is not sound you stand to lose a lot of money. One question I would be asking is why is this landlord proposing to offer you a mortgage rather than selling on the open market and getting all the money now? Is it because there is some horrible problem and you are the idiot being lined up to take the fall? A full survey might be about £1,000.

Stamp Duty will be payable. The value of the mortgage loan will be deemed to be the purchase price. Assuming this is over £125,000 you will be liable for Stamp Duty at 1% of the total price. If its over £250,000 then its 3% of the total price.

Solicitor: You definitely need to use your own solicitor. £500 would be cheap even for a normal residential purchase. If you are using a private mortgage your solicitor will need to check this so I suspect the cost will be more. But whatever you do, do not not use a solicitor and do not use one recommended by the landlord.

Once the initial transaction is complete you will be the legal owner of the property. This needs to be registered with the Land Registry. The fee varies according to the sale price, but its in the region of £200 to £300.

Arrangement fees are the fee charged by a commercial lender to give you a loan. They are not relevant here.

Lender’s insurance premium refers, I assume, to a mortgage indemnity. This is an addition charge made to borrowers obtaining 90%+ mortgages from a commercial lender. So not relevant here.

Removal expenses are, as you say, not going to be relevant as you are not actually moving.

Your monthly repayments may be the same as your rent now, but surely the landlord will have terms allowing him to raise the interest rate on the loan if general rates rise. In which case your payments will go up. If he does not then he is an idiot. This is one thing your solicitor needs to pay careful attention to.

Life insurance / mortgage protection is not compulsory. But if you die or can’t work before the loan is repaid what will you do? If you have no dependents and are happy to sell up then fine.

Buildings insurance is usually a requirement of a commercial mortgage, because if the house burns down you are still liable for the loan, so the lender would like the house to be rebuilt. The same should apply to you, but its up to your landlord what he specifies. Contents insurance has nothing to do with the mortgage and is a matter for you to decide whether you want to protect your possessions.

Council tax and utilities should all be the same. One minor exception is that the council tax band can be reassessed on sale if the have been improvements to the property since the last sale (eg an extension, conservatory, loft conversion, etc).

One really big thing you have not mentioned is what happens if you want to sell up? There needs to be terms covering how you repay the mortgage early so you are able to do this.