first time buyer offered 92% mortgage + personal loan. Why?

Hi ive recently looked into buying a home with a friend of mine however both ebs and tsb have come back saying they'll give us 92% of the mortgage and the remaining 18% in a personal loan. does anyone know why? the reason the gave was that they couldnt get mig insurance for us even though we matched the criteria with both banks for 100%. we have savings but need that for furnishings etc, are they screwing us over by offering the personal loan at 8.1% and the mortgage fixed for one year at 5.35(tsb) and ebs say we have to go fixed for 5 years in order to get the offer there rate for 5 years is 5.68%. any help much appreciated

AFAIK that is the way most of them are giving "100%" mortgages, except the last 8/10% is arranged with a Sub Prime lender such as GE Money etc

jenny0132519 said:

the reason the gave was that they couldnt get mig insurance for us

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You don't have to let the lender sort this out. In fact you are generally better off not doing this but shopping around for your self.

Have you shopped around with other lenders for the loan and with other brokers/life assurance companies for the mortgage protection life assurance?

I am assuming that you can afford to service this level of debt but obviously if you can't then you need to think twice of taking it on.

financially both of are well able to finance the loan, according to the bank mig insurance is the insurance the bank take out against us not servicing the loan, but i dont understand why they cant just give us 100% in a mortgage when essentially there doing exactly that by offering the personal loan. were both quiet young 23 that wouldnt stand against us would it?
With regards life insurance i think were going with 123.ie and were covered by block insurance with the property.
will we end up paying way more in repayments due to the 8.1% on the laon or does it even out? over the course of the term?

jenny0132519 said:

according to the bank mig insurance is the insurance the bank take out against us not servicing the loan

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Perhaps they are talking about a mortgage indemnity bond? These used to be (?) required when the loan to value ratio was high (e.g. > c. 80%) to protect the lender against default even though they would also be entitled to repossess... I thought that they were gone these days?

but i dont understand why they cant just give us 100% in a mortgage when essentially there doing exactly that by offering the personal loan. were both quiet young 23 that wouldnt stand against us would it?

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So have you shopped around?

With regards life insurance i think were going with 123.ie and were covered by block insurance with the property.

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Double check that the block insurance is sufficient to cover the property and is acceptable to the lender. You will probably want to insure your contents separately.

will we end up paying way more in repayments due to the 8.1% on the laon or does it even out?

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You'd need to crunch the numbers but I would expect the proposed two loan measure to cost (maybe marginally in the long term) more than just borrowing everything at mortgage rates. Also - I don't really understand why they are insisting that you fix for 5 years unless you are the limit of your borrowing capacity or ability to service the loan?

If you can well afford it then steer clear of EBS and TSB and it's problem solved.

Go to First Active 4.99% 1 year fixed or Ulster Bank who will give an outstanding ECB + 0.75% tracker to first time buyers no matter what the loan to value.

I think in this context "mig insurance" refers to "mortgage indemnity guarantee" insurance and is only available from the lender. Don't dream of paying for the MIG by the way - plenty of lenders will pay it for you as it's for their protection anyway.

MIG's still exits but only a minority of lenders charge customers for them so they tend to go un-noticed.

You'll still need your own life assurance as the block policy presumably only covers the building itself. You may also want contents cover as this is rarely if ever included on block policies. It's optional.

As NorfBank says, shop around for the mortgage as there are several 100% lenders.

Liam D. Ferguson
www.ferga.com