Mortgage Advice Please.

[AdamzB]

The sooner you're on the ladder the sooner its paid for, don't wait do it now. Look at this way......when you're 45 you'll be mortgage free!! And if you have any sense and spare cash you'll make over payments and get it paid off sooner.

^^ This. Also when did 30Y mortgages become the norm?

[SpuffMonkey]

Do bear in mind that values can go down and interest rates up - as I know from bitter experience! Although it seems like this will never happen - I don't think it would take much to flip.

[pcstru]

Do bear in mind that values can go down and interest rates up - as I know from bitter experience! Although it seems like this will never happen - I don't think it would take much to flip.

Yep. You can quickly start to lose lot's of money with a house. I bought my first house in 1990. A few years later had to move because of jobs, it took years to sell in a depressed market. I vowed I would never buy a house again. In the worst case you are paying a loan on a house you can't live in while it depreciates in value below the repayment value of the loan. No one should think there is no risk in buying a house - you are taking on significant financial risk.

[elsiegee40]

Do bear in mind that values can go down and interest rates up - as I know from bitter experience! Although it seems like this will never happen - I don't think it would take much to flip.

 

Like @pcstru, I'm another one who lost a large amount of money (£13k) on their first property. It took a long time and very harsh spending controls to save enough money to be able to pay off the negative equity on our mortgage and the deposit for a property bigger than a shoebox so that we could start our family... and that was two of us, both higher level tax payers at the time. It's a harsh lesson in economics.

[PotNoodleTech]

But is you're house going to lose 100% of it's value and be worth £0? That's effectively what you're doing if your renting long term.

 

E.g. elsiegee - If you lost 10% of the value on your £120k house (£12k) you're still going to get back £108k when you sell it. You don't ever get any of your rent back, period.

 

Now, if the OP is living with parents rent free (or near rent free), then yes, keep saving for a long as humanly p[ossible, there is no down side (apart from having to live with your parents)

[elsiegee40]

But is you're house going to lose 100% of it's value and be worth £0? That's effectively what you're doing if your renting long term.

 

E.g. elsiegee - If you lost 10% of the value on your £120k house (£12k) you're still going to get back £108k when you sell it. You don't ever get any of your rent back, period.

 

Now, if the OP is living with parents rent free (or near rent free), then yes, keep saving for a long as humanly p[ossible, there is no down side (apart from having to live with your parents)

 

Actually I lost 25% of the value of my flat! With a 95% mortgage that was a disaste

Edited February 20, 2015 by elsiegee40

[pcstru]

But is you're house going to lose 100% of it's value and be worth £0? That's effectively what you're doing if your renting long term.

 

E.g. elsiegee - If you lost 10% of the value on your £120k house (£12k) you're still going to get back £108k when you sell it. You don't ever get any of your rent back, period.

You are unlikely to lose 100% of your house value, but that doesn't mean a loss cannot be significant. I lost around 25% of the value of my first house, another 20% paying a mortgage while not living there and another 5% clearing up after I tried to stem that loss but ended up with tenants from hell. It took me many years to get back into the black.

 

With a rent you don't carry any of that risk. You know your outgoings and you have some protection against unfair changes in rent. You are not at risk of suddenly having to replace or repair major items - heating systems, roof's, dry rot etc. You can rent significantly cheaper than you can buy, it is probably a little more than the mortgage interest alone, but against that you offset all the risk and you could save the chunk that represents the capital portion.

 

Personally, I think it is a huge risk to see your home as both a home and an investment. It is working like that for many right now, but that doesn't mean it will work forever and us older folks are screwing the younger generation with our expectation that house prices will continue to rise (or even fail to be corrected). When young folks can't afford to even get on the ladder until they are in their 30's and have saved 10's of thousands, there is something wrong. The answer to that is to build millions more homes, a political act that will take more courage than I see in any of our politicians because it will break that growth that we are all so greedy for.

 

[ETA - in a repossession in negative equity while your house will not lose 100% of it's value, you will lose 100% of your house and still have to stump up the difference between what the bank fire sales your house for and what you borrowed]

Edited February 20, 2015 by pcstru

[abillybob]

Cheers guys been silently taking in all the posts. Me & my girlfriend have a 2 week holiday coming up soon also which means being together for two weeks 24/7, I think dependent on this and how we get on we will start looking more in depth. With both our income's they will offer a £128,000ish Mortgage though because I have a £8,000 loan on my car they will only offer £96,000. We have almost £30k between us in deposit and are looking at some of the help to buy schemes. It seems that if I can get the bank to loan us £128,000 we will have to put down 10% for deposit which is around 13k leaving us with about 17k to put towards the house this means we'd have £145,000 then we can add on governments 25% £36,250 giving us £181,250

 

After doing all the calculations regarding money it seems that with a house worth £169,500 (one that we really like in a nice area) and my loan, all bills, food, council tax, broadband, phones, petrol etc... we would still have just under £400 left over to do with what we wanted each month so we could afford it all, it's just trying to convince the banks. We haven't actually approached any banks just used Lloyds Mortgage calculator which gives you an estimated amount, each case differs.

 

With the left over money we will furnish and decorate the house to our taste. Nothing has been set in stone though and we want to see how things go before jumping ship to quickly. I think we'll give it a few months until next winter time and then look at it all again, though all your comments have been very helpful.

 

Thankyou

 

Edit: I should also mention the houses we are looking at are brand new and comes with a 10 Year Warranty so if certain things go wrong most is covered under warranty.

Edited February 20, 2015 by abillybob

[LincolnE]

@abillybob: If you're looking to move with your girlfriend to buy a house together, I'd personally recommend looking at rental, at least for a initial 6 month period. Why? Whilst you will be loosing out on the money spent on rent for them 6 months, you'll get more of a feel of living together. Getting a house together is a long term commitment and you want to 100% make sure it'll work, I'd personally say that 2 weeks isn't anywhere near enough, especially given that spending time together in the holiday isn't going to give you a normal indication of day to day life. In the long run in terms of a 30 year mortgage, waiting another 6 months isn't going to drastically change things. Edited February 20, 2015 by elsiegee40

[elsiegee40]

Abillybob: If you're looking to move with your girlfriend to buy a house together, I'd personally recommend looking at rental, at least for a initial 6 month period. Why? Whilst you will be loosing out on the money spent on rent for them 6 months, you'll get more of a feel of living together. Getting a house together is a long term commitment and you want to 100% make sure it'll work, I'd personally say that 2 weeks isn't anywhere near enough, especially given that spending time together in the holiday isn't going to give you a normal indication of day to day life. In the long run in terms of a 30 year mortgage, waiting another 6 months isn't going to drastically change things.

 

What he said!

[JoeBloggs]

@abillybob: If you're looking to move with your girlfriend to buy a house together, I'd personally recommend looking at rental, at least for a initial 6 month period. Why? Whilst you will be loosing out on the money spent on rent for them 6 months, you'll get more of a feel of living together. Getting a house together is a long term commitment and you want to 100% make sure it'll work, I'd personally say that 2 weeks isn't anywhere near enough, especially given that spending time together in the holiday isn't going to give you a normal indication of day to day life. In the long run in terms of a 30 year mortgage, waiting another 6 months isn't going to drastically change things.

 

Totally agree.

 

Being on holiday for 2 weeks with not a care or worry in the world isn't the same as living with someone. You want to see them when they are stressed to the max and had an argument and still get past it!

[AdamzB]

@abillybob Looking through your past threads I would really take a long hard look at yourself. I don't really think you are in a secure place to take on a 30 year commitment at this point in your life.

 

 

• August 2014 - Leaves current job
  
• September 2014 - Breaks up with Girl Friend
  
• October 3rd 2014 - Leaves job
  
• October 8th 2014 - Posts about leaving new job without giving notice
  
• November 2014 - Goes back to old job
  
• December 2014 - Complains about gets speeding tickets
  
• Janurary 2015 - Looking to moonlight at a feeder nursery
  
• February 2015 - Involved in car accident
  

Edited February 20, 2015 by elsiegee40

[witch]

You've been going out with her for less than 6 months., and before that you had a supposedly rock-solid relationship of quite some length that disintegrated in rather spectacular fashion.

Why are you already thinking of mortgages and such? Wait a bit - especially if you are still living at home - and save up and really decide if this is the relationship for you. And live together for a bit.

In she is as much of a hurry as you to settle down? I know you are sick to death of being told this - but you are very young and after your horrible experience with your ex, you need to just enjoy a new relationship and let it develop in its own time without being complicated by mortgages, debts and bills

[abillybob]

You've been going out with her for less than 6 months., and before that you had a supposedly rock-solid relationship of quite some length that disintegrated in rather spectacular fashion.

Why are you already thinking of mortgages and such? Wait a bit - especially if you are still living at home - and save up and really decide if this is the relationship for you. And live together for a bit.

In she is as much of a hurry as you to settle down? I know you are sick to death of being told this - but you are very young and after your horrible experience with your ex, you need to just enjoy a new relationship and let it develop in its own time without being complicated by mortgages, debts and bills

 

I think your right, I wasn't talking about jumping the gun right now just getting some advice for the near future. Thankyou for your help.

 

@abillybob Looking through your past threads I would really take a long hard look at yourself. I don't really think you are in a secure place to take on a 30 year commitment at this point in your life.

 

 

• August 2014 - Leaves current job
  
• September 2014 - Breaks up with Girl Friend
  
• October 3rd 2014 - Leaves job
  
• October 8th 2014 - Posts about leaving new job without giving notice
  
• November 2014 - Goes back to old job
  
• December 2014 - Complains about gets speeding tickets
  
• Janurary 2015 - Looking to moonlight at a feeder nursery
  
• February 2015 - Involved in car accident
  

 

I agree. Maybe a post too much about my personal life on this forum and it's not the right place to do it. I think I'll give it a rest for now.

[witch]

@abillybob

 

You can post anything you like (within reason!) and it is fine to ask for advice on personal stuff if you are OK with people knowing your business to that extent. It is up to you.

[sippo]

Dear Deidre...

[rad]

I think @AdamzB sums up your posting over the last year as an lerker

 

A house is not a cheap investment. Solicitor fees and estate agent fees are expensive. Live your life, rent, move, rent more and then decide where you are going to settle down before buying a house.

[tmcd35]

I'm buying, if I could do it all over again - I'd probably stick with renting. Yes you're paying off someone elses mortgage, but on the other hand they are responsible for all maintenance. I've just paid out £3k on double glazing. No central heating, kitchen and bathroom in desperate need of a major face lift. It's a leasehold and looks like the council, who are the freeholders, might replace the roof soon which will cost me ££££'s I can't afford. Maybe it'll be better when the mortgage is paid off in 2027, but until then I find it hard to see the benefits.

 

I also fill trapped. I can't easily move. Selling in it's current condition - re: central heating, kitchen and bathroom - isn't going to be easy...

[Arreks]

I'm probably the same age as @abillybob so this thread has really helped me too - I've been in a stable job for a while and I've been with my partner for years, she isn't a fan of renting but I always thought it'd be be better to start off that way so my opinion is kinda set in stone now.

[featured_spectre]

@tmcd35 I know the feeling. However, the benefits outway those cons if you have the right insurance. My home insurance paid to have the central heating replaced entirely as it is below a certain energy rating (I think it was below D) and assisted in costs of other replacements to get it to a minimum of rating C, which included Double glazing and insulation - I am with More Than FYI. I haggled to get this in, as a dodgy central heating and home energy rating is a hazard, so they were willing to cover the cost provided I stayed with them at a fixed rate for 5 years (the fixed rate is still less than the cost of the work under taken, so it was a bargain).

 

Decoration wise, you have the freedom to do what you like, whereas renting you don't.

 

My bathroom is in process of being renovated, and we're going for this sort of theme...

 

Rainbow Tiled Bathroom

[CAM]

When you get your mortgage promise, go look at a few places even if they are still out of reach so you can see what's available and learn a bit about house hunting in the process. I did this and came close to offering to the agent just to find the bank refused because of the lease. Prompted me to investigate leasing to discover 65 years left is bad bad news (it has to be renewed for a hefty price that would cost a second deposit!). Use common sense obviously, agent will be annoyed at a single low income "buyer" wanting to look at a 5 bedroom million pound mansion.

 

Properties up north are also cheaper then down south. London is especially pricey, searching for a studio atm first time buyer and getting priced out left right and centre. Kick in the teeth when I realised my almost there deposit needed to have £3000 legal fees shaved off it.

 

Also to anyone reading this (I don't care who). SAVE MONEY NOW WHILST YOU ARE YOUNG AND LIVING AT HOME. Put a third of your wage each month aside in an ISA (because that's roughly how much you should spend on rent when you move out) and let it sit there without touching it. A lesson in spending control and getting that deposit started early as it's a painful experience. Anything more at the end of the month is a bonus, stick it in too!

Edited February 23, 2015 by CAM

[connor_ict]

Renting is a complete waste of time and money, its dead money, how can you save for a deposit when your paying out monthly for somewhere that's never going to be your own. I've been thinking about moving out myself recently but as other people have said the deposits some banks want are ridiculous, best thing id suggest is save save save and stay at home definitely think its better moving out with someone because you have the double income which increases the amount the bank will lend you. But that's just my opinion.

[jinnantonnixx]

@tmcd35 I know the feeling. However, the benefits outway those cons if you have the right insurance. My home insurance paid to have the central heating replaced entirely as it is below a certain energy rating (I think it was below D) and assisted in costs of other replacements to get it to a minimum of rating C, which included Double glazing and insulation - I am with More Than FYI.

 

What?! I've never heard of this sort of thing before. How on earth did you get this, and how did you know about it?

[featured_spectre]

@jinnantonnixx I asked for it. Don't ask you don't get, but however, it does mean that I cannot use the government grant scheme to further improve the energy rating of the house (though on any future houses I buy I can if it is available still). I believe More Than dealt with the grant application etc, and did it all themselves to save me the hassle of doing it, and paid for the extra (which is what I meant when I said the fixed fee was less than what I would have paid). Edited February 23, 2015 by featured_spectre
added additional info.

[tmcd35]

Did they do that under the contents or buildings cover? I'm with More Than and I could see nothing in the contents T&C's that would allow for that. Alas, being leasehold, the council hold the building cover, not me, and the council are singularly useless at everything except finding new ways to extract money from me.

 

I did look into the Green Deal, got quite far through the process, before I got a personal loan to do the double glazing. It's interesting what it doesn't cover, or doesn't cover fully - namely expensive items like windows and boilers! Turns out it was a waste of £150 to get the initial survey done.

 

Truth is both have their pro's and con's. I think too many people too readily dismiss renting. Thatchers legacy I suppose.