omega0684
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| posted on 19/11/10 at 05:48 PM |
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Mortgages ????????????
Evening all,
im pretty sure that 99% of my fellow locostbuilders know much more about mortgages than i do (this is not an overstatement, i know didly squat!) So
here is my question for tonight; Who wants to teach me about Mortgages ?  i don't know how much i can get on my salary, is it dependent on
deposit? How are the repayments worked out? fixed rate, variable i don't know, etc etc etc, lets call it, mortgages 101 to start. this is my
situation.
the average cost of a 2 bed with garage in a nice area of milton keynes is about £140-£160,000. (or you can have a 3 bed in a not so nice area). A
swanky medium sized 2 bed flat (with garage) falls into this category too (mostly complexes with secured parking etc). As im on my own at the moment
(but possible moving in with mate/ladyfriend at a later date) i don't need a great deal of space at present. a flat in MK would be ideal as it
would minimise commuting distance and car usage to virtually nothing allowing me to spend money on more important stuff like food!
i reckon i can raise about £10-£15,000 for a deposit, but this would mean i would need a mortgage of at least £125,000 to get somewhere in and around
MK. so how do i go about finding how much i will need to borrow and how much i will pay back.
All help welcome
Thanks again
Alex
I love Pinto's, even if i did get mine from P&O!
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mads
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| posted on 19/11/10 at 05:50 PM |
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Alex, give me a call....
[Edited on 19/11/10 by mads]
We gain knowledge faster than we do wisdom!
Life is not a journey to the grave with the intention of arriving safely in a pretty and well-preserved body, but rather to skid in
sideways, thoroughly used, totally worn out and loudly proclaiming... "f*ck, what a trip!"
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Dangle_kt
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| posted on 19/11/10 at 05:57 PM |
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anyone who really knows there stuff has to give you a big long spiel that they are not giving you financial advice in a professional capacity etc.
We used a mortgage advisor, one was superb, one was an idiot. Unfortunatly we listened to the idiot and so ended up with a 125% mortgage just before
the bubble burst.
[Edited on 19/11/10 by Dangle_kt]
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Bumble
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| posted on 19/11/10 at 06:12 PM |
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Alex.....my advice would be to make sure you do your homework. Look at all the different mortgage types and make sure you understand what the
differences are. Assuming you want straight repayment mortgage which pays off the loan amount and the interest within the term of the loan then very
basically there are 3 main types of repayment mortgages....Fixed, Variable and Tracker. The fixed rates are exactly that.....fixed for a set
period.....they give stability but are often at a higher interest rate so you have to choose carefully. Variable.....means the interest rate varies
up or down with the Bank of England base rate. Tracker is sort of an in between in that it tracks the Bank of England Base rate but is normally
capped so cannot go below or above predetermined level. I would advise reading up on them and getting a mortgage magazine (What Mortgage) before you
speak to an adviser otherwise you will get bamboozled by tech jargon.
In terms of how much you can borrow etc all the major banks / building socieities have Calculators on them that you feed in fo in to ie size of loan
required, deposit, salary, loan term etc then tell you how much you can borrow and what it will cost monthly and is an overall repayment value.
Nationwide's is pretty good.
Personally I benefitted very nicely in my early years of mortgage life from a variable repayment but that was more by chance than anything else. I
fix my mortgage on different terms every 2 - 3 years (currently on a Tracker) to make sure I'm benefitting from the best rate available at the
time and don't just stay on the Building Society Std Mortage Rate. It does involve re-accquaitning yourself with what's going on at the
time as it is a constantly changing market especially at the moment.
Good luck and as I said put in the homework....it's probably the biggest purhcase you'll ever make!!
HTH,
Matt
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daniel mason
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| posted on 19/11/10 at 06:14 PM |
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i would go for a house mate, most flats,although cheaper have hidden anual cost for upkeep of communal areas upto around £1500 per year in my area.
i was in a similar situation to you a few years ago and i would advise you not to bite off more than you can chew (so to speak) am sure from your
posts your not that old so if you can raise enough cash for a deposit i would definately jump at the chance (as i did at 24 yrs old) am so glad i did
it even though i seem to miss out on a lot of things my mates seem to be able to afford!
as a rough guide when i took out my mortgage over 25 yrs for every £1000 you borrow it will cost you £6 per month so £100,000 would be £600 p/m. it
will be slightly less now but there is always the possibility of interest rates rising again.
i managed to get a decent deposit after being forced to sell my 2004 evo 8 and borrowed £105,000 and all in with mortgage,council
tax,food,bills,insurances,sky,internet,bt,tv costs me over £1200 per month. if you need more info then feel free to ask! dan.
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zilspeed
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| posted on 19/11/10 at 06:34 PM |
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stevebubs
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| posted on 19/11/10 at 07:00 PM |
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Ditto on the house
Have a play in the mortgage area here... http://www.moneynet.co.uk/
Bear in mind interest rates are extremely low at the moment...so if you do perform a payment calculation, try and rerun it with another 4/5% interest
on top...just to make sure you're happy that you have a reasonable buffer...
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gingerprince
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| posted on 19/11/10 at 07:02 PM |
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To be honest you're going to struggle to get a good deal with that kind of deposit - you're looking at a 95% LTV, which 6-12 months ago
was impossible to find. Now if you do find one you'll be paying a heavy interest premium.
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dilley
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| posted on 19/11/10 at 07:10 PM |
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It really is not as daunting as you think, I am a qualified IFA and Mortgage consultant although I am not involved at the moment I can offer advice in
a profesional capacity and I have some good contacts still who I can trust, alot of people will fill you full of rubbish!! First question you need to
ask a broker/IFA is are they whole of market or tied....whole of market brokers can offer any product from any lender within the E.U, tied brokers can
only offer you their best product from there set panel of lenders-this is not good!.
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omega0684
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| posted on 19/11/10 at 07:36 PM |
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dilley: do you know of any online sites i can go and read and research?
I love Pinto's, even if i did get mine from P&O!
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chrisxr2
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| posted on 19/11/10 at 08:41 PM |
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mse
have a scout around on moneysaving expert.com
Life moves pretty fast, if you don't stop and look around once in a while, you could miss it.
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Ninehigh
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| posted on 19/11/10 at 10:19 PM |
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Last time I tried I needed 10% deposit (so I was looking at £10k for half a flat) and with the pay rate I was on I could spend 50 years paying for a
flat. This was under some "shared equity" BS which basically means I pay for half (over 25 years) and then the other (which I had been
paying rent on for the past 25 years)
I hope it's changed otherwise I don't know how anyone can be a first time buyer!
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twybrow
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| posted on 20/11/10 at 12:37 AM |
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Alex - we have been going through similar in Southamtpon. I have spoken to a couple of independent financial advisors (their advice costs nothing by
the way!)... You can scrape onto into a mortgage at 10% deposit (Loan to value ratio). They do sting you at 10% however... You might be better saving
up an extra ~£7k and go for a 15% deposit. The rates get a lot nicer then... Give us a call and we can catch up, then get all old and talk mortgages
and tea shops!
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Rocket_Rabbit
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| posted on 20/11/10 at 02:22 AM |
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All you need to know is this:
The average (mean) wage is £26,000.
The average house price is £165,000.
BoE base rate is 0.5%
Inflation = 3.2%
Now either inflation goes up MASSIVELY or house prices crash massively.
One of these things will happen, the Banks know this which is why for an 90% mortgage, they are charging 7-8% (16 times base rate) yet this will fall
to 3.5% upon a 30% plus deposit.
So, in effect, an average wage person wanting an average house will need to find £16,500 minimum or £39,500 preferable.
You don't need to be an economic genius to realise the dilema at present.
First time buying now is possibly the daftest thing you could do.
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dilley
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| posted on 20/11/10 at 05:43 PM |
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over the last 10 years the average base rate has been 4.98%, so, a 6% rate is pretty good! base rate can only go up! there is never a right time for a
first time buyer, as long as you are not in negative equity it relly does not matter. All property goes up and down the same, where is the risk in
owning one property? we all need some where to live and property is the best investment over time. How much did your parents pay for their first home?
what would it be worth now??? there will always be peaks and troffs!
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JoelP
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| posted on 20/11/10 at 09:27 PM |
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quote:
Originally posted by Rocket_Rabbit
Now either inflation goes up MASSIVELY or house prices crash massively.
Why massively?
quote:
First time buying now is possibly the daftest thing you could do.
Whys that? Is renting so much better? The lad i employ is currently buying his first house, the mortgage he's going for is about 80% the rent in
the area.
Have you spent too much time reading housepricecrash.co.uk? It really isnt going to happen on those scales...
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Rocket_Rabbit
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| posted on 21/11/10 at 07:07 AM |
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quote:
Originally posted by dilley
property is the best investment over time.
Absolutely untrue. Stock Market has shown much better returns than Housing market ever has.
JoelP
I don't read housepricecrash or any of the other nonsense floating around. I base my predictions on simple numbers that are out there for all
to see.
You never mentioned how much deposit your employee had put down on the house he has bought., or how long his Mortgage was over.
But my numbers came in at the following
I rent a 3 bed semi with a garage that is costing me 60% of the mortgage on a similar property.
Unfortunately, I have no deposit I can acquire from parents etc, so the maximum I can offer up would be 10%
And when the interest rates do go up (which at 0.5% base with Banks still tyring to recover money is ininevitable), my rent will be approaching less
than 50% of mortgage.
[Edited on 21/11/10 by Rocket_Rabbit]
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dilley
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| posted on 21/11/10 at 09:10 AM |
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You are saying that property is a bad investment? 10k down on a 100k house gives you an investment and growth on 100k! 20% property rise =20k gain-not
bad for a 10k deposit.
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dilley
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| posted on 21/11/10 at 09:11 AM |
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quote:
Originally posted by Rocket_Rabbit
quote:
Originally posted by dilley
property is the best investment over time.
Absolutely untrue. Stock Market has shown much better returns than Housing market ever has.
JoelP
I don't read housepricecrash or any of the other nonsense floating around. I base my predictions on simple numbers that are out there for all
to see.
You never mentioned how much deposit your employee had put down on the house he has bought., or how long his Mortgage was over.
But my numbers came in at the following
I rent a 3 bed semi with a garage that is costing me 60% of the mortgage on a similar property.
Unfortunately, I have no deposit I can acquire from parents etc, so the maximum I can offer up would be 10%
And when the interest rates do go up (which at 0.5% base with Banks still tyring to recover money is ininevitable), my rent will be approaching less
than 50% of mortgage.
[Edited on 21/11/10 by Rocket_Rabbit]
May I ask how much rent you pay and the value of your rented property?
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JoelP
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| posted on 21/11/10 at 12:40 PM |
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my employee only scrapped together 10% deposit, and that included selling his car and getting a banger. Think he said over 20 years its about 320 a
month, rent would be closer to 500. Indeed, i dont think you can rent anywhere for £320 a month nowadays. He paid about 80k for a semi with a garden,
in a village near leeds.
Regarding property vs shares, even if they performed identically, property wins because of leverage, ie as dilley says you can secure a large
investment for a small deposit.
Eample: The first house i bought was 24k in 2003, now its done up with an extra bedroom (20k to do that included 2 years with no rental income), and
an estate agent has estimated 80-100k. And that was off a 4k investment, since i remortgaged it to get my money out. But earning a potential 50k off 4
grand beats the hell out of shares.
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dilley
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| posted on 21/11/10 at 01:06 PM |
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quote:
Originally posted by JoelP
my employee only scrapped together 10% deposit, and that included selling his car and getting a banger. Think he said over 20 years its about 320 a
month, rent would be closer to 500. Indeed, i dont think you can rent anywhere for £320 a month nowadays. He paid about 80k for a semi with a garden,
in a village near leeds.
Regarding property vs shares, even if they performed identically, property wins because of leverage, ie as dilley says you can secure a large
investment for a small deposit.
Eample: The first house i bought was 24k in 2003, now its done up with an extra bedroom (20k to do that included 2 years with no rental income), and
an estate agent has estimated 80-100k. And that was off a 4k investment, since i remortgaged it to get my money out. But earning a potential 50k off 4
grand beats the hell out of shares.
Plus the benefit of first time buyers taking the option of interest only repayments in the early years when cash is tight.
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Rocket_Rabbit
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| posted on 4/12/10 at 06:05 AM |
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quote:
Originally posted by dilley
You are saying that property is a bad investment? 10k down on a 100k house gives you an investment and growth on 100k! 20% property rise =20k gain-not
bad for a 10k deposit.
Can't find fault with your maths 
However, do you really think that property prices are going to go up 20% any time soon?
And what happens if the house prices go down 20%...your are negative equity and in a lot of trouble.
If houses were more profitable than shares, don't you think that the banks would trade property instead?
JoelP,
You haven't actually earned £50k though have you? Your house is your main house and as such it is equity and not money. The money you have
'earned' has come from the economy bubble that has currently burst, can easily go, and it probably will. You could sell your house, but
then it requires that you find a buyer and market it appropriately, plus pay stamp duty and so on. This in itself costs tens of thousands of
pounds.
Effectively, there is nothing stopping me securing a loan to buy £x00,000 of shares. I could then trade these shares. Since 5% change in a stock is
easily doable in a DAY, I could earn a lot of money. And when it came to sell, it'd cost me £20(ish) in broker fees and that is your lot.
The best thing is that your shares pay you for having them - dividends.
Dilley,
I pay £625pcm on a £185,000 property.
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