On £25k but 'poor'?! Misery thread...
Discussion
Chest Rockwell said:
yammyfan said:
Why don't you go down the 'Help to Buy' Scheme. Go and find a new house build estate and show some interest. Its a 20% Equity loan. That is interest free for 5 years. Its a complete no brainer. Some figures for you to digest:
£200,000 House
£10,0000 Your Deposit contribution (5%)
£2/3000 Fees and Stamp duty
£40,0000 Government Contribution
Monthly Mortgage at 3.34% is about £730 a month. That is an achievable rate on that size property.
The mortgage lender will essentially give you a mortgage based on a 25% deposit which means you will get a much better rate. Your 'affordability criteria' will be judged on the remaining balance after the 25% deposit has been taken off.
Repayment wise, You can only pay the equity loan off in a lump. Either in Whole or Half i believe. I would take advantage of this while you can - as long as you don't mind a new build!
ETA: I see you have mentioned your friend is on Help to buy and is 'renting' the house from the government. This is not correct. He is using Shared Ownership. Please do some research into the 'help to buy', the scheme is there for people like you and I cannot imagine its going to last much longer.
This bit seems to be the catch:£200,000 House
£10,0000 Your Deposit contribution (5%)
£2/3000 Fees and Stamp duty
£40,0000 Government Contribution
Monthly Mortgage at 3.34% is about £730 a month. That is an achievable rate on that size property.
The mortgage lender will essentially give you a mortgage based on a 25% deposit which means you will get a much better rate. Your 'affordability criteria' will be judged on the remaining balance after the 25% deposit has been taken off.
Repayment wise, You can only pay the equity loan off in a lump. Either in Whole or Half i believe. I would take advantage of this while you can - as long as you don't mind a new build!
ETA: I see you have mentioned your friend is on Help to buy and is 'renting' the house from the government. This is not correct. He is using Shared Ownership. Please do some research into the 'help to buy', the scheme is there for people like you and I cannot imagine its going to last much longer.
Edited by anonymous-user on Thursday 19th June 11:44
Equity loan fees
You won’t be charged loan fees for the first 5 years of owning your home.
In the sixth year, you’ll be charged a fee of 1.75% of the loan’s value. After this, the fee will increase every year. The increase is worked out by using the Retail Prices Index plus 1%.
Your Help to Buy agent will contact you before the fees start, to set up monthly payments with your bank. You’ll also be sent a statement about your loan each year.
Fees don’t count towards paying back the equity loan.
https://www.gov.uk/affordable-home-ownership-schem...
So if you've got a monthly mortgage of 700 quid, just how will a sudden 1.75% fee figure on top of that? If I've thought this through correctly, one would see their monthly housing outgoings climb to over 1000 quid per month? Or is this fee per year which can be paid monthly?
Also, I'd imagine interest rates will be higher than 0.5% in 6 years time, but then again they may not be.
Edited by anonymous-user on Thursday 19th June 13:16
0 - 5 Years - £0 additional PCM
6 years+ - 1.75% of 40,000 = 700 (700/12 = £58) - So this will take your payments to approx £800.
I would think that most people can save £20k over 4 years - or have paid their mortgage down enough for the additional fee to be 'unnoticeable'
yammyfan said:
I would think that most people can save £20k over 4 years
That's quite an assumption. What about extra kids, BoE interest rates, new car, jobs market and of course the economic cycle? I know of single folk who can save up such money, but for families it may be quite a struggle.Of course, it can go either way...that's the gamble.
Chest Rockwell said:
That's quite an assumption. What about extra kids, BoE interest rates, new car, jobs market and of course the economic cycle? I know of single folk who can save up such money, but for families it may be quite a struggle.
Of course, it can go either way...that's the gamble.
Ignoring that assumption. £58 a month is not a huge increase. In fact I think its quite reasonable.Of course, it can go either way...that's the gamble.
I can see no downsides to the Help to Buy scheme. There are people that slate it with no facts. But I haven't seen one negative of it yet - happy for somebody to bring one to my attention.
yammyfan said:
Ignoring that assumption. £58 a month is not a huge increase. In fact I think its quite reasonable.
I can see no downsides to the Help to Buy scheme. There are people that slate it with no facts. But I haven't seen one negative of it yet - happy for somebody to bring one to my attention.
do you have a vested interest in HTB? In other words, are you an agent etc I can see no downsides to the Help to Buy scheme. There are people that slate it with no facts. But I haven't seen one negative of it yet - happy for somebody to bring one to my attention.
Edited by Chest Rockwell on Thursday 19th June 17:39
Chest Rockwell said:
do you have a vested interest in HTB? In other words, are you an agent etc
Haha no not at all. I have just heard a lot of people talking it down that don't know the ins and outs of it (not aimed at you), I think it's a good idea especially for first time buyers and that people should consider it.Edited by anonymous-user on Thursday 19th June 17:39
I know people on £90k+ who are using help to by as it's a no brainer, for atleast 5 years anyway!
Help to buy is great. Up to the point you want to sell your Barrat home which is worth 90% of what you paid for it to anyone not getting help to buy from the government. So your £200k house is now worth £180k. Then you owe the government £40k on top. Yeah, sounds gr8 m8, sign me up innit.
It's a s
t deal, taken by stupid people to desperate to get on the housing ladder to bother researching what a st deal it is. I know people that have bought in to it a sincerely regretted it. They lost money, lots of it, and it was a total arseache. On top of it all, you end up living in a poorly designed house built by the lowest bidders with the cheapest materials on the sttest plots of land in the country.
Avoid at all costs.
It's a s
t deal, taken by stupid people to desperate to get on the housing ladder to bother researching what a st deal it is. I know people that have bought in to it a sincerely regretted it. They lost money, lots of it, and it was a total arseache. On top of it all, you end up living in a poorly designed house built by the lowest bidders with the cheapest materials on the sttest plots of land in the country.Avoid at all costs.
I thought it wasn't only restricted to new homes now.
Although to be fair I did lose £10k on my Barratt Homes flat, but that was more a supply and demand issue, as 4 repossessions came on the market just as I was looking to sell mine - it could have been worse though, plenty of people on the development paid £40k more than I did and were in negative equity.
Although to be fair I did lose £10k on my Barratt Homes flat, but that was more a supply and demand issue, as 4 repossessions came on the market just as I was looking to sell mine - it could have been worse though, plenty of people on the development paid £40k more than I did and were in negative equity.
yammyfan said:
Happy to be corrected here, but based on my prices above:
0 - 5 Years - £0 additional PCM
6 years+ - 1.75% of 40,000 = 700 (700/12 = £58) - So this will take your payments to approx £800.
I would think that most people can save £20k over 4 years - or have paid their mortgage down enough for the additional fee to be 'unnoticeable'
Big assumption that for some of the people needing to use the htb 2 scheme, either that mortgage will get paid down significantly in the first 4/5/6 years or that they will have the ability to save the loan money,0 - 5 Years - £0 additional PCM
6 years+ - 1.75% of 40,000 = 700 (700/12 = £58) - So this will take your payments to approx £800.
I would think that most people can save £20k over 4 years - or have paid their mortgage down enough for the additional fee to be 'unnoticeable'
especially as rates aren't that great on the loans (it's meant to be self funding, so the good loans will cover the ones that go bad)
Using the example, first 5 years no problem-free money.
Year 6 of the loan £700pa only covers the interest on the loan.
Year 7 1.75 + rpi + 1%
So the question becomes what will rpi be in 7 years time, 8 years time etc if you haven't paid off the loan how expensive is the loan going to get, especially important if wages haven't risen much but the interest rate payable on mortgages has gone up.
Then you must also ask yourself what happens to those loans that aren't paid but the mortgage is, will they become shared ownership by default, will a secondary charge be placed against the property, etc?
I looked into the help to buy scheme and the 'equity loan' scheme (HTB1) doesn't seem like a good deal - you have to choose a new-build property (which are often more expensive to begin with) and after 5 years that bubble bursts and you're paying a mortgage and repaying a loan. It makes sense if your income is high and after that 5 year period the extra payments won't affect you - unfortunately this isn't something I can forecast.
Help to Buy 2 is not an equity loan, instead it's a guarantee for a percentage of your mortgage by the government. A few lenders currently offer this, but the rates don't seem that good. I still need just as higher deposit / equity if I was applying for a 95% LTV mortgage, this just appears to be a scheme for people with particularly bad credit?
Anyway, more of an update on current affairs...
Interview this afternoon. First one in 3 years, bit nervous but not sure why. In the comfortable position of not needing a job which is nice. I stipulated that I wouldn't move for less than £30kpa, which is the maximum they are currently offering (job advertised for 25-30k depending on experience). They still wanted to interview me after acknowledging that.
It's closer to home, but in an industry I'm not familiar with. It's still in construction, but a completely different trade.
On the debt front, the end is in sight. I know this because, after paying off a huge chunk (£1000) at once my bank has immediately raised my credit rating. It's no wonder people end up in over their heads, because my immediate thought was that I could now afford to go out and buy a new family car...but I can't really, since I'd be buying it with borrowed money and be back to square one.
Going to sit tight and save up for the next family car. Whether I'll be able to save enough money before we move out in October / November I'm not sure of...
Help to Buy 2 is not an equity loan, instead it's a guarantee for a percentage of your mortgage by the government. A few lenders currently offer this, but the rates don't seem that good. I still need just as higher deposit / equity if I was applying for a 95% LTV mortgage, this just appears to be a scheme for people with particularly bad credit?
Anyway, more of an update on current affairs...
Interview this afternoon. First one in 3 years, bit nervous but not sure why. In the comfortable position of not needing a job which is nice. I stipulated that I wouldn't move for less than £30kpa, which is the maximum they are currently offering (job advertised for 25-30k depending on experience). They still wanted to interview me after acknowledging that.
It's closer to home, but in an industry I'm not familiar with. It's still in construction, but a completely different trade.
On the debt front, the end is in sight. I know this because, after paying off a huge chunk (£1000) at once my bank has immediately raised my credit rating. It's no wonder people end up in over their heads, because my immediate thought was that I could now afford to go out and buy a new family car...but I can't really, since I'd be buying it with borrowed money and be back to square one.
Going to sit tight and save up for the next family car. Whether I'll be able to save enough money before we move out in October / November I'm not sure of...
How do you know your rating has shot up?
Paying a small chunk of debt off shouldn't change your rating that much, its defaults that harms your score, exposure to debt is a factor, but not the sums we're talking about here. i.e. if you had 4 credit cards with access to £100k of credit it probably would be a consideration.
Re the family car, that is exactly how most people buy them, not many people have £20k cash sitting about to buy a Ford Focus!
Paying a small chunk of debt off shouldn't change your rating that much, its defaults that harms your score, exposure to debt is a factor, but not the sums we're talking about here. i.e. if you had 4 credit cards with access to £100k of credit it probably would be a consideration.
Re the family car, that is exactly how most people buy them, not many people have £20k cash sitting about to buy a Ford Focus!
Sorry, bit misleading that, it's too early to be posting probably. I meant to say 'credit limit' rather than rating!
I just have to remain determined and physically save up for the car, buying it on a credit card seems silly after all the effort I put into paying it off.
We have also decided to join my parents on their holiday at the end of July, not sure if I posted that yet. The understanding being that I will pay for all of the fuel (£150ish) and my Fiancee raise all of the spending money through her earnings, which she is doing a good job of.
I need a break big-time.
I just have to remain determined and physically save up for the car, buying it on a credit card seems silly after all the effort I put into paying it off.
We have also decided to join my parents on their holiday at the end of July, not sure if I posted that yet. The understanding being that I will pay for all of the fuel (£150ish) and my Fiancee raise all of the spending money through her earnings, which she is doing a good job of.
I need a break big-time.
Hope your interview went well OP.
My Fiancé and I are currently considering moving in with either my Mum or her Mum & Dad. We pay approx £1000 a month rent for a small 2 bed flat and have around £15,000 of debt (credit cards, loans, finance). The plan being that we can easily pay off all our debt within 12 months if we don't have to pay rent (neither parents will charge rent) and then once everything is paid off we can start saving a deposit for a house. Still working out the finer details but it's looking like a very likely scenario for us to help us get out of the hole we have dug for ourselves!
My Fiancé and I are currently considering moving in with either my Mum or her Mum & Dad. We pay approx £1000 a month rent for a small 2 bed flat and have around £15,000 of debt (credit cards, loans, finance). The plan being that we can easily pay off all our debt within 12 months if we don't have to pay rent (neither parents will charge rent) and then once everything is paid off we can start saving a deposit for a house. Still working out the finer details but it's looking like a very likely scenario for us to help us get out of the hole we have dug for ourselves!
SystemParanoia said:
Unfollows post in disgust
How comes? Have I let the side down? What did I do wrong? I'm not wasting any more money!MajorProblem said:
Good move OP,
Everyone grown man with a family needs to blow their cash on a holiday and new car before moving out of their parents house.
It's hardly blowing cash.Everyone grown man with a family needs to blow their cash on a holiday and new car before moving out of their parents house.
Holiday - piggybacking my parents holiday cottage, accommodation cost = £00
Spends - £50 a day, £350 (saved by my Fiancee)
Fuel - 2 tanks at £75 (paid for by me)
To top it off, my father is not going to be charging me rent for July so we can affort to go away on holiday. I'll actually be £150 better-off than any other month (which I won't notice as the car tax is due and the cambelt needs doing).
As for 'new' car, I only meant new to me, it will still be something ~ 10 years old and worth £2-3k. I'll continue using my Pug shed as long as possible, though.
MajorProblem said:
Jesus wept.
Care to list your outgoings?
Haha, not particularly! Let's just say that from the approx £2800 a month we jointly bring home we are lucky if we have anything left by the 20th of the month! This is purely spent on debts and going food shopping once a month!Care to list your outgoings?
Gassing Station | Finance | Top of Page | What's New | My Stuff