House / Mortgage Advice
Discussion
Christ, I thought I was risk averse :-)
You do know just because you take out a 25 year mortgage you won't necessarily be actually paying it off for 25 years don't you?
Go online see what you can afford a month them try out different/shorter terms or as above, overpay. You may be surprised by how much the term decreases.
If you would like to live in a nice cottage then go for it.
Get redundancy/critical illness cover if you are nervous about being out of work.
Does you wife work? If so the chances of both of you being out of work at the same time is pretty remote so there will always be one salary coming in.
You do know just because you take out a 25 year mortgage you won't necessarily be actually paying it off for 25 years don't you?
Go online see what you can afford a month them try out different/shorter terms or as above, overpay. You may be surprised by how much the term decreases.
If you would like to live in a nice cottage then go for it.
Get redundancy/critical illness cover if you are nervous about being out of work.
Does you wife work? If so the chances of both of you being out of work at the same time is pretty remote so there will always be one salary coming in.
I took out a 5 year fixed rate, 25 year mortgage at age 25 on my own, I saved up didn't bother with a company pension, and made a few investments rather then earn 1% interest on a sh**ty ISA. I waited until the 5 year fixed rate period was up to avoid early repayment fees, and paid it off.
I have thought about a larger house but its more the garage/workshop area I would like which I don’t have the room to build where I live now, but taking out a 150k mortgage for a house with a double garage seems a stupid idea when I dont really need it.
I have thought about a larger house but its more the garage/workshop area I would like which I don’t have the room to build where I live now, but taking out a 150k mortgage for a house with a double garage seems a stupid idea when I dont really need it.
MontyC said:
I took out a 5 year fixed rate, 25 year mortgage at age 25 on my own, I saved up didn't bother with a company pension, and made a few investments rather then earn 1% interest on a sh**ty ISA. I waited until the 5 year fixed rate period was up to avoid early repayment fees, and paid it off.
I have thought about a larger house but its more the garage/workshop area I would like which I don’t have the room to build where I live now, but taking out a 150k mortgage for a house with a double garage seems a stupid idea when I dont really need it.
If you are able to clear a 25 year mortgage in 5 years, why wouldn't you take out another mortgage to pay for a larger house?I have thought about a larger house but its more the garage/workshop area I would like which I don’t have the room to build where I live now, but taking out a 150k mortgage for a house with a double garage seems a stupid idea when I dont really need it.
GreatGranny said:
Christ, I thought I was risk averse :-)
You do know just because you take out a 25 year mortgage you won't necessarily be actually paying it off for 25 years don't you?
Go online see what you can afford a month them try out different/shorter terms or as above, overpay. You may be surprised by how much the term decreases.
If you would like to live in a nice cottage then go for it.
Get redundancy/critical illness cover if you are nervous about being out of work.
Does you wife work? If so the chances of both of you being out of work at the same time is pretty remote so there will always be one salary coming in.
I know I can overpay it, I've been doing that with this one, which has taken 15 years. I'm looking at the worse case scenario, and with the possible/probably interest rate hikes. The wife does work, but I don't want her to be working for too many years, I suppose we need to set out our priorities. You do know just because you take out a 25 year mortgage you won't necessarily be actually paying it off for 25 years don't you?
Go online see what you can afford a month them try out different/shorter terms or as above, overpay. You may be surprised by how much the term decreases.
If you would like to live in a nice cottage then go for it.
Get redundancy/critical illness cover if you are nervous about being out of work.
Does you wife work? If so the chances of both of you being out of work at the same time is pretty remote so there will always be one salary coming in.
Looking at the figures, a 180k mortgage will cost about £750pm, if we added £500pm to that it would be over in 13 years, however, that's not taking into account interest rates going up. If there was to be a hike up to 5% then it could potential be leaving me in a very dark place, as too I would imagine quite a few mortgage owners.
Edited by rowntreescabana on Wednesday 24th June 12:15
RowntreesCabana said:
GreatGranny said:
Christ, I thought I was risk averse :-)
You do know just because you take out a 25 year mortgage you won't necessarily be actually paying it off for 25 years don't you?
Go online see what you can afford a month them try out different/shorter terms or as above, overpay. You may be surprised by how much the term decreases.
If you would like to live in a nice cottage then go for it.
Get redundancy/critical illness cover if you are nervous about being out of work.
Does you wife work? If so the chances of both of you being out of work at the same time is pretty remote so there will always be one salary coming in.
I know I can overpay it, I've been doing that with this one, which has taken 15 years. I'm looking at the worse case scenario, and with the possible/probably interest rate hikes. The wife does work, but I don't want her to be working for too many years, I suppose we need to set out our priorities. You do know just because you take out a 25 year mortgage you won't necessarily be actually paying it off for 25 years don't you?
Go online see what you can afford a month them try out different/shorter terms or as above, overpay. You may be surprised by how much the term decreases.
If you would like to live in a nice cottage then go for it.
Get redundancy/critical illness cover if you are nervous about being out of work.
Does you wife work? If so the chances of both of you being out of work at the same time is pretty remote so there will always be one salary coming in.
Looking at the figures, a 180k mortgage will cost about £750pm, if we added £500pm to that it would be over in 13 years, however, that's not taking into account interest rates going up. If there was to be a hike up to 5% then it could potential be leaving me in a very dark place, as too I would imagine quite a few mortgage owners.
Edited by rowntreescabana on Wednesday 24th June 12:15
1% maybe in the next few years.
fittster said:
MontyC said:
I took out a 5 year fixed rate, 25 year mortgage at age 25 on my own, I saved up didn't bother with a company pension, and made a few investments rather then earn 1% interest on a sh**ty ISA. I waited until the 5 year fixed rate period was up to avoid early repayment fees, and paid it off.
I have thought about a larger house but its more the garage/workshop area I would like which I don’t have the room to build where I live now, but taking out a 150k mortgage for a house with a double garage seems a stupid idea when I dont really need it.
If you are able to clear a 25 year mortgage in 5 years, why wouldn't you take out another mortgage to pay for a larger house?I have thought about a larger house but its more the garage/workshop area I would like which I don’t have the room to build where I live now, but taking out a 150k mortgage for a house with a double garage seems a stupid idea when I dont really need it.
Have been within 5 years of being mortgage free twice. First time was 11 years ago and the proceeds of the sale of our house in the UK funded, just, the deposit for our first unit out here. Last time was 4 years ago when we decided to move from the 2/3 bed unit to a 5 bed house. However, we worked very hard to make the move without selling the unit - borrowed against increased equity to fund 20% deposit, and then put tenants in the unit at a rate that almost covered the mortgage. We budgeted for 7% interest rates, and all sorts of additional expenditure, and whilst scary at the time, realised we were still only 39 then, so we had time to figure it all out.
Four years later, drop in interest rates plus increase in rent means unit is paying for itself and has gone up about 20% in that time. Additional comfort now from knowing that if I needed to, I could sell the house, move back to the unit and be mortgage free immediately. And this is our long-term plan, when the kids are older...
What I'm getting at is, is there any way you could fund the new place with equity from your existing home, and have both properties? Might seem a bit of a gamble or be uncomfortable for a while, but could lead to capital gains from two places.
Four years later, drop in interest rates plus increase in rent means unit is paying for itself and has gone up about 20% in that time. Additional comfort now from knowing that if I needed to, I could sell the house, move back to the unit and be mortgage free immediately. And this is our long-term plan, when the kids are older...
What I'm getting at is, is there any way you could fund the new place with equity from your existing home, and have both properties? Might seem a bit of a gamble or be uncomfortable for a while, but could lead to capital gains from two places.
PomBstard said:
Have been within 5 years of being mortgage free twice. First time was 11 years ago and the proceeds of the sale of our house in the UK funded, just, the deposit for our first unit out here. Last time was 4 years ago when we decided to move from the 2/3 bed unit to a 5 bed house. However, we worked very hard to make the move without selling the unit - borrowed against increased equity to fund 20% deposit, and then put tenants in the unit at a rate that almost covered the mortgage. We budgeted for 7% interest rates, and all sorts of additional expenditure, and whilst scary at the time, realised we were still only 39 then, so we had time to figure it all out.
Four years later, drop in interest rates plus increase in rent means unit is paying for itself and has gone up about 20% in that time. Additional comfort now from knowing that if I needed to, I could sell the house, move back to the unit and be mortgage free immediately. And this is our long-term plan, when the kids are older...
What I'm getting at is, is there any way you could fund the new place with equity from your existing home, and have both properties? Might seem a bit of a gamble or be uncomfortable for a while, but could lead to capital gains from two places.
Thanks for that, it's interesting and giving me another angle to look at.Four years later, drop in interest rates plus increase in rent means unit is paying for itself and has gone up about 20% in that time. Additional comfort now from knowing that if I needed to, I could sell the house, move back to the unit and be mortgage free immediately. And this is our long-term plan, when the kids are older...
What I'm getting at is, is there any way you could fund the new place with equity from your existing home, and have both properties? Might seem a bit of a gamble or be uncomfortable for a while, but could lead to capital gains from two places.
I can't see how it is possible to offer advice without knowing what the OP earns. To my mind the wisdom of taking on £150K plus worth of debt would be greatly influenced by whether he earns (say) £25K a year or £250K a year.
From my own personal experience however, I can say that I live in a modest house entirely adequate for my needs and upon which I cleared the mortgage about a decade ago. And it has transformed my way of life.
Proper savings for the first time (I could never see the point whilst owing money on a mortgage, you're effectively just borrowing the money you have in savings and paying more interest than you're earning so I overpaid rather than saved).
My outgoings are now a few hundred pounds a month.
When I lost my job at the beginning of the recession I didn't have to panic about finding something - anything, which removed the stress.
And most of all, it allowed me to pursue a new and completely different self employed career which I love (both being my own boss and what I actually do). There is no way I could have tried (or risked) that with a big mortgage millstone around my neck.
Finally, there's something really satisfying about knowing you own your home and no one can take it off you (unless something really goes wrong! Or you get married - arguably the same thing!)
So I'll go against the 'just do it' brigade, there's far far more to life than sweating over a six figure debt commitment just to live in a great big house.
But as I say, it does depend what you earn - tell me the OP clears ten grand a month and I'll change my tune!
From my own personal experience however, I can say that I live in a modest house entirely adequate for my needs and upon which I cleared the mortgage about a decade ago. And it has transformed my way of life.
Proper savings for the first time (I could never see the point whilst owing money on a mortgage, you're effectively just borrowing the money you have in savings and paying more interest than you're earning so I overpaid rather than saved).
My outgoings are now a few hundred pounds a month.
When I lost my job at the beginning of the recession I didn't have to panic about finding something - anything, which removed the stress.
And most of all, it allowed me to pursue a new and completely different self employed career which I love (both being my own boss and what I actually do). There is no way I could have tried (or risked) that with a big mortgage millstone around my neck.
Finally, there's something really satisfying about knowing you own your home and no one can take it off you (unless something really goes wrong! Or you get married - arguably the same thing!)
So I'll go against the 'just do it' brigade, there's far far more to life than sweating over a six figure debt commitment just to live in a great big house.
But as I say, it does depend what you earn - tell me the OP clears ten grand a month and I'll change my tune!
Ari said:
So I'll go against the 'just do it' brigade, there's far far more to life than sweating over a six figure debt commitment just to live in a great big house.
This sums it up for me. We have a modest 3 bed mid terrace. Its adequate but importantly to me the mortgage is low. Less than £500 a month and under 100k. Sometimes I think I'd like to move to a nicer house but this would involve a substantial increase in the amount we would need to borrow and my other half would need to work more than the 2 days she does now. We could do it, but we don't want to be slaves to work plus we have a young child and enjoy spending time with him. A friend of mine has a very nice 4 bed in a nice area, new cars on the drive but their mortgage is circa 300k and they've got about 60k worth of cars. He has just taken a new job in London to finance all this but this means he will only see his kid at weekends. The kid spends 5 days a week in nursery. To me that is a waste. I'm very much in the more to life camp.Ari said:
I can't see how it is possible to offer advice without knowing what the OP earns. To my mind the wisdom of taking on £150K plus worth of debt would be greatly influenced by whether he earns (say) £25K a year or £250K a year.
From my own personal experience however, I can say that I live in a modest house entirely adequate for my needs and upon which I cleared the mortgage about a decade ago. And it has transformed my way of life.
Proper savings for the first time (I could never see the point whilst owing money on a mortgage, you're effectively just borrowing the money you have in savings and paying more interest than you're earning so I overpaid rather than saved).
My outgoings are now a few hundred pounds a month.
When I lost my job at the beginning of the recession I didn't have to panic about finding something - anything, which removed the stress.
And most of all, it allowed me to pursue a new and completely different self employed career which I love (both being my own boss and what I actually do). There is no way I could have tried (or risked) that with a big mortgage millstone around my neck.
Finally, there's something really satisfying about knowing you own your home and no one can take it off you (unless something really goes wrong! Or you get married - arguably the same thing!)
So I'll go against the 'just do it' brigade, there's far far more to life than sweating over a six figure debt commitment just to live in a great big house.
But as I say, it does depend what you earn - tell me the OP clears ten grand a month and I'll change my tune!
I earn £37k, my wife about £24k. I have a couple of small debts that I can pay off now, so, if we did decide to go for this, we'd have zero debt other than the £670pm (overpaying about £200pm) we're paying at the moment for the next two years. At the moment we tend to spend a fair bit just eating out and socialising, with a new house that would be knocked on the head a bit. We're in South Wales too, so property is obviously a fair bit cheaper than the South East. From my own personal experience however, I can say that I live in a modest house entirely adequate for my needs and upon which I cleared the mortgage about a decade ago. And it has transformed my way of life.
Proper savings for the first time (I could never see the point whilst owing money on a mortgage, you're effectively just borrowing the money you have in savings and paying more interest than you're earning so I overpaid rather than saved).
My outgoings are now a few hundred pounds a month.
When I lost my job at the beginning of the recession I didn't have to panic about finding something - anything, which removed the stress.
And most of all, it allowed me to pursue a new and completely different self employed career which I love (both being my own boss and what I actually do). There is no way I could have tried (or risked) that with a big mortgage millstone around my neck.
Finally, there's something really satisfying about knowing you own your home and no one can take it off you (unless something really goes wrong! Or you get married - arguably the same thing!)
So I'll go against the 'just do it' brigade, there's far far more to life than sweating over a six figure debt commitment just to live in a great big house.
But as I say, it does depend what you earn - tell me the OP clears ten grand a month and I'll change my tune!
So you bring home approx. £4400 per month net between the both of you?
Even a 1% increase in IR wouldn't make a huge difference to you.
I have just fixed mine for 5 years which is longer than I normally do because the rate is so good at the moment.
Means I have fixed costs mortgage wise and we also overpay depending how flush we are each month, typically £150 that's on a £420 pcm mortgage.
If you really want to have that country cottage IMO the reasons not to do it aren't financial. You sound like you are in a good position.
Even a 1% increase in IR wouldn't make a huge difference to you.
I have just fixed mine for 5 years which is longer than I normally do because the rate is so good at the moment.
Means I have fixed costs mortgage wise and we also overpay depending how flush we are each month, typically £150 that's on a £420 pcm mortgage.
If you really want to have that country cottage IMO the reasons not to do it aren't financial. You sound like you are in a good position.
RowntreesCabana said:
I earn £37k, my wife about £24k. I have a couple of small debts that I can pay off now, so, if we did decide to go for this, we'd have zero debt other than the £670pm (overpaying about £200pm) we're paying at the moment for the next two years. At the moment we tend to spend a fair bit just eating out and socialising, with a new house that would be knocked on the head a bit. We're in South Wales too, so property is obviously a fair bit cheaper than the South East.
With that extra bit of information, definitely get it done!RowntreesCabana said:
I earn £37k, my wife about £24k.
Ok so the final piece of the jigsaw - how confident are you that you'll still be earning £37K and your wife £24K in five years, ten years, twenty years?If the answer is 'very confident - and probably more' then you sound well placed to do it.
If the answer is 'hard to say, could lose my job over the next few years and I'd struggle to find another earning much more than £18K and my wife wants to go part time' then you probably aren't.
It also all depends what you want from life. For me, my house is somewhere to sleep, eat, relax, watch TV, sit in the garden on a nice day. It isn't a hobby or interest in its own right. As long as it caters for those things then I'm happy and I'd rather have the freedom of no mortgage and extra cash as a result. For other people their house is everything and they spend their lives tending the garden, doing home improvements and planning the next extension. If you're the latter then again, it makes more sense.
My motto (in business and personally) is that there are two routes to being better off. Earn more and spend less.
I've seen plenty of high income but day to day broke people because the cash all comes rushing in in a big tidal wave and then immediately rushes back out again paying for a 'lifestyle' and leaving them with nothing. Just feels a bit pointless to me. I'm certainly not saying that would be the case with you, I'm just saying don't let it become so.
Interesting to read peoples' views on this. Ultimately, it boils down to what you really want. My wife and I live in a 3 bed semi new build and are coming up for the 4 year mark now. In that time, we've got the inside and outside looking beautiful and whilst we could have bought a detached house for not all that much more on our mortgage, we decided to borrow less in case we didn't like how the area eventually turned out, allowing us to sell up sooner.
With a baby on the way and even with a dog, we have more than enough space overall although a bigger kitchen would be nice. We have great neighbours, our garden is bigger than what the significantly more expensive 4 and even 5 bed properties are getting now and the thought of having more/bigger rooms to maintain and clean (I'm a bit of a perfectionist) isn't something that excites me. I can be mortgage free before I'm 44 or thereabouts which excites me (31 just now).
But of course, you can have all the money in the world and be dead tomorrow so my advice is to do what feels right for you and what will make you happy. For some it's a big house, for others a fancy car whilst others again love their holidays....unless of course you have a really well paid job and can have it all lol.
With a baby on the way and even with a dog, we have more than enough space overall although a bigger kitchen would be nice. We have great neighbours, our garden is bigger than what the significantly more expensive 4 and even 5 bed properties are getting now and the thought of having more/bigger rooms to maintain and clean (I'm a bit of a perfectionist) isn't something that excites me. I can be mortgage free before I'm 44 or thereabouts which excites me (31 just now).
But of course, you can have all the money in the world and be dead tomorrow so my advice is to do what feels right for you and what will make you happy. For some it's a big house, for others a fancy car whilst others again love their holidays....unless of course you have a really well paid job and can have it all lol.
RowntreesCabana said:
PomBstard said:
Have been within 5 years of being mortgage free twice. First time was 11 years ago and the proceeds of the sale of our house in the UK funded, just, the deposit for our first unit out here. Last time was 4 years ago when we decided to move from the 2/3 bed unit to a 5 bed house. However, we worked very hard to make the move without selling the unit - borrowed against increased equity to fund 20% deposit, and then put tenants in the unit at a rate that almost covered the mortgage. We budgeted for 7% interest rates, and all sorts of additional expenditure, and whilst scary at the time, realised we were still only 39 then, so we had time to figure it all out.
Four years later, drop in interest rates plus increase in rent means unit is paying for itself and has gone up about 20% in that time. Additional comfort now from knowing that if I needed to, I could sell the house, move back to the unit and be mortgage free immediately. And this is our long-term plan, when the kids are older...
What I'm getting at is, is there any way you could fund the new place with equity from your existing home, and have both properties? Might seem a bit of a gamble or be uncomfortable for a while, but could lead to capital gains from two places.
Thanks for that, it's interesting and giving me another angle to look at.Four years later, drop in interest rates plus increase in rent means unit is paying for itself and has gone up about 20% in that time. Additional comfort now from knowing that if I needed to, I could sell the house, move back to the unit and be mortgage free immediately. And this is our long-term plan, when the kids are older...
What I'm getting at is, is there any way you could fund the new place with equity from your existing home, and have both properties? Might seem a bit of a gamble or be uncomfortable for a while, but could lead to capital gains from two places.
I'll add that because our pension funds here are predicted to be dire, the plan is for the capital gains on the house to cover not only the interest-only mortgage on the unit and leave us debt free, but to also add substantially to our retirement pot in about 15 years' time. As we'll be selling the principal place of residence, under current tax rules here, we'll pay no capital gains either. If we then wait, I think its two years, we could then also sell the unit, pocket the gains in full, add to the pot and live in a smaller place a bit further from the beach.
As others have pointed out, its a bit of a gamble and means you might miss out on stuff now, but at the moment with three kids, I need a big house, and its a plan that works for us.
I was in a similar position 4 years ago. I was 38 at the time and sitting mortgage free in a home that was more than enough for us, we'd been living there for 8 years and I'm sure if we'd made a different decision I'm sure we'd still be happy there. Friends said we were mad when we talked of moving saying we'd be giving up our disposable income (they were right) and how we'd live to regret it (they were wrong).
So why did we do it? For me it was the fact that I felt that if I left it much longer the decision would be taken out of my hands, mid to late 40's plus a 25 year stretch would not be my best idea. Second the arse had fallen out of the market in the two years leading up to that point and moving up the ladder was more affordable than any point before or since. The main reason is that although it would be great to have the great feeling of freedom that no mortgage brings how boring would it be to always take the safe, easy option when you could take the exciting and rewarding one.
So why did we do it? For me it was the fact that I felt that if I left it much longer the decision would be taken out of my hands, mid to late 40's plus a 25 year stretch would not be my best idea. Second the arse had fallen out of the market in the two years leading up to that point and moving up the ladder was more affordable than any point before or since. The main reason is that although it would be great to have the great feeling of freedom that no mortgage brings how boring would it be to always take the safe, easy option when you could take the exciting and rewarding one.
Are you happy with the house you are in now? If you are, don't get caught up in the 'rat race', stay where you are and enjoy the lower cost life and build up financial independence from an employer / etc. Hell, buy a brand new TV, sound system or give the living room a makeover if you want to change things up a little, but don't spend what you don't need to if it's any financial pressure at all. Of course if you do really want a bigger / better place, then go for it!
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