why are mortgages so cheap

[oyster]

BMWBen said:

jonah35 said:

you can get near to paying 2.99% with a 25% deposit - that's quiet low really, Makes you wonder what the point is in saving doesn't it!

A 25% deposit eh... that means round here I need to somehow get hold of £87500 cash and then I can get that mortgage.



What I'm saying is, if you work and live in London, being a first time buyer is not fun. The only people I know of who have managed if have had the money stumped up by their parents.

So you feel you can't buy anything cheaper than £350k around London as a first time buyer? If you are thinking at that level then I'd assume you're in a well=paid job, which makes saving £80k a lot easier.

Maybe your username suggests why you're struggling.

[scotal]

anonymous said:

[redacted]

Mortgage Advisors are paid on Commission, the more your mortgage the more they (we,I) earn. However whilst a mortgage advisor should tell a cleint if they can afford more than they want to borrow, they should not be pushing them towards a bigger house.

[scotal]

BMWBen said:

A 25% deposit eh... that means round here I need to somehow get hold of £87500 cash and then I can get that mortgage.

Without trying too hard would a 4.99% fixed do? At 90% LTV? (that's not a recommendation, you may not qualfiy. but it is available today.) If you are prepared to wear a variable rate then its possible at 3.99%
There are also rates tiered at 85 & 80%. The "you must have a big deposit" line is currently not true.

[Mr Whippy]

scotal said:

anonymous said:

[redacted]

Mortgage Advisors are paid on Commission, the more your mortgage the more they (we,I) earn. However whilst a mortgage advisor should tell a cleint if they can afford more than they want to borrow, they should not be pushing them towards a bigger house.

Problem is they won't know what a person can afford as much as that person should... so it's a two way street.

I don't get stretching yourself too far though, as you are just lying to yourself. You have to pay the mortgage in the end.

Most advisors tell me I can afford more but I don't want to afford more, so I spend less. An advisor can only protect idiots from themselves for so long

Hence why, imo, the lending criteria should be stricter, and then relaxed if a borrower shows they understand their finances very well... but it all needs to be with clever people. Many advisors I talk to don't understand the concept of not buying a new car every 3yrs, or going on holiday 3 times a year as sacrifices for having a nicer house

Dave

[wiggy001]

Rocksteadyeddie said:

BMWBen said:

jonah35 said:

you can get near to paying 2.99% with a 25% deposit - that's quiet low really, Makes you wonder what the point is in saving doesn't it!

A 25% deposit eh... that means round here I need to somehow get hold of £87500 cash and then I can get that mortgage.



What I'm saying is, if you work and live in London, being a first time buyer is not fun. The only people I know of who have managed if have had the money stumped up by their parents.

Buy a cheaper house in a cheaper area. HTH.

+1.

I've worked in London in IT like you for years and bought my first home in zone 6 for £120k (in 2002). I've made the next step up the ladder since, but that house is still only worth £140k tops.

Your first home doesn't have to be a large house in an affluent area you know.

[Hudson]

oyster said:

I keep seeing statements like this.

I know that general living costs a lot, but a couple on even below average salaries could save up £12k in less than 2 years.

We are. But we're renting for a few years while we save up.

My salary is ste, the O/H's is better but im the bottleneck ill hand my man card in at the door.

Should have just been a

[turbobloke]

Mr Whippy said:

scotal said:

anonymous said:

[redacted]

Mortgage Advisors are paid on Commission, the more your mortgage the more they (we,I) earn. However whilst a mortgage advisor should tell a cleint if they can afford more than they want to borrow, they should not be pushing them towards a bigger house.

Problem is they won't know what a person can afford as much as that person should... so it's a two way street.

I don't get stretching yourself too far though, as you are just lying to yourself. You have to pay the mortgage in the end.

Most advisors tell me I can afford more but I don't want to afford more, so I spend less. An advisor can only protect idiots from themselves for so long

Hence why, imo, the lending criteria should be stricter, and then relaxed if a borrower shows they understand their finances very well... but it all needs to be with clever people. Many advisors I talk to don't understand the concept of not buying a new car every 3yrs, or going on holiday 3 times a year as sacrifices for having a nicer house

Dave

Agreed, there should be due diligence, common sense and the application of infinite wisdom all round.

Yet we've seen on here the bizarre position where an applicant was refused a mortgage so bought the property for cash. Obviously not a problem with the deposit.

If I recall correctly they weren't unemployed, and sure somebody could go straight out and donate their life savings to a cattery, but common sense and better judgement ought to prevail. What passes for an affordability assessment seems to be a rather rigid approach in which computer-asks-only-this-and-says-only-that. However that impression may be totally inaccurate.

[BMWBen]

wiggy001 said:

Rocksteadyeddie said:

BMWBen said:

jonah35 said:

you can get near to paying 2.99% with a 25% deposit - that's quiet low really, Makes you wonder what the point is in saving doesn't it!

A 25% deposit eh... that means round here I need to somehow get hold of £87500 cash and then I can get that mortgage.



What I'm saying is, if you work and live in London, being a first time buyer is not fun. The only people I know of who have managed if have had the money stumped up by their parents.

Buy a cheaper house in a cheaper area. HTH.

+1.

I've worked in London in IT like you for years and bought my first home in zone 6 for £120k (in 2002). I've made the next step up the ladder since, but that house is still only worth £140k tops.

Your first home doesn't have to be a large house in an affluent area you know.

You clearly haven't met my missus I wouldn't mind, but she has set her expectations high (probably because of the kind of places we've been renting) and won't bring them down again! And the depressing thing is that once you start looking "upmarket" you find that 350k doesn't get you anything better than 150k. Possibly the same poorly laid out, non-functional flat in a "nicer" area, but not in a "nice" area for sure and definitely not a proper place.

Edited by BMWBen on Wednesday 24th August 20:43

[slipstream 1985]

PoleDriver said:

PFFfft! You youngsters don't know you're born! I saw someone compalining about a 6% mortgage being high!
The last time I had a mortgage I was paying 18%... And I got a good deal!!

yeah and in those days a postie a milkman, a shop worker could afford a house. now in those jobs you cant even afford to rent.

[Old Merc]

slipstream 1985 said:

yeah and in those days a postie a milkman, a shop worker could afford a house. now in those jobs you cant even afford to rent.

Your dead right.In 1968 I was 21, an apprentice mechanic, bringing home about £12 a week!!and a wife with a new baby.We bought a terrace house for £2700,(£100 deposit and £19 a month).It was in a state,so damp "we put the gutters on the inside".We did it up,3-4yrs later sold it for £8500 and bought a semi for £10,500.A 21 yr old would have no chance today.

[Mr POD]

Bing o said:

Mr POD said:

IN 1990 my mortgage was just £150 less than my take home due to a rate of 15.5%. Which delayed having children for a while, but eventually I fixed my mortgage for 10 years about 8 years ago, at 4.66 %, which was a mistake, as not doing so would have been cheaper, except that I overpaid the maximum each month I could without having to pay penalties for a couple of years, and am now paying just £12.64 a month (which works out cheaper than paying off the full amount and paying their admin fee. Plus they are looking after the deeds for free, which once paid off they'd like to charge for. Now I can live on half my take home.


My point? Whatever you do, just pay the fecker off as soon as you can.

I think the point may be that in 1990 £150 was a liveable sum of money. I wonder how many people are on a similar limit at 4% today?

I'm having to view this through rose tints but IIRC I spent about £100 a month on poll tax, £60 quid on utilities, and £60 on getting to work and £40 on tax and insurance for the car, and £160 on food, which clearly doesn't add up. Fact is we needed 2 incomes when as a young couple with traditional child rearing ideals, one of us wanted to give up work to bring up the children we couldn't afford.

[jonah35]

is it chelsea that do a 3.99% 10 year fixed

so to borrow £200k interest only it's around £650 ish per month - most people spend more on their car plus fuel most months.

makes sense to live in an apartment in the city in which you work imho

[anonymous-user]

jonah35 said:

is it chelsea that do a 3.99% 10 year fixed

so to borrow £200k interest only it's around £650 ish per month - most people spend more on their car plus fuel most months.

makes sense to live in an apartment in the city in which you work imho

You'll need 60k deposit though

[Engineer1]

mcbook said:

Don't take this the wrong way but isn't one of the reasons the housing market got so out of control because banks were offering people like you 100% mortgages. If you can't afford it, save up some cash until you can.

The current financial climate and people's expectations mean this isn't easy. Last decades luxury is the presents requirement say broadband, or a Mobile etc.
Thankfully house prices aren't rising as when they are it can be a case of the 10% you need grows faster than you can save it so you reach £9000 and need £11000, you get the £11000 and need £15000 etc.

Edited by Engineer1 on Friday 26th August 22:09

[jonah35]

anonymous said:

[redacted]

yeah true but that's easy enough.

trouble is with most people, they don't know how to save.

if a couple save 1k per month each thats 24k per year which is 2.5 years of saving if they start from scratch. not too difficult.

thing is if someone earns £1800 per month they want their £50 gym membership, £50 iphone, £100 eating out per week, £199 car on lease, insurance and all the other stuff. Then they want a holiday to mauritius for £2,000 and nice clothes and sky tv for £70 and all the other gadgets and they want to do this whilst living in a £1,000 per month apartment. Then some people feel they can 'only' save £100 per month.

if you earnt £1800 per month and had no debt then you could house share outside of london for say £250-£300 per month, have a £10 per month mobile, go jogging and a week in tenerife or somewhere (or nowhere at all and sell your holiday) and freeview TV and eat out on a saturday night with a special offer voucher. You could save MORE than £1k per month if you wanted.

the trouble is PEOPLE DON'T WANT IT THAT BAD THAT THEY ARE PREPARED TO SAVE HARD FOR IT, THEY WANT 100% MORTGAGES THAT JUST FALL INTO YOUR LAP. MOST PEOPLE DON'T THINK ABOUT THE FUTURE. that is why people can only see short term and only save for things that are happening within a years time and don't think about how they are going to pay for their kids, for retirement, for the wedding and so on. They just worry about it when the time comes.

[grantone]

jonah35 said:

yeah true but that's easy enough.

trouble is with most people, they don't know how to save.

if a couple save 1k per month each thats 24k per year which is 2.5 years of saving if they start from scratch. not too difficult.

thing is if someone earns £1800 per month they want their £50 gym membership, £50 iphone, £100 eating out per week, £199 car on lease, insurance and all the other stuff. Then they want a holiday to mauritius for £2,000 and nice clothes and sky tv for £70 and all the other gadgets and they want to do this whilst living in a £1,000 per month apartment. Then some people feel they can 'only' save £100 per month.

if you earnt £1800 per month and had no debt then you could house share outside of london for say £250-£300 per month, have a £10 per month mobile, go jogging and a week in tenerife or somewhere (or nowhere at all and sell your holiday) and freeview TV and eat out on a saturday night with a special offer voucher. You could save MORE than £1k per month if you wanted.

the trouble is PEOPLE DON'T WANT IT THAT BAD THAT THEY ARE PREPARED TO SAVE HARD FOR IT, THEY WANT 100% MORTGAGES THAT JUST FALL INTO YOUR LAP. MOST PEOPLE DON'T THINK ABOUT THE FUTURE. that is why people can only see short term and only save for things that are happening within a years time and don't think about how they are going to pay for their kids, for retirement, for the wedding and so on. They just worry about it when the time comes.

I think we should sacrifice our consumer driven economy so that young people can pay old people more for their houses and banks can skim a bigger proportion of their pay.

[SammyW]

jonah35 said:

yeah true but that's easy enough.

trouble is with most people, they don't know how to save.

if a couple save 1k per month each thats 24k per year which is 2.5 years of saving if they start from scratch. not too difficult.

thing is if someone earns £1800 per month they want their £50 gym membership, £50 iphone, £100 eating out per week, £199 car on lease, insurance and all the other stuff. Then they want a holiday to mauritius for £2,000 and nice clothes and sky tv for £70 and all the other gadgets and they want to do this whilst living in a £1,000 per month apartment. Then some people feel they can 'only' save £100 per month.

if you earnt £1800 per month and had no debt then you could house share outside of london for say £250-£300 per month, have a £10 per month mobile, go jogging and a week in tenerife or somewhere (or nowhere at all and sell your holiday) and freeview TV and eat out on a saturday night with a special offer voucher. You could save MORE than £1k per month if you wanted.

the trouble is PEOPLE DON'T WANT IT THAT BAD THAT THEY ARE PREPARED TO SAVE HARD FOR IT, THEY WANT 100% MORTGAGES THAT JUST FALL INTO YOUR LAP. MOST PEOPLE DON'T THINK ABOUT THE FUTURE. that is why people can only see short term and only save for things that are happening within a years time and don't think about how they are going to pay for their kids, for retirement, for the wedding and so on. They just worry about it when the time comes.

You've got a point, but your average young couple would surely struggle to save £1000 each every month. Take home of £1800/month implies they each earn roughly £28,500 a year, hardly an average salary for someone 'young'. £500 per month sounds more realistic without making too many sacrifices.

[PoleDriver]

slipstream 1985 said:

PoleDriver said:

PFFfft! You youngsters don't know you're born! I saw someone compalining about a 6% mortgage being high!
The last time I had a mortgage I was paying 18%... And I got a good deal!!

yeah and in those days a postie a milkman, a shop worker could afford a house. now in those jobs you cant even afford to rent.

So they could raise enough to pay a £100k mortgage at 18%? I must have been in the wrong business!!

[Rocksteadyeddie]

jonah35 said:

anonymous said:

[redacted]

yeah true but that's easy enough.

trouble is with most people, they don't know how to save.

if a couple save 1k per month each thats 24k per year which is 2.5 years of saving if they start from scratch. not too difficult.

thing is if someone earns £1800 per month they want their £50 gym membership, £50 iphone, £100 eating out per week, £199 car on lease, insurance and all the other stuff. Then they want a holiday to mauritius for £2,000 and nice clothes and sky tv for £70 and all the other gadgets and they want to do this whilst living in a £1,000 per month apartment. Then some people feel they can 'only' save £100 per month.

if you earnt £1800 per month and had no debt then you could house share outside of london for say £250-£300 per month, have a £10 per month mobile, go jogging and a week in tenerife or somewhere (or nowhere at all and sell your holiday) and freeview TV and eat out on a saturday night with a special offer voucher. You could save MORE than £1k per month if you wanted.

the trouble is PEOPLE DON'T WANT IT THAT BAD THAT THEY ARE PREPARED TO SAVE HARD FOR IT, THEY WANT 100% MORTGAGES THAT JUST FALL INTO YOUR LAP. MOST PEOPLE DON'T THINK ABOUT THE FUTURE. that is why people can only see short term and only save for things that are happening within a years time and don't think about how they are going to pay for their kids, for retirement, for the wedding and so on. They just worry about it when the time comes.

That, Sir, is about the size of it. It comes down to how much you want it. If you want it and want all the other consumer trimmings then it is going to take you a loooooong time to save up. The failure comes when people fail to acknowledge that they are not prepared to forego the mobile, eating out, ready meals etc etc. Ergo they don't want to get on the ladder that much.