Size of your Mortgage
Discussion
Hi All,
Having thought about what I would like to do in the next few years the idea of having a big mortgage freaks me out. When I say big I mean even 50% of the value of the house seems high to me!
I understand it depends on the value of the house etc and your earning but generally what are people doing in terms of equity/finance mix?
Having thought about what I would like to do in the next few years the idea of having a big mortgage freaks me out. When I say big I mean even 50% of the value of the house seems high to me!
I understand it depends on the value of the house etc and your earning but generally what are people doing in terms of equity/finance mix?
SunsetZed said:
Maybe the UK's not for you then, there are many other countries with cheaper property which could help you with this quandry...
Right so the UK is not for me becasue I dont want to be financed to the hilt and be in debt and negative equity; working until my bones are falling apart because I was stupid enough to take out a 200k mortgage and pay back the grubby banks 380k back with interest payment over 25 years. Yeah lets all live the dream, muppet
IATM said:
working until my bones are falling apart because I was stupid enough to take out a 200k mortgage and pay back the grubby banks 380k back with interest payment over 25 years.
Yeah lets all live the dream, muppet
Ok so don't take out a mortgage then. Save up the £200k in cash to buy the house, by which point it will cost £500k. See where I'm going with this?Yeah lets all live the dream, muppet
Those "grubby banks" are currently lending money cheaper than it has ever been lent before. If you want to pay them less then borrow less or pay it back quicker, it's really not rocket science.
Or rent for the rest of your life and just hope you have enough coming in when you are old to keep paying the rent. Your choice.
R11ysf said:
IATM said:
working until my bones are falling apart because I was stupid enough to take out a 200k mortgage and pay back the grubby banks 380k back with interest payment over 25 years.
Yeah lets all live the dream, muppet
Ok so don't take out a mortgage then. Save up the £200k in cash to buy the house, by which point it will cost £500k. See where I'm going with this?Yeah lets all live the dream, muppet
Those "grubby banks" are currently lending money cheaper than it has ever been lent before. If you want to pay them less then borrow less or pay it back quicker, it's really not rocket science.
Or rent for the rest of your life and just hope you have enough coming in when you are old to keep paying the rent. Your choice.
, I should have known better. With respect I dont think buying a property on the assumption it is going to go up is sound advise. I know some areas do go up and some dont or some are minimal.
I was more curious at what the general population feel comfortable with when buying a house. We have a new estate near us of say 40 houses at 500-650k houses. All sold and being lived in within 18 months. What has my cogs turning is that one may have just paid the 10% deposit or 50% deposit.
From what I gather many use inheritance to give them a good chunk of deposit etc etc but I was more curious than anything else.
IATM said:
GT03ROB was right , I should have known better.
With respect I dont think buying a property on the assumption it is going to go up is sound advise. I know some areas do go up and some dont or some are minimal.
I was more curious at what the general population feel comfortable with when buying a house. We have a new estate near us of say 40 houses at 500-650k houses. All sold and being lived in within 18 months. What has my cogs turning is that one may have just paid the 10% deposit or 50% deposit.
From what I gather many use inheritance to give them a good chunk of deposit etc etc but I was more curious than anything else.
So you never plan to own a house and will simply rent for the rest of your life?, I should have known better. With respect I dont think buying a property on the assumption it is going to go up is sound advise. I know some areas do go up and some dont or some are minimal.
I was more curious at what the general population feel comfortable with when buying a house. We have a new estate near us of say 40 houses at 500-650k houses. All sold and being lived in within 18 months. What has my cogs turning is that one may have just paid the 10% deposit or 50% deposit.
From what I gather many use inheritance to give them a good chunk of deposit etc etc but I was more curious than anything else.
Although in any particular year the price of a house may go up, down or sideways, over a longer term horizon, property values are likely to keep pace with inflation (as a minimum) or increase much faster, due to well-documented supply and demand issues.
In many cases a mortgage can be cheaper than the rental cost and you actually get something at the end of the term!
Edited by sidicks on Thursday 31st March 10:53
Mine is 47% LTV, but I had a unique a fortunate position in which my parents gave me £120k inheritance, so instead of wasting it, I used all of it for the house and mortgaged the remaining £105k with the goal of being mortgage free when I'm somewhere between 30-32, then I'll do exactly the same and use all of the money as a 50% LTV.
Bought our first place in December last year, £215k house and our mortgage is just over £200k. We wanted to save a 10% deposit but this house was just what we were after so went with a 95% LTV. Although not ideal, I'm not too concerned as we plan to remortgage in 5-10 years and pay a good wedge off it. I'd like to think that by 2020 we'll have already paid off about £15k with our normal monthly payments, be able to chuck £15k lump sum in on a remortgage deal and the house will hopefully be worth about £240k maybe... Putting us at pretty much a 70% LTV if my man maths haven't failed me!
I'm comfortable in the house we're in and comfortable with the repayments... I guess to answer your question OP it all depends on what you feel comfortable with and the lifestyle you wish to lead?
I'm comfortable in the house we're in and comfortable with the repayments... I guess to answer your question OP it all depends on what you feel comfortable with and the lifestyle you wish to lead?
IATM said:
Right so the UK is not for me becasue I dont want to be financed to the hilt and be in debt and negative equity; working until my bones are falling apart because I was stupid enough to take out a 200k mortgage and pay back the grubby banks 380k back with interest payment over 25 years.
I don't think you understand much about finance.Either you pay the banks interest or you pay the landlord rent (or you have the opportunity cost of lost income on your equity).
There is nothing particularly "grubby" about banks (or landlords).
People don't give out free houses.
IATM said:
I was more curious at what the general population feel comfortable with when buying a house.
As long as I could afford it and I was in an LTV band allowing me the lowest possible rates (generally somewhere in the 65-70% range) I would happily lever up.The "affordability" then is the problem.
The bank test is something like whether you could manage on a 5% repayment mortgage over 25 years.
I suspect the vast majority of the UK would be eating beans and rice if that actually happened.
From a quick google for FTB it's a 10 to 20% deposit on average.
For those going up the ladder the average deposit is 30%
I think the calculation works like this (savings+equity)-costs = deposit in £
Salary and bank rules dictates how much you can borrow/afford over what period + deposit = house you can buy (work out loan % from there).
For those going up the ladder the average deposit is 30%
I think the calculation works like this (savings+equity)-costs = deposit in £
Salary and bank rules dictates how much you can borrow/afford over what period + deposit = house you can buy (work out loan % from there).
Think mine was about 75% when I took it out, 10 years on it's under 50%. Possibly going to move in the next year or so but savings mean the additional mortgage won't change the LTV very much.
I rented for a lot of years before buying my house when I was about 30. Looking back at house prices and mortgage rates I would have been better off in the long term buying several years earlier rather than renting, but then again I'd have had less disposable income in that time (mortgage payments would have been more than rent, but the house price increases in that period were greater than the difference).
I rented for a lot of years before buying my house when I was about 30. Looking back at house prices and mortgage rates I would have been better off in the long term buying several years earlier rather than renting, but then again I'd have had less disposable income in that time (mortgage payments would have been more than rent, but the house price increases in that period were greater than the difference).
35 and bought my first place 2 years ago on a 75% LTV for 205k. My mortgage is much cheaper than rent (£625 vs £900) and I'm insulated from all of the rent hikes Brighton has seen over the last few years.
Was speaking to an older chap down the pub the other night who was still renting as it was more flexible, turned out he had been renting the same flat for 30 years...
Was speaking to an older chap down the pub the other night who was still renting as it was more flexible, turned out he had been renting the same flat for 30 years...
SunsetZed said:
unless you come into money via say inheritance then you will not get on to the mortgage ladder without taking on the mortgage debt (at a level you can afford, don't over-stretch yourself I'm not suggesting that) and the sooner you accept that the better your financial situation will be later in your life.
Yup, that's the way it's always been. It's why mortgages usually have a 25 year term. It's why inflation is so useful in circumstances where your "debt" is fixed at the outset and any increase in value lands in your own pocket (tax free). This is the factor which can make owning more attractive than renting. Gassing Station | Finance | Top of Page | What's New | My Stuff