Mortgages, Meh...

[cqueen]

Sorry to drag up an old thread,

I'm looking into mortgages and I dont understand how I'm supposed to get one as a first time buyer. I'm moving to Chester and I'm on around 25k.

Say I have £15k deposit, that leaves me with a mortgage of around £60k. WTF am I supposed to buy with £60k?! I've looked into the shared ownerships and there are none in my area.

A little help?

[syl]

[Kickstart]

Hi

£15k deposit would be enough for a £300k house (5% deposit is common). Realistically it should easily be enough for a house half that much.

Old rule used to be that they would give you 3.5 times your (single persons) earnings, so for you about £85k (plus your deposit so £100). However interest rates are a lot lower now and many will give more (seen 9x earnings, but think that would be fairly mad, be around £950 a month interest only for you).

All the best

Keith
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[colin1]

[cqueen]

Oh, well thats good news, how much would the repayments be on a £150k mortgage?

Chester isnt too expensive (unless you're renting). But you wont get anywhere in the UK for £60k, unless its some crack heads garden shed (no offence to anyone living in a <£60k house!).

[Kickstart]

Hi

Say current interest is 5.5%, so about £8250 interest a year, which is £690 a month. Add to that the amount to pay it off rather than just clear the interest.

And there are plenty of places where £60k would buy you a nice house.

All the best

Keith
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Traxpics, track day and racing photographs - Bimota Forum - Bike performance / thrust graphs for choosing gearing

[syl]

The repayment depends on how much you borrow, how long you borrow it for and the rate of interest. The rate of interest can vary over the mortgage (although you can fix/cap it in the short or medium term). Over 25 years, the interest rate can vary wildly - but in 20 years time the repayments on a 100k mortgage will be much less significant due to the effects of compound inflation (and if interest rates are high, inflation will be high and it will be even less significant).

At 5% over 25 years, each 10k you borrow will cost you £59.12 per month.

If interest went up to 7.5% it would cost you £74.75
If you paid over 20 years (@ 5%) it would cost £66.83

Have a play with this:

https://www.bbc.co.uk/homes/property/mortgagecalculator.shtml

For a first time buyer on a 165k house with a 150k mortgage, for a person earning 25k/year, Norwich and Peterborough will give you a mortgage at 4.89% (base rate tracker) which would mean approximately £877 per month.

More information here:

https://www.yourmortgage.co.uk/
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[cqueen]

Right well I cant afford that. Looks like I'm going to be renting untill I'm 35 years old. Jesus us young'ns have been screwed.

[Kickstart]

Hi

Not sure you are that screwed.

£25k a year is about £1500 take home a month. ~£875 mortgage gives you ~£625 left to live on. Allow £200 for food, £100 for council tax and £100 for utility bills and you are left with a little over £200 for petrol and yourself. Doesn't sound much, except that in a year you will have had a cost of living rise but the mortgage will be about the same. And you can always take in a lodger. And that is on a fairly expensive first house.

For comparison when I bought my first house it was £27k (cheap 3 bedroom terrace house). Interest on that at the time hit £330 a month, with another £37 for the endowment bit. So £367. My take home pay at the time was about £660. Given how little many costs have gone up in the mean time you are probably better off having spent £150k now on a fairly flash house than I was then buying a cheap house, and I suspect most people who got onto the housing ladder 15~20 years ago were in a similar situation.

All the best

Keith
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[numark1]

I can get a mortgage with hsbc at 19 on 18k a year for 80k.

My friends brother is a mortgage advisor and he said i could get up to £120 by i think the term he used was "massaging the figures" lol

[Spiral]

The way the house prices are increasing is ridiculous sooner or later the market will collapse and people will be paying say a 100k mortgage on a house that is only worth 80K, the government will have to step in soon to prevent this, especially now that the debt mark in the uk has hit the trillion mark.


The missus owns her own home well the mortgage is 10k (it was took out by her mom and dad many years ago) the house is worth 90k now, im getting a mortgage in my name for about 80k and hopefully in a few years we'll be able to sell both houses make a bit of a profit and have the cash to get a nice house and make our futures a bit more financially secure.
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[Psychofly]

I was in the same boat but we bought a much cheaper house about 4 years ago before prices rocketed.

Me and the ex had combined debts of just over £10k.
We took out a 105% mortgage with Northern Rock which works out at 95% secured mortgage and 10% unsecured loan. Both payments are calculated separately but the payment is one single combined payment.
We then remortgaged 2 years later to pay off all our debts by getting the same mortgage again but with the increase in value of the house we managed to increase our loan part of it to £15k. House was initially bought for £37.5k in 2002. 2004 when we remortgaged was worth £52k. Our payments went up from £235 to £395 but we were saving about £700 in debt payments each month so financially better off.
We split up December last year (not married and are lucky it's an amicable split so no hassle with backstabbing etc.) and sold the house last night for £69.5k. On the completion date (when the keys are handed over) the buyers mortgage company will transfer the £69.5k to our lawyers who will pay off our mortgage on our behalf, take their fees and transfer the remainder to an account of our choosing. At this point the house is legally no longer ours and we split the remainder of the cash in half and go our separate ways.
When we took out the mortgage our maximum we could borrow was worked out as 3.5 times my wage as the main income and 2.5 times the ex's wage and they take monthly debt commitments into account. If you can afford to put down a 5% deposit you'll get a much better rate and lower monthly payments but by the sounds of it you're in the same boat as we were. To be honest on a 100% mortgage some companies may see £180k as too much but Northern Rock were by far the best we found so it's worth giving them a shot - you can get an agreement in prinicple online which means they'll agree subject to references and credit checks to loan you up to a certain amount. The final checks etc. are done after you have an offer accepted on a house you want to buy. After the mortgage is accepted officially you can then sign the missives on the new house which makes the sale legally binding.. before this either party can pull out of the sale (this is under Scottish law - you'll need to check under English law because I know there is a difference at this stage but not sure what). Last I checked Northern Rock will do UP TO 120% mortgage but anything over 95% will be as an unsecured loan. By 100% the mortgage company means 100% of the buying price or 100% of the value given at the survey stage whichever is LOWER. e.g. if a house is valued at £180k when you get the house surveyed but you have offered £190k the 100% will be the £180k NOT the buying price if that makes sense.
That's a long post and I hope it makes some sort of sense.
Oh yeah and a mortgage is usually a maximum of 25 years (which is the standard length of a mortgage) I don't think you can stretch it much more than that if at all. Another point to remember is most companies won't touch you if you are working within a probationary period with a company. When we bought I was only in my job 1 month and I had to get a letter from work confirming that their was no 3 month probationary period like most companies have as a get-out clause when they hire new staff.

Good luck with the house buying.
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[EllioTT_GiXXeR]

I could go for £200k and only pay back £1300 per month then that will come down to about £800-900 after 2 years.

Doubt that is any help, but thats abit what its like over here.
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