Mortgages, Meh...

[killa]

Possibly one of the worst threads ever but I am in the dark on this subject.

I have a good idea what a mortgage involves but I am still pretty much in the dark about them.
This is all hypothetical so don’t have a go at me for asking.

So, you’re young, in love and looking to move into your first house together, you have (yourself) a small amount of debt, say within the 10K mark.
Some questions I would have in my head before I’d commit.

Should I get rid of the 10K debt before considering a mortgage?
Maybe trying to get rid of that 10K debt is close to impossible, so what then?
Can I include the 10K in the mortgage?
How long am I expecting to pay for this mortgage, for example 180K?
What happens if your not married but shi* hits the fan and you got to bail out?

Thanks

Killa
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Cleverly disguised as a responsible adult.
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[veeeffarr]

10k isn't a small amount of debt.

Think a mortgage is for 25 years and will be 3.5 times your annual wages or 2.5 if its a combined wage from a couple.

Don't shoot me if i'm wrong.

[veeeffarr]

Found some more info for you

[ash t]

Wahey something for me

Right then, A mortgage is based on what you earn. If you want a £180k mortgage, the total yearly income of the applicant (s) must be around 1/4 of that amount, so basicly, your wage, and whoever else is named on the mortgage, has to be earning a combined wage of around £50k per year.

It all goes on income and also, anything that you owe.

Regarding any debt you are in, most mortgage companies will ask that they have priority over any loans and other debts, so its best to get rid of debt.

Sorry if this is sketchy, I have only been a mortgage person for a few weeks!
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[ash t]

If you are married and shit hits the fan, Then you will either have to sell up and split the winnings, or one person buys the other persons half of the house.

Its not a case of "how long will it take to pay off £180k" its more a case of "how much can I afford to borrow and pay back over 30 years"


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[Kickstart]

Hi

General life time of a mortgage is 25 years. Can get them for longer or shorter durations (longer they are the more interest you pay overall).

To get a good deal you need a deposit, although plenty of places will give a 100% mortgage. You are not likely to get a mortgage for more than the value of the property.

Main 2 types of mortgage are repayment and endowment. Repayment ones are just like a loan where you pay off the capital. With an endowment you just pay the interest but also pay into a policy which matures when your mortgage comes to an end and should in theory cover the capital (good idea when the stock market is doing well as you are likely to get back more than enough to cover the capital, bad idea when the stock market is doing badly).

The general limit used to be 3.5 times income, but that was when mortgage interest rates were 2~3 times their current level (doesn't make much difference really, house prices are based on what people can afford to pay, so with lower interest rates people can afford to pay more and house prices go up). Although you can almost certainly afford to pay for a mortgage that is far above 3.5 times your income there is the problem that interest rates can go up. It would not take much of an increase for people to no longer be able to afford them, happens to enough people and house prices crash (crash is not that likely but some increase is probable).

All the best

Keith
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[killa]

This is all good, thanks people….
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[ash t]

Oh yeah. You can have up to 4 people on a mortgage too!
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When You're Starting To Choke, Take Some Pills With Your Coke, Its Hyserical

[colin1]

if you wanna get a house and have your gf live with you but dont wanna go halves on a house, you can do what I did and make it that you are the landlord and she pays you rent.

Its possible that if i hadnt done this, she could have had half my house when she left after living with me for 2 years. Im not quite sure about that though.

That raises another possibility.

You can get a buy to let mortgage. These dont depend on your income, but depend on rent you would be able to charge on the place.

Buy to let mortage would probably need a deposit.

It may be possible that you could get a buy to let mortgage if you find some mates to be tenants and you are a tenant too while also being the landlord.
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[flat spot]

A few things need adding I think.........

Normally it's 3.5 x your wages + 1 x her wage if you're buying together.

For a good interest rate 5% deposit is needed.
No deposit usually means higher interest rate.
For a buy to let you're looking at nearer a 15% deposit.

If you split, you split the house if both parties are paying the upkeep and bills evenly.

I doubt very much anyone will sell you an endowment policy anymore.
With a repayment mortgage (I have this) you pay off the a big % of the interest against a small % of the capital at 1st, then it eventually goes the other way.


Do ask how much the full payback amount is. Then decide do you want to kill yourself, or move to France.

[syl]

[TOM M]

Getting a mortgage seems a lot of hassle and a hell of a lot expense.

Wouldnt it just work out better to get a long term lease / rent??
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[carlnicholson...]

I was renting with my girlfriend, at £450 a month. This was the lowest rent anywhere in our area. We had no choice, as we couldn't afford to buy.

Or so we thought.

I found a house for shared ownership. Basically, a housing association own 3/4 of the house, and we buy the other 1/4 off the people currently living in it.

The seller wanted 20k for their quarter, so we only needed to borrow 20k which worked out at £115 a month. The housing association want £104 for their three quarters so the total cost of my house is £219 a month. The house is mine, I can do what I want to it, I have no landlord.

I had a pokey flat it a dodgy area where my bike was knicked for £450, and now have my own house in a lovely, quite nice area for £219.

Loads of people told us that shared ownership was dangerous and we can get kicked out etc,etc, All a load of bollox. I essentially own the house, and have the deeds. The housing association have no involvement, and just want to £104. Thats it.

I strongly reccommend it to any house buyer who has no savings, or like me, £15k debt!!!
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[Kickstart]

[colin1]

[Annabella]

Most estate agents have an independent mortgage adviser on site.

They will give you the best advice possible as they are heavily regulated.

What I will suggest is that you see a minimum of three.
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[instigator]

Say if someone bought a £35k flat, like I am looking to do.

Using the mortgage calculator, over 25 years at 5.5% you're looking to be paying £215 a month.

My questions are:

Can you take out such a long mortgage on such a cheap property if your salary is roughly £24k?

Also, what happens if I wanted to pay it off at a much quicker rate after a couple of months. Would you still have to pay off the £35k loan & 5.5% p.a over the whole 25 years? I like the thought of only spending £215 a month on a mortgage but perhaps if I get a bonus or something like that, can I chuck a bigger amount in one month?

Cheers

Greg - Really should go see a financial advisor.

[illusion]

35k flat?? You moving to Shetland? Where the hell can you get a 35k flat!
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[colin1]

[DAF]

Key thing about mortgages is to spend the time shopping around for the best deal for your own circumstances.

You can go and see an advisor or you can put in the legwork yourself. There's some useful links in some of the previous posts; I'll add one that I used - Moneyfacts

https://www.moneyfacts.co.uk/menus/main/menu_mortgages.htm

There's also a handy page for those not familiar with the house buying process.

https://www.moneyfacts.co.uk/guides/house_buy.asp

I also recommend Motley Fool for good advice in clear English. Scroll to the bottom of the page for specific advice on the very basics.

https://www.fool.co.uk/mortgages/mortgages.htm?NavLoc=TN&NavTo=mortgages&NavFrom=home

Buying is definitely worth it long term; you have your own property which will (hopefully) increase in value over the years. Also, you don't have to deal with greedy landlords who try and rip you off your deposit because there's a few plates missing from the inventory.

Good luck
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[killa]

This has helped me out a great deal guys, worth printing off I think.
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Cleverly disguised as a responsible adult.
Bike:- Yamaha TRX850 | Killas Biking History | Killas Gaming History | Killas autmotive history

[Kickstart]

[illusion]

Is it better to rent for a couple of years whilst saving a deposit or go for a 100% mortgage?
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[colin1]

100% mortgage i reckon, cos u can always change ur mortage later to one with better rates.
its amazing how much u shell out over a couple of years renting

i doubt i got the best deal on a mortgage when i got mine, but ive saved a lot more than i would have renting

for me a mortgage is actually quite a bit cheaper too and i get more than i would renting
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colin1 is officially faster than god

[syl]