New mortgage

[Whatmuff]

1 hour ago, DanBettin said:

That doesn't say much. Some of the world's greatest boxing coaches are terrible boxers. Are you saying you disagree that advice from a financial advisor is better than the advice from those that aren't qualified? 

You don't have to be qualified to have good advice. I have met some financial advisors that couldn't provide any half decent service. 

[100milesaway]

It says an awful lot to me.. How can you trust a person with your financial future when most of them don't have a bean in the bank.The money market and financial groups around the banking industry  are a law unto themselves. I have seen many elderly people given the most appauling advise that has cost them dearly.  Sometimes common sense is better than expensive "assistance" . Company advisors and accountants frequently make decisions that they wouldn't dream of suggesting if it was their own money,. from Auntie.

 

 

Edited February 12, 2018 by 100milesaway

[Cosd]

Though a lot of truth has been said around mortgages and living beyond ones means, one major point I haven’t seen anywhere (but I accept is still a gamble) is the rate in which house value has gone up in the last 30-40 years and how much profit has been there to be made. 

 

My beleif is there is no right or wrong way to do it. One should do what one feels is right for them. There are so many factors that come into play, with salary and interest rates only being part of the equation. Hindsight is a wonderful thing, foresight is another thing altogether. Only time will tell you whether you made the right choice for you. 

Edited February 12, 2018 by Cosd

[RockySpears]

4 hours ago, NorfolkAYA said:

No that's absolutely rubbish, if I was paying £500 a month @1.2% and it then went to 2.4% I would be paying £506 not £1000. 

NO. sorry.  You have muddled thinking.

The   £500 is the interest.

Let us approach it from the other way round:

You have a mortgage for £500, 000 (you have a big house, or a small, London, studio apartment)

The interest rate is 1.2%, so each year the interest you pay is :-  £500,000 x 0.012 = £6,000 pounds per year interest only.

Each month, that is £6,000 divided by 12 = £500 interest only, per month.

Now the interest rate is 2.4%, so each year the interest you pay is :-  £500,000 x 0.024 = £12,000 pounds per year interest only.

Each month, that is £12.000 divided by 12 = £1000 interest only, per month.

This is why people need to understand what they are doing.  If interest rates were to "Normalise" for our fictitious, £500,000 mortgage holder, let's say 7%.

£500,000 x 0.07 = £35,000 per year interest or £2,916.66 per month.

Yours,

RS

[LondonLuke]

5 hours ago, NorfolkAYA said:

No that's absolutely rubbish, if I was paying £500 a month @1.2% and it then went to 2.4% I would be paying £506 not £1000. 

Hilarious. 

Know when to walk away, know when to run. 

[DanBettin]

 

13 hours ago, Whatmuff said:

You don't have to be qualified to have good advice. I have met some financial advisors that couldn't provide any half decent service. 

That's purely anecdotal. Is your point that there are bad financial advisors, just as there are in any profession?

 

13 hours ago, 100milesaway said:

It says an awful lot to me.. How can you trust a person with your financial future when most of them don't have a bean in the bank.The money market and financial groups around the banking industry  are a law unto themselves. I have seen many elderly people given the most appauling advise that has cost them dearly.  Sometimes common sense is better than expensive "assistance" . Company advisors and accountants frequently make decisions that they wouldn't dream of suggesting if it was their own money,. from Auntie.

 

 

Again, are we concluding that there's no point in financial advisors or not? And again, you seem to be basing your opinion on what you 'have seen', it's all just anecdotal. I've seen bad financial advice too. I've also seen good (reputable and recommended) financial advisors save people a lot of hassle and, more importantly (in my opinion, at least), armed with the facts of the latest legislation. Which matters, a lot. It's their trade to keep upto date with new laws, guidelines and opportunities. The good ones will do this, and know a ton more than PW members, the bad ones won't, granted, but as I've said there are good and bad in any profession - so that ain't saying much.

[JohnfromUK]

I have used (one of the major names) 'financial advisor' firms for all my life.  I have stuck with them - and overall I have been pleased with the result.  I set targets, the main one of which was to be in a financial position to retire at 60.  It worked and I did.  The result could have been achieved at lower cost, but it could also have been missed.  Had I done my 'own thing' (rather than a fixed payment to them monthly) I might not have been disciplined enough to keep it up, or I might have made the wrong investments, or taken the wrong path on the balance between tax relief 'on the way in' (pensions) and 'on the way out' (ISA and PEP).

I have run their 'plan' past a relative who is financially very knowledgeable and worked in the city in a senior role.  Their advice has always been 'passed' by him as sound, though with caveats that I am paying significantly for the service.

Their people are (or at least give the appearance of being) quite well paid - and the overall firm have done well (as witness by the price of their own shares) - and you could argue that this has been at my expense.  Well - it achieved what I set out to do, so I'm satisfied.

[DanBettin]

28 minutes ago, JohnfromUK said:

I have used (one of the major names) 'financial advisor' firms for all my life.  I have stuck with them - and overall I have been pleased with the result.  I set targets, the main one of which was to be in a financial position to retire at 60.  It worked and I did.  The result could have been achieved at lower cost, but it could also have been missed.  Had I done my 'own thing' (rather than a fixed payment to them monthly) I might not have been disciplined enough to keep it up, or I might have made the wrong investments, or taken the wrong path on the balance between tax relief 'on the way in' (pensions) and 'on the way out' (ISA and PEP).

I have run their 'plan' past a relative who is financially very knowledgeable and worked in the city in a senior role.  Their advice has always been 'passed' by him as sound, though with caveats that I am paying significantly for the service.

Their people are (or at least give the appearance of being) quite well paid - and the overall firm have done well (as witness by the price of their own shares) - and you could argue that this has been at my expense.  Well - it achieved what I set out to do, so I'm satisfied.

Absolutely. You pay for the advice, but if it's good advice it's worth it and has the potential to save you money, so arguably there's no cost. I don't really use their apparent wealth as a metric to how valuable their advice is (to an extent ). I'm also happy to be trained at my gym by a personal trainer that may not look as in shape as others. It helps, but I appreciate there are legitimate reasons why; in the case of financial advice - the advisor may not have the capital I do so may not be able to generate the funds I can to run a plan/schedule that they'd recommend for me.

And I stress again, up-to date knowledge is critical. My sister rang me for advice on her up-coming mortgage application since I only recently (year and a half ago) applied for mine. I told her I'm reluctant to give her advice because things change so fast and to speak to my financial advisor instead. I did make suggestions as to what I thought he'd advise (i.e. what he told me a year and a half of go), all of which was out of date. Things had changed that fast. She took a totally different direction to what I would've recommended if I was adamant I knew best. She now has the house.

[Deker]

On 2/10/2018 at 21:49, team tractor said:

I’ve just added 3 years to my mortgage and don’t regret it. I love my house , it’s perfect for me . 

I see loads of people trying to pay them off early . Why ? 

Yeah you can save money but then they buy nice cars instead that loose money. 

 

At at the end of the day you have to live somewhere so make it something you want .

 

I paid mine off as soon as I could as I live on my own as when my previous employer went into administration it hit home how easy it was to lose my house through no fault of my own  didn't want to have to go through that again.

 

Also, there's a calculator on Money Saving Expert which showed you how many years you can knock of your mortgage by just overpaying 10% once you realise how much interest is being paid it gets addictive

[Whatmuff]

On 13/02/2018 at 09:11, DanBettin said:

 

That's purely anecdotal. Is your point that there are bad financial advisors, just as there are in any profession?

 

Again, are we concluding that there's no point in financial advisors or not? And again, you seem to be basing your opinion on what you 'have seen', it's all just anecdotal. I've seen bad financial advice too. I've also seen good (reputable and recommended) financial advisors save people a lot of hassle and, more importantly (in my opinion, at least), armed with the facts of the latest legislation. Which matters, a lot. It's their trade to keep upto date with new laws, guidelines and opportunities. The good ones will do this, and know a ton more than PW members, the bad ones won't, granted, but as I've said there are good and bad in any profession - so that ain't saying much.

Absolutely, there are some bad financial advisors and the people on this forum may have some really good advice which could be far better than some financial advisors. I'm not saying they're all bad but I am saying just because someone holds a qualification it doesn't mean they will give the best advice. This news article from today shows my argument quite well.

Edited February 15, 2018 by Whatmuff

[team tractor]

2 hours ago, Deker said:

 

I paid mine off as soon as I could as I live on my own as when my previous employer went into administration it hit home how easy it was to lose my house through no fault of my own  didn't want to have to go through that again.

 

Also, there's a calculator on Money Saving Expert which showed you how many years you can knock of your mortgage by just overpaying 10% once you realise how much interest is being paid it gets addictive

Mines only £500 a month so I won’t worry  

i like a cheap mortgage.

my sister died 20 years ago this week so I live for the now i guess  

[bornfree]

I managed to pay my mortgage off in ten years. Luckily I had a job with unlimited overtime and I worked 12 hour days 7 days a week iam glad I did it because I just hated the idea of paying interest.

[Lloyd90]

On 12/02/2018 at 21:04, RockySpears said:

NO. sorry.  You have muddled thinking.

The   £500 is the interest.

Let us approach it from the other way round:

You have a mortgage for £500, 000 (you have a big house, or a small, London, studio apartment)

The interest rate is 1.2%, so each year the interest you pay is :-  £500,000 x 0.012 = £6,000 pounds per year interest only.

Each month, that is £6,000 divided by 12 = £500 interest only, per month.

Now the interest rate is 2.4%, so each year the interest you pay is :-  £500,000 x 0.024 = £12,000 pounds per year interest only.

Each month, that is £12.000 divided by 12 = £1000 interest only, per month.

This is why people need to understand what they are doing.  If interest rates were to "Normalise" for our fictitious, £500,000 mortgage holder, let's say 7%.

£500,000 x 0.07 = £35,000 per year interest or £2,916.66 per month.

Yours,

RS

To be fair to NorfolkAYA I’m going to say he proposed a repayment mortgage. 

Also not many people own a £500,000 house.

My brother is a mortgage broker and roughly you can lend 4.75x your income or joint income (if applying with a partner) BUT expenses debts etc are all taken out before the sum is timed by 4.75. 

The average household income in the UK is apparently only £28,000 a year! 

Let’s just assume two people are applying and they both earn £25,000. I think this is somewhat generous based off the average household income. I know often one person earns more than £25k but I also think it’s quite rare that both people are on a good wage. 

Assuming they have no car debt or other big expensive ensues - £50k x 4.75 = £237,500. 

They would put down their deposit - and have the maximum loan. 

Over 30 years at 1.3% REPAYMENT, they would pay £797. 

If interest rates doubled - to 2.6% - they’d pay £951. 

If interest rates doubled again - so 4x the initial rate - to 5.2%, their payments would be £1,304. 

This is all repayment as well so their loan amount would be reducing, therefore those payments would be even less. 

£797 - £1,304 is a big jump but it’s not doubled their payment and the interest rate has quadrupled. 

 

Now for your example - for someone/ a couple to have a £500,000 mortgage, they would need an income of £105,263 - either jointly or solely if a single applicant. 

Do you know many people who have that income? 

Is someone was on PAYE for tax and earned £105,263 a year (highly doubtful for tax purposes but let whist assume they’d pay the most tax possible). 

They would be taking home £5,648 a month after taxes and NI etc. That’s assuming they don’t have a much more tax efficient way of being paid their wage in place. 

So their mortgage payment (albeit interest only in your calculation) would be 51.6% of their take home was every month. 

Whilst high that generally sounds like lots of people mortgage payments, and thats without them paying off any of the loan and reducing the debt whilst the rates are low. 

[400_racer]

On 2/13/2018 at 09:11, DanBettin said:

 

That's purely anecdotal. Is your point that there are bad financial advisors, just as there are in any profession?

 

Again, are we concluding that there's no point in financial advisors or not? And again, you seem to be basing your opinion on what you 'have seen', it's all just anecdotal. I've seen bad financial advice too. I've also seen good (reputable and recommended) financial advisors save people a lot of hassle and, more importantly (in my opinion, at least), armed with the facts of the latest legislation. Which matters, a lot. It's their trade to keep upto date with new laws, guidelines and opportunities. The good ones will do this, and know a ton more than PW members, the bad ones won't, granted, but as I've said there are good and bad in any profession - so that ain't saying much.

 

How do people recommend selecting a financial adviser to ensure (as far as is possible) you end up with a 'goodun'?  

Obviously you can ask around friends/family, but just wondered if there are other things that can be checked or looked into before picking someone.

 

 

[DanBettin]

14 minutes ago, 400_racer said:

 

How do people recommend selecting a financial adviser to ensure (as far as is possible) you end up with a 'goodun'?  

Obviously you can ask around friends/family, but just wondered if there are other things that can be checked or looked into before picking someone.

 

 

Good question, not sure - I've been fortunate enough to have been recommended ours by multiple people his company had helped with various things.

[JohnfromUK]

25 minutes ago, 400_racer said:

 

How do people recommend selecting a financial adviser to ensure (as far as is possible) you end up with a 'goodun'?  

Obviously you can ask around friends/family, but just wondered if there are other things that can be checked or looked into before picking someone.

 

 

You might start by reading this;

https://www.moneyadviceservice.org.uk/en/articles/choosing-a-financial-adviser

[243deer]

1 hour ago, 400_racer said:

 

How do people recommend selecting a financial adviser to ensure (as far as is possible) you end up with a 'goodun'?  

Obviously you can ask around friends/family, but just wondered if there are other things that can be checked or looked into before picking someone.

 

 

You meet several and use your own instincts to judge them if you have not had a personal recommendation. I am in the process of buying my first house and despite having a recommendation I have also met with 2 other advisers. It turns out the the recommendation was spot on in terms of the deal I can get, the professionalism shown and the speed of response. With one adviser I had to wait 2 weeks for an appointment and then he kept me waiting 1/2 an hour (eating into what little shooting time I get at the moment) - unlikely in those circumstances that he will get any of my business. I had popped all 3 names into searches to see if there were any negative comments about any of them - there were not - but one has now.

[400_racer]

Thanks for the input guys, will go meet a few and continue to read up