Salop Matt Posted February 20, 2008 Report Share Posted February 20, 2008 Well me and the Mrs are just thinking of moving in around september ish ! For a 100% mortgage of 124k for a house (2 bed)at 124k 5years fixed rates and mortgage over 30years monthly repayments are around £750. both of us one 15k which after tax is just shy of 1,900 combind. We should do it but it will take some getting used to constantly watching the pennys ! Quote Link to comment Share on other sites More sharing options...
al4x Posted February 20, 2008 Report Share Posted February 20, 2008 If you have an 'interest only' mortage, you're not really buying it, you're just paying rent - except you get the repair bills too!. OK, if the house price raises you'll pocket the increase. But unless you then move to a cheaper house, your next property's higher purchase price will just swallow up any profit that you think you've made. And if they don't raise: you sell up (if you can) you're left in negative equity. Shortening the term of your repayments is the best way to save money. We took a £135k mortage on our last house (in Jan 2004) on a 15 year term. The over-payments we have/are going to make will mean we're mortage free in March/April 2014. Currently, the interest rate we earn on our ISA's etc is greater than we pay on our fixed rate mortage, too. that is sort of true with Interest only mortgages, but if you intend moving a few times and improving properties you don't need to worry too much about the capital aspect of it. I'm on an offset interest only mortgage at the moment so anything I have in savings or my current account effectively gets knocked off the mortgage for interest purposes. I can also pay any amount off the capital that I like so I can manage things a bit while still keeping money aside for renovating the house. This saves paying tax on savings and the amount of money to do the house up is too much for an ISA and keeps everything flexible. Quote Link to comment Share on other sites More sharing options...
LEFTY478 Posted February 20, 2008 Report Share Posted February 20, 2008 that is sort of true with Interest only mortgages, but if you intend moving a few times and improving properties you don't need to worry too much about the capital aspect of it. I'm on an offset interest only mortgage at the moment so anything I have in savings or my current account effectively gets knocked off the mortgage for interest purposes. I can also pay any amount off the capital that I like so I can manage things a bit while still keeping money aside for renovating the house. This saves paying tax on savings and the amount of money to do the house up is too much for an ISA and keeps everything flexible. Whilst I understand why a property developer would want to keep the maximum amount of cash available for the building costs and that their interest payments are usually kept to a very short period, in relation to domestic buyers. Off-Set loans tend to have a higher than normal interest rate attached. I suspect that your rate is a good deal higher than the 4.65% five year rate that I'm paying, while mine and my wife's ISA's (also fix rate, for 2 years) are paying 6.15% tax free. Quote Link to comment Share on other sites More sharing options...
al4x Posted February 20, 2008 Report Share Posted February 20, 2008 4.65 is a very good rate at the moment but I'd guess its got either a high application fee or redemption amount. Mines about 5.75% and on a tracker as fixing it was going to cost a fair bit to either apply or redeem. Its on offset at the moment while the savings account is high before the work is done as it goes down I'll swap it to a straight interest only at a lower rate. I'm on a theoretical 80% loan to value at the moment and that ratio will have improved a lot by the time it comes to swap them. Quote Link to comment Share on other sites More sharing options...
Big_Sam Posted February 20, 2008 Report Share Posted February 20, 2008 (edited) I know its sounds nuts, but why would you want to buy a house and spend your life paying off £300k? Surely renting is cheaper in the long run? I mean £900 a month will get a lot of house up here anyway. I was paying £180 for a 2 bed place last year! :evilsmile: Edited February 20, 2008 by Big_Sam Quote Link to comment Share on other sites More sharing options...
LEFTY478 Posted February 20, 2008 Report Share Posted February 20, 2008 (edited) I intend to have spent no more than 20 years paying for it and hope to get another 40ish year rent free. Why do you wish to pay from a house 5 - 6 times over and still be left with sweet FA? Edit to add: £900 x 60 years = £648,000 and that's not allowing for any inflation in rental costs. Allowing just a 2% pa increase in rental costs and 60 years rent equals £1,231,757. Why buy: Go figure? Edited February 20, 2008 by LEFTY478 Quote Link to comment Share on other sites More sharing options...
al4x Posted February 20, 2008 Report Share Posted February 20, 2008 I know its sounds nuts, but why would you want to buy a house and spend your life paying off £300k? Surely renting is cheaper in the long run? I mean ?900 a month will get a lot of house up here anyway. I was paying ?180 for a 2 bed place last year! :evilsmile: the other side of this is buy now and sell when you retire and move into rented with a nice lump sum, unless you're very lucky landlords come and go so you'll rarely be secure renting. The other side of it is to me the buy to let market is dead on its feet at the moment with a lot of people including some big institutions getting out so rents could be going upwards Quote Link to comment Share on other sites More sharing options...
AdamC Posted February 20, 2008 Report Share Posted February 20, 2008 I see what you are saying about interest only, and agree for some it is not a good idea, but for those that go into it with a plan it is fine. I plan to spend 2 or 3 years getting the house up to scratch, adding at least a further room, and based on what other places in the area have sold for, will be worth an additional figure that is many times greater than what I put into it. Once the work is done, I will put the spare money a month into paying of the loans capital. I am very regimented with money and am comfortable doing things this way as I have a plan and will stick to it. I am only 27, so have time and age on my side. A friend however did the same thing, but left himself no financial room to do the work, then took out a loan to do some work, spent about half on the house and the rest, welll, him and his misses now have new snow boards and are currently snowboarding. This is clearly not the way to do it. Most mortgage products out there has its place if used correctly, the sad fact is a lot of people are too stupid to do this. Hence the reason every other TV add starts "Do you owe more than £5000, we could help....". Most of us have been stupid at some point with money, some are just more stupid than others. My wife was in terrible money trouble when I met her, but I sorted her out, and with her hard work and dedication, she is nearly out the red, and says she never wants another CC. Sound advice taking the mortgage over a longer period, if you are dedicated enough to make over payments when you can, as it gives you room to breathe when the heat is on! Quote Link to comment Share on other sites More sharing options...
LEFTY478 Posted February 20, 2008 Report Share Posted February 20, 2008 (edited) Agreed. Mortages are a tool and there are lots of different ones and not all of them are suitable for everyone. If you have a plan that fits you and you can stick to it, or you are able to reccognise when it's time to change, then they're a good thing. Many people bulk at the thought of spending £4/500 on a re-mortage, without appreciating the long term savings benefit. Edited February 20, 2008 by LEFTY478 Quote Link to comment Share on other sites More sharing options...
CARBINE Posted February 20, 2008 Report Share Posted February 20, 2008 I think the wages are **** compared to the outgoings and with every thing going up the country will go bust and then we are all in the pooh even the people with savings, might as well leave the country to the imports and sod off abroad. Quote Link to comment Share on other sites More sharing options...
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