Simon C

Ok so I'm renting at the momment and I'll be a first time buyer.

What is an acceptable morgage rough calcualtion?

Looking at properties about 100 - 130k. A colleague who earns 2k more than me bought 8 months ago for the first time.


I'm wondering how the hell he affords it. I know he put up 12k, but even so thats still over 4x his salary.

I don't want to exced the magic 4 times, or on a base rate rise I'm heading for financial doom.

beal

iTrader: (1)

Have a gander at this;
Mortgage Calculator

boxst

Hello

I would imagine your friend took an interest only mortage. The calculator above is pretty good.

Steve

MikeCardiff

iTrader: (2)

Personally I wouldnt suggest going over 3.5x - as you are looking at places under £130K I assume you arent earning massive money, so the less you borrow the better.

Also compare what your outgoings are now, and what they will be if you take the mortgage - remembering that as well as the mortgage you will be paying for life insurance, house insurance, and repairs or maintenance that the house needs etc...

When we bought we were offered some daft multiples, which meant if we had taken it we could have bought a huge house, and had a massive mortgage with massive monthly payments and would have been stuffed if either one of us ever lost our jobs. In the end, our mortgage worked out at approx 2.1x our joint income.

MikeCardiff

iTrader: (2)

Forgot to add - dont work out your figures based on advertised mortgage rates - go to a lender and see what ACTUAL RATE you can get. Most of the really low deals are for people remortgaging ( or who have a huge deposit ) as the lenders try to nick business from other lenders by offering attractive rates.

As a FTB, particularly if you dont have at least 10% deposit you will probably find the rate is quite a bit higher than the 'best deals' you see advertised.

StickyMicky

interesting thread, as i had planned to pop onto the property ladder for the first time this year, until i used my little nest egg for something else

anyway i did a rough calculation and @ 6% interest, i could buy the property next door to me for an extra 137/month over what i pay to rent so figured it was worth it, although it did need tidied up a bit so probably why the price was nearly 20k down compared with the other local one

no idea if the 6% is accurate or not, just did a quick average for rates and used one of the figures, will spend the next year building up a deposit again and check in a years time

Luminous

iTrader: (3)

I've just been offered a remortgage from Bristol and West. To be honest its a total mess as they cannot seem to pin down what percentage rate they want me to pay.

1) They say its fixed at 5.95%
2) Then they say is APR is 6.10% variable
3) They claim the BOE base rate is 7.25%
4) They say their SVR rate is 1.75% above base
5) Finally, at the bottom of the quote it actually says what I will be paying, and this is £1 less per month than I currently pay. I'm currently fixed at 5.5%, so this makes no sense to me at all
6) At least they have managed to make it clear there are no charges payable at all with this deal (apart from 5% early redemption within the fixed term)

Simon C

Mike, in an ideal world I wouldn't, however salarays and house prices aren't equal.

To be 4x my salary and on a 130k property I am still looking at a deposit of 30K.

Mitchy260

All very well until your partner gets pregnant, pushing that multiple up quite a bit.

I wouldn't reccomend using a wife/GF salary to start a mortgage. I was in mine for about 6 mths when missus learned she was up the duff.

As a consequence, about £20k down per year. Thankfully i got the mortgage based on my salary only, otherwise i think we would have been up sh*t creek

I assume O.P is on £25k pa so around £1500 take home pay, or around £1400 if on a pension scheme.

£130,000 mortgage will cost you around £850 per month at todays rates, add the £150 council tax on top and there's £1000 before you even start.

£4-500 left for debts, bills, food, insurance, petrol etc. It will be a struggle.

Also, try and limit your budget to £124,999, you'll save yourself the stamp duty

Good luck

Simon C

Spot on Mitchy.

On those maths Impossible.

MikeCardiff

iTrader: (2)

Mitchy, the amount we borrowed multiple wise was worked out so that if either one of us wasnt working, we could still comfortably pay the mortgage and bills and have enough to live off.

Being boring and sensible we took into account any future things like pregnancy, redundancy, illness etc...

Even though we did get a joint mortgage, we could still have got the mortgage for the house on just my salary, and it would still have been less than 3.5x.

I would agree though that people shouldnt work out how much they can borrow based on their joint income and assume they will always be earning that amount.

Simon C

Jut completed a quick google search.

Using this site ( I don't know if its realisitic) Mortgage Comparison of First Time Buyer Mortgages - Money Extra

If I can come in with a deposit greater than 10k (errrk thats my new car gone then) then the rates for an intrest only mortgage drops right into my affordable catagory (400 - 500).

Jamescsti

Interest only is probably a bad idea, if you can't afford a repayment mortgage then I probably would look for something cheaper, unless you are expecting a windfall or big pay rise in the future

Simon C

There isn't anything cheaper except renting!!! Thats the frigging problem!!

Whats peoples views on 100% morgages for a few years then change.

Scoobychick

iTrader: (1)

*Nudge* Houseboat *Nudge*

Simon C

*nudge* firearms holder *nudge*

David Lock

Oh dear........

Could I refer you to the Scoobynet Manual, Chapter 14, Para 426 (b) sub-section 56d - Advertising - Marine & River Craft - purchase and hire thereof.

I shan't report you this time............

Simon C

David, it was a bloody joke!!!!

David Lock

Simon - I sympathise in the sense that I'd like my kids to get on the "ladder" in the next year or so but there isn't a snowball's chance that they will be able to do this (unless I snuff it ). Where abouts are you and what sort of property are you after?

I don't want to start another property prices in freefall discussion because they just get silly and no one really knows anyway. BUT it does seem likely that prices might drop a bit and it all helps. I wonder if your colleague's property that he bought 8 months ago has dropped in value slightly? dl

David Lock

I had just about worked that one out........

But do check the Manual - it's after the chapters on Rottweiler and Cat threads

d

Scoobychick

iTrader: (1)

to you Big D

Simon C

I'm in the North Herts area, basically about the only hope I have is a 1 bed flat, maybe a 2 bed if 1 comes up at the right price but needs some work doing to it.

I'd lke a freehold place, but for the money I'd be looking at, there is no chance.

miss*scoobygav555*

Me and gav have just put an offer in on our first house which has been excepted and is all on the move and it helped us loads having a big deposit to put down, otherwise I think we might have struggled!! I'm just trying to get to grips with all the different mortgages etc, we're off to see a mortgage advisor on Tuesday to get it sorted!! Still so excited!!

MikeCardiff

iTrader: (2)

I seriously wouldnt bother with an interest only mortgage on the type of property you're looking at. FTB flats are hugely overpriced at the moment, and will be the first to drop in value.

Buying interest only when prices are at their peak, and the mortgage rate isnt very low isnt any better than renting, particularly if you go for a 100% mortgage. You could be paying out for 2 or 3 years, not actually own any of the flat, and end up with a load of negative equity on a place that is worth a load less than you paid for it.

Interest only could be worth it if you have a decent deposit and you use it as a stopgap, but really all you are doing is renting the flat from the mortgage lender rather than a landlord, paying out more money and you're liable for any repairs on it.

Speaking very generally I would say if you can only buy somewhere by buying a) interest only, b) on 100% mortgage or c) by borrowing more than 4x your income ( or any combination of above ) then you really should wait until you are in a better position.

If I was you I'd stick with renting for now rather than buying a small flat that you will want to move out of within a couple of years.

We both rented ( seperately and together ) since we were 16. I would have liked to have bought somewhere years ago, but didnt earn enough, then put myself through Uni, then didnt earn enough again, so it wasnt possible.

What we did do though is rather than taking the traditional route of buying a tiny cheap flat, keeping it for 3 years, then getting a bigger mortgage to buy a 2 bed semi for another few years, then getting an even bigger mortgage to buy somewhere bigger as a 'family home' as most people do is miss out the first 3 or 4 rungs of the property ladder and bought a decent size detatched house as our first.