Mortgages - how much to borrow
- Thread starter NotAGolf
- Start date
We worked out how much we could afford to pay and the worked back and came out with a number for how much in total we could borrow. Ultimately the Bank will probably lend you far more than you can reasonably pay back.
Between us we were taking home 3.5k a month and I sat down and worked out that about 1100 - 1200 would be a sensible limit. That worked out to borrowing about 180-200k over 30 years. The bank said we could have up to £290k if we wanted it =/. We got the £33k together and borrowed £185k to get a place for £218k. Now our mortgage is £1098 a month and to run the house excluding food costs us another £400.
Go backwards and get your limit, don't get an amount and then try and make your life fit around it.
Between us we were taking home 3.5k a month and I sat down and worked out that about 1100 - 1200 would be a sensible limit. That worked out to borrowing about 180-200k over 30 years. The bank said we could have up to £290k if we wanted it =/. We got the £33k together and borrowed £185k to get a place for £218k. Now our mortgage is £1098 a month and to run the house excluding food costs us another £400.
Go backwards and get your limit, don't get an amount and then try and make your life fit around it.
Living in Wokingham/Reading £175k will get you a 1/2 bed apartment or a masionette if youre lucky
The advantage being that you have much greater earning potential, and are in a much more affluent part of the country with decent access to the capital. I know where i would rather be.
Nothing's stopping you moving. You pay your money and make your choice.
Soldato
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- 22 Feb 2008
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- 11,114
Just out of interest couldnt you rent the place out and find somewhere else to rent?
Just that way at least your current place would pay for its self and once the market has sorted its self out you can sell it on. In the mean time you can rent a place and still not be out of pocket. I mean a lot of places offer guaranteed rent schemes which are normally fee free for the first year at which point you swap them or take like 10% hit. I mean either way even it its costing a little bit each month at least your makeing a complete lost.
I understand from what your saying that it isnt the best area but I would look into that first for sure.
Back to the topic....
We did consider it, but it's just not feasible. The amount we'd have to charge for rent to have anyone in their right mind move in wouldn't even cover the mortgage payments. On top of that you obviously have landlord responsibilities which we just don't have the time to handle ourselves.
It's a real ****bird of a situation to be in. Feels like what should have been the most carefree and enjoyable years of my life have been ****** away.
Associate
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- 7 Jan 2010
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- 886
As you have the 25% deposit, I think you should take a look at the one account. It's an offset mortgage which is basically a current account with a large overdraft. The interest rate is 3.75% variable, hasn't changed since I started 16 months ago.
The interest is calculated daily on your current balance and charged monthly, so the more money you pay in, the less you have to pay in interest.
I was in a similar situation to you, bought with my girlfriend, was also 24 at the time. Had around £50k deposit and bought a house for £189k in the end. My monthly payments are around £400, and going down each month!
Let me know if you want to know more.
The interest is calculated daily on your current balance and charged monthly, so the more money you pay in, the less you have to pay in interest.
I was in a similar situation to you, bought with my girlfriend, was also 24 at the time. Had around £50k deposit and bought a house for £189k in the end. My monthly payments are around £400, and going down each month!
Let me know if you want to know more.
Thanks for all the replies guys.
Sounds like good news overall. I was expecting replies telling me to keep dreaming! To try and answer all the questions:
A fair chunk of the deposit is inheritance but I've basically saved almost my entire income this year with very little expenditure thanks to being able to live rent free at home so I've added a bit to that.
We're buying in West Sussex, in (or more realistically near) one of the most expensive cities.
Seriously wish the property down here was the same price as up north! A 4 bed detached for 175k
We'll definitely looking to go fixed for as long as possible, although as said 4 years will probably be the limit, by which time hopefully our income will have improved a fair bit.
I think a good idea would be to get a 30 year mortgage instead of 25. That will lower the repayments for the time being and should cover us on any interest rises over this period as now is the time we're most likely to struggle. Then after our fixed period ends, if we are living comfortably we re-mortage with only a 20 year period to even it out, and if we're still struggling then leave it at that and resign ourselves to paying a bit more interest over the mortgage.
Sounds like good news overall
. I was expecting replies telling me to keep dreaming! To try and answer all the questions:A fair chunk of the deposit is inheritance but I've basically saved almost my entire income this year with very little expenditure thanks to being able to live rent free at home so I've added a bit to that.
We're buying in West Sussex, in (or more realistically near) one of the most expensive cities.
Seriously wish the property down here was the same price as up north! A 4 bed detached for 175k
We'll definitely looking to go fixed for as long as possible, although as said 4 years will probably be the limit, by which time hopefully our income will have improved a fair bit.
I think a good idea would be to get a 30 year mortgage instead of 25. That will lower the repayments for the time being and should cover us on any interest rises over this period as now is the time we're most likely to struggle. Then after our fixed period ends, if we are living comfortably we re-mortage with only a 20 year period to even it out, and if we're still struggling then leave it at that and resign ourselves to paying a bit more interest over the mortgage.
We're on a 35 year mortgage (which basically takes us to retirement) to keep things manageable for the time being. All being well when our ten year fixed period ends our income will have improved significantly and we can look at a shorter term on the next mortgage.
All ok getting a long term fixed mortgage IF you plan to stay in the house the entire time. Mortgages are non transferable right? Well they are not in the States I think. (probably wrong)
Pretty sure ours is transferrable.
Associate
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- 6 Aug 2010
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- Aberdeen
The majority of mortgages are transferable but it should say in the info/website if it is or not.
so how does it work if buying a new house? surely its only transferable if it is for the exact same amount? or do you just add on to it with a different interest rate etc ?
I'm with Santander, and this is what they say:
"The transferred rate only covers the existing mortgage amount.
If you need to borrow extra money to cover the costs of your new property, you will need to transfer the whole of your current balance and then choose a new product available from our current mortgage range for the extra amount."
Yeah, that sounds similar to what we were told.
I work with a guy from Dewsbury, he tells me it's a complete dump?
As with anywhere it depends on exact location. Some parts of Leeds are awful, others very nice. Most parts of Manchester are awful but there are some decent bits. To finally prove the point there are even some half decent places in London if you look hard enough.
There are places here I wouldn't choose to live and some that are respectable with good transport links.
You don't do shopping, socialising, etc. here.
Another option is to keep it at 30 years and if and when you have more money overpay. Any overpayment will come off of the capital you borrowed.
In our first year we payed off 13k and only 1.5-2k of that actually came out of the capital. This year we are overpaying £100 a month (possibly more if we can afford it + savings) which will mean we pay off nearer 3k this year. Ultimately it reduced the time you have to pay for or the interest you pay.
On our mortgage paying off an extra £100 a month will save us like 48k over the life of the mortgage.
Following on from Gillys comment, the internet and the world as a whole are convinced Croydon is the biggest dump in the South but there are really some great places in the borough to live with excellent transport links, schools, shopping and community. As always though the nicer the area the more its going to cost you.
Also it completely depends on what you are going to be doing. Some people will call a town a dump because it only has 2 nightclubs, if you don't do nightclubs then its actually bordering on a positive.
Croydon does have its problems don't get me wrong. But in most cases its no worse than a lot of other towns.
I think they will try and nudge it up at some point this year but it will almost certainly have to come back down again very quickly. The Japanese have been trying to get away from a similarly low interest rate for years but everytime they touch it inflation goes crazy so they have to drop it.
