I wholeheartedly agree. I wasn’t even aware a 35 year mortgage term existed.
We have 5 years left on this house, then we’ll sell both and find our forever home and retire early.
That's unusual - I thought the max multiplier was about 6x income at the moment (gradually up from 4-4.5x post financial crisis).The bank is willing to lend my step daughter (with 2 kids split 50/50 with her x) 250k when she earns 35k (over 35 years),
I cannot help feel these low interest rates are going to cause an issue further down he line.. Not that I have a clue when or how
I wholeheartedly agree. I wasn’t even aware a 35 year mortgage term existed.
We have 5 years left on this house, then we’ll sell both and find our forever home and retire early.
The bank is willing to lend my step daughter (with 2 kids split 50/50 with her x) 250k when she earns 35k (over 35 years),
I cannot help feel these low interest rates are going to cause an issue further down he line.. Not that I have a clue when or how
It may be because of the term length... Affordability is to do with monthly payments rather than size of the loan i.e they will let you borrow more if over a longer period as payments are same as smaller loan over shorter period
Are you sure about that?Seems some banks offering 7-9 x now
Are you sure about that?
Mine was about 4.75* our combined earnings and I thought that was high to be honest. I haven't really heard of over 5.5x for fairly usual <100k salaries
Aye those seven times rates as I recall are fixed for 35 years at a (relative to current levels) terrible rate of 3 or 4% APR? - which would be massive amounts of interest on a 7* mortgage. Mines 1.64% fixed for 5 years ( at 75% LTV)Yes, my better half works at a specialist finance company. I say banks I should really say some lenders.
See Habito as an example https://www.theguardian.com/busines...uk-home-prices-as-habito-launches-7x-mortgage for 7 times. Others are offering 7-9 times.
Most sensible lenders will offer 3-5 times. On my first house I borrowed 4 times. Current house 2 times (29 currently).
The one thing about these big lends is they are fixed for 30-50 years in terms of rates, so at least you know what you are paying... If you find a house that will increase in value well, you could still be better off based upon interest rates and inflation.
Aye those seven times rates as I recall are fixed for 35 years at a (relative to current levels) terrible rate of 3 or 4% APR? - which would be massive amounts of interest on a 7* mortgage. Mines 1.64% fixed for 5 years ( at 75% LTV)
I get what you mean though, generally the market is trending towards higher and higher multiples and the only thing sustaining this is low interest rates. I know a lot of people (myself included) would struggle with 5+% interest rates!
The habito thing is cruel. I'm very much opposed to having job dependent multipliers.
It absolutely makes sense to lenders. But it's yet another divide in haves/hav nots.
Pushes up prices again. But now if you don't have one of the good jobs you fall even further behind.
If I had access to 7x salary I could have my forever home now. The benefits are insane if you can get that multiplier.
Obviously this is assuming rising prices, which is generally the trend over the long term
Aye changing to 5% for me adds about £800 a month (1200 to 2000). Bit spicy! But hey I live in what most people could consider a "forever home" when the renovating is finished..Just did the maths. 1.6 to 2.6 is 100ppm difference.
5 percent would add 300. Not actually as bad as I thought. But still, it's a lot to chuck away every month. Especially with NI hit coming soon.
The habito thing is cruel. I'm very much opposed to having job dependent multipliers.
It absolutely makes sense to lenders. But it's yet another divide in haves/hav nots.
Pushes up prices again. But now if you don't have one of the good jobs you fall even further behind.
If I had access to 7x salary I could have my forever home now. The benefits are insane if you can get that multiplier.
Obviously this is assuming rising prices, which is generally the trend over the long term
Does it matter? If renting is more expensive than buying, why in the world wouldn't you buy?!
Would you actually want a 7x loan over 35 years hanging around your neck just to fulfil the goal of obtaining a "forever" home?
I ran a quick calculation and the repayments would be over 50% of our take home compared to around 20% currently. This would limit our quality of life in other areas and/or our retirement plans (goal to retire at 55 or earlier). Seems like a horrible idea to me unless your current accommodation is awful.