Buying and selling house questions

[Maccy]

Agree to disagree, we took out a 35 year mortgage - doesn't mean we were living beyond our means.

 

[toshj]

I disagree with what you are saying.

Basically if you cannot afford to pay the payments on a 25 / 30 year mortgage and have savings. then you can't afford the house IMO.

So if a big purchase does come along your savings should cover it. Not what you should be paying towards your mortgage.

My first ever mortgage like I said was 21 years. I also make regular investment payments. I also pay into savings and I also make over-payments. I also run 2 decent cars and go on high end holidays.

So if you can't make a big bill on a 35 year mortgage without having to stop over payments then I would say there is an issue there. That is the problem these days. People don't see the property ladder as an ladder. They want the biggest home right now. Stick it on 35 years then have nothing else to show for it.

I was thinking of upgrading my home and moving up the ladder. I decided even though I have the equity and the means to do so I'd rather just get this paid off a bit more so my next move up is extremely easy for me and I have zero issues with money.

So you're essentially saying that absolutely everyone should be highly fiscally conservative and show limited ambition when it comes to property?

We've taken a 35 year mortgage as it gives us plenty of flexibility on a monthly basis - and we're using those savings to fully renovate the place. We've got enough in the bank to go for a 20 or 25 year mortgage, but it would be an extremely restrictive route and would result in our property being a) worth less in 10 years time without the renovations and b) we'd miss out on living in an improved/renovated environment.

 

[Psycho Sonny]

So you're essentially saying that absolutely everyone should be highly fiscally conservative and show limited ambition when it comes to property?

We've taken a 35 year mortgage as it gives us plenty of flexibility on a monthly basis - and we're using those savings to fully renovate the place. We've got enough in the bank to go for a 20 or 25 year mortgage, but it would be an extremely restrictive route and would result in our property being a) worth less in 10 years time without the renovations and b) we'd miss out on living in an improved/renovated environment.

you are completely different from his post though.

he said he took 35 years so that if a big bill comes up he has money for it.

you have savings he doesn't.

so completely different.

 

[Amplus]

I disagree with what you are saying.

Basically if you cannot afford to pay the payments on a 25 / 30 year mortgage and have savings. then you can't afford the house IMO.

So if a big purchase does come along your savings should cover it. Not what you should be paying towards your mortgage.

My first ever mortgage like I said was 21 years. I also make regular investment payments. I also pay into savings and I also make over-payments. I also run 2 decent cars and go on high end holidays.

So if you can't make a big bill on a 35 year mortgage without having to stop over payments then I would say there is an issue there. That is the problem these days. People don't see the property ladder as an ladder. They want the biggest home right now. Stick it on 35 years then have nothing else to show for it.

I was thinking of upgrading my home and moving up the ladder. I decided even though I have the equity and the means to do so I'd rather just get this paid off a bit more so my next move up is extremely easy for me and I have zero issues with money.

Get the feeling you are living in an absolute hell hole paying off your £200 a month mortgage on your one bedroom flat, with the heating off in the winter and the home lit by candlelight, so you can sit there all smug about how much money you're saving

I jest of course. But everyone here, including myself, can afford less then 35 years who have taken it on. But have chosen to take the longer mortgage so they can save at the start to improve the home with the knowledge 35 years isn't really 35 years. Not sure why you are not getting this.

 

[Mercenary Keyboard Warrior]

I disagree with what you are saying.

Basically if you cannot afford to pay the payments on a 25 / 30 year mortgage and have savings. then you can't afford the house IMO.

So if a big purchase does come along your savings should cover it. Not what you should be paying towards your mortgage.

My first ever mortgage like I said was 21 years. I also make regular investment payments. I also pay into savings and I also make over-payments. I also run 2 decent cars and go on high end holidays.

So if you can't make a big bill on a 35 year mortgage without having to stop over payments then I would say there is an issue there. That is the problem these days. People don't see the property ladder as an ladder. They want the biggest home right now. Stick it on 35 years then have nothing else to show for it.

I was thinking of upgrading my home and moving up the ladder. I decided even though I have the equity and the means to do so I'd rather just get this paid off a bit more so my next move up is extremely easy for me and I have zero issues with money.

My first was 20 years so anyone taking more than that was fiscally irresponsible and couldn't afford it.

See how idiotic that sounds?

 

[Psycho Sonny]

My first was 20 years so anyone taking more than that was fiscally irresponsible and couldn't afford it.

See how idiotic that sounds?

that's not what i said. i said if you can't afford to pay a big bill on a 35 year mortgage then you have issues

 

[Mercenary Keyboard Warrior]

that's not what i said. i said if you can't afford to pay a big bill on a 35 year mortgage then you have issues

Its just rubbish, the term is practically irrelevant, You arbitrarily decided 21 years is ok, its not 20 is the correct value, yeah Im being a douche, I say its 20, so I say your over exposed having to take 21 years
Peoples definition of comfortable is different, you can get mortgages upto 99 years now, thats age 99.
Would I say thats wise, not really could be massive amounts of interest, but its irrelevant, a hell of a lot of people are in positions that would put them under stress should a significant event happen, 20 years, 25 years, 35 years, irrelevant

 

[Semple]

I disagree with what you are saying.

Basically if you cannot afford to pay the payments on a 25 / 30 year mortgage and have savings. then you can't afford the house IMO.

So if a big purchase does come along your savings should cover it. Not what you should be paying towards your mortgage.

My first ever mortgage like I said was 21 years. I also make regular investment payments. I also pay into savings and I also make over-payments. I also run 2 decent cars and go on high end holidays.

So if you can't make a big bill on a 35 year mortgage without having to stop over payments then I would say there is an issue there. That is the problem these days. People don't see the property ladder as an ladder. They want the biggest home right now. Stick it on 35 years then have nothing else to show for it.

I was thinking of upgrading my home and moving up the ladder. I decided even though I have the equity and the means to do so I'd rather just get this paid off a bit more so my next move up is extremely easy for me and I have zero issues with money.

Give it a rest man, you've got dozens of people on here telling you that you're talking **** (as per usual).

You even said in one of your earlier posts about the banks checking your finances to ensure affordability, you think they'd lend big amounts to people if they weren't sure they couldn't afford it. This isn't the 90's where you could go and get a 110% mortgage, lenders are much more ruthless today.

 

[Psycho Sonny]

Its just rubbish, the term is practically irrelevant, You arbitrarily decided 21 years is ok, its not 20 is the correct value, yeah Im being a douche, I say its 20, so I say your over exposed having to take 21 years
Peoples definition of comfortable is different, you can get mortgages upto 99 years now, thats age 99.
Would I say thats wise, not really could be massive amounts of interest, but its irrelevant, a hell of a lot of people are in positions that would put them under stress should a significant event happen, 20 years, 25 years, 35 years, irrelevant

yes the term is irrelevant

if you can't afford to have savings and pay the mortgage and have to then take a 35 year mortgage. then you can't afford the house.

in order to be able to afford the house IMO you should be able to pay it off within a reasonable amount of time. term doesn't matter as you can re-negotiate and overpay.

however if you take a 35 year deal and then have no savings - i would say that is an issue.

 

[Mercenary Keyboard Warrior]

yes the term is irrelevant

if you can't afford to have savings and pay the mortgage and have to then take a 35 year mortgage. then you can't afford the house.

in order to be able to afford the house IMO you should be able to pay it off within a reasonable amount of time. term doesn't matter as you can re-negotiate and overpay.

however if you take a 35 year deal and then have no savings - i would say that is an issue.

Rubbish

If you can pay the mortgage and the bills you can afford it. Thats the basic affordability check.
The banks do this plus the stress test.

Outside that its purely your definition of affordability, and how if someone fails to meet your criteria you say they cannot afford it. Its just plain wrong.

Is it brilliant fiscal responsibility to have no safety net, nope, but is it affordable yes.

The speed you pay it down is purely one of appetite for risk and priority for maximising free cash vs interest
The longer the term the more risk.

 

[IvanDobskey]

If you ask me, get the longest term you can as long as there is overpayment flexibility. Gives you more in your pocket every month, then you can choose what to do with your money. Just bear in mind that the more you overpay early doors, the better.

 

[Syla5]

This thread:

Everyone to Psycho_Sonny: "Your advice is laughably bad and off topic or making massive assumptions"

Psycho_Sonny to Everyone: "You're all wrong, OP is doomed, no one will every pay of their 35 year mortgages because no-ones circumstances change. DOOM TO ALL"

 

[Mercenary Keyboard Warrior]

If you ask me, get the longest term you can as long as there is overpayment flexibility. Gives you more in your pocket every month, then you can choose what to do with your money. Just bear in mind that the more you overpay early doors, the better.

Its definately an approach, I actually pay 10% overpayment (of original sum borrowed) per year (my max). Four years into my mortgage and it will be paid off in just over 7, assuming nothing changes.
Originally I said reduce the term, but after a bit I thought, doh thats silly, so now they keep the term the same. Technically I could have about 6 years of payment holiday or something, and meet my already reduced end date of 2032.
My original date was 2035, but it reduced to 2032 on my first overpayments.

My only minor difference of opinion is that some people are terrible with money, give them any excuse to kick the can down the road and they will. Those people probably should try to pay of earlier with a shorter term, there wont be many people who do not face redundancy, illness etc during their working life. Whilst times will still be hard should that happen, being mortgage free, or at least having a relatively low mortgage will help at that time. Its really simply down to fiscal responsibility.
Was an article on BBC the other day, someone affected by the Thomas cook issue, stuck abroad and could not afford the flight home, it mentioned another couple who had to borrow to fly home.
These sorts will be the sort who will take maximum term, and hence have a longer period of risk, than sucking up the pain of paying it down faster with a shorter term, they just aren't the sort to make over payments.

 

[200sols]

This thread:

Everyone to Psycho_Sonny: "Your advice is laughably bad and off topic or making massive assumptions"

Psycho_Sonny to Everyone: "You're all wrong, OP is doomed, no one will every pay of their 35 year mortgages because no-ones circumstances change. DOOM TO ALL"

Like 99.9% of threads he posts in then.

 

[Psycho Sonny]

Like 99.9% of threads he posts in then.

I have the ability to read between the lines unlike most in here.

"I have barely any savings so wondering"

that is a direct quote from OP

He also thought adding another £100K on would only cost him an extra £250 a month or thereabouts. I said the interest alone would be around £200+ a month.

So this is someone who isn't exactly clued up when it comes to borrowing money and has zero savings.

Therefore advising him to take on a 35 year mortgage IMO is bad.

You have to treat the OP with the info received from them.


Had he came in here and said. I earn X amount. I have savings of X amount. I am also investing into Y and Z. I now want to move up the ladder on a 35 year mortgage and have the ability to overpay by X amount every month. Then my advice would be totally different.

But nothing the OP has said so far makes this sound like a good idea.

But let's not let the facts get in the way here.

Everyone's suggestions have been based on their own circumstances not OP's.


The fact he has zero savings when living in his current home would suggest he can't really afford to add £100K on top. Not without putting a lot of stress on his income.

 

[ozaudio]

i don't even own a house or ever reply to sonny posts, i havnt even read more than this page, but... he sort of has a point. like somebody who buys a car but cant really afford anything else because of it. doesn't service it because they cant afford to, i suppose it the same with a house. make a commitment to something for 35 years and then in them 35 years not really be able to buy anything expensive because all your moneys going into paying your house of. this is something i have thought over the last few years when thinking of buying a house. do you live in some were that most of you class as a rubbish hole, but have money to do as you please in life, or have a nice big house but cant afford time of work sick because youll misss a mortgage payment lol .

 

[Mercenary Keyboard Warrior]

Your still wrong. Combined income OP said was around £45k, which assuming something like £25k&£20k split is about £3100 per month

Op says they spend about £1000 on bills inc mortgage, he also has a £250 loan.

Combined thats 1250/3100 = 40% outgoings to incomings, thats low, thats no disaster level of risk point.

If they added combined £500 more (covering mortgage and associated increased bills) thats 1750/3100 = 56%, thats still relatively low. Its also around the point someone on £25k per year would take home so yes it would be very tight, and obviously the person on (assumption) £20k would not be able to cover it.

So it seems they spend around 40% of income on housing and car loan, rest is arguably unallocated spending and it would be a trade off between doing stuff like cars/gyms/whatever and switching some of that to a mortgage.

 

[Mercenary Keyboard Warrior]

i don't even own a house or ever reply to sonny posts, i havnt even read more than this page, but... he sort of has a point. like somebody who buys a car but cant really afford anything else because of it. doesn't service it because they cant afford to, i suppose it the same with a house. make a commitment to something for 35 years and then in them 35 years not really be able to buy anything expensive because all your moneys going into paying your house of. this is something i have thought over the last few years when thinking of buying a house. do you live in some were that most of you class as a rubbish hole, but have money to do as you please in life, or have a nice big house but cant afford time of work sick because youll misss a mortgage payment lol .

But they wont lend to allow you to put yourself in that position, they stress test and ask for a breakdown of expenditure.
Sure 15 years ago you probably could get yourself into that position, now it would be pretty difficult without life changing, or some serious interest rate changes.

 

[Psycho Sonny]

Your still wrong. Combined income OP said was around £45k, which assuming something like £25k&£20k split is about £3100 per month

Op says they spend about £1000 on bills inc mortgage, he also has a £250 loan.

Combined thats 1250/3100 = 40% outgoings to incomings, thats low, thats no disaster level of risk point.

If they added combined £500 more (covering mortgage and associated increased bills) thats 1750/3100 = 56%, thats still relatively low. Its also around the point someone on £25k per year would take home so yes it would be very tight, and obviously the person on (assumption) £20k would not be able to cover it.

So it seems they spend around 40% of income on housing and car loan, rest is arguably unallocated spending and it would be a trade off between doing stuff like cars/gyms/whatever and switching some of that to a mortgage.

"I plan to have kids in the next year"

Put that into your equation now and tell me it's a good idea. The above is a direct quote from OP.

 

[Syla5]

I have the ability to read between the lines unlike most in here.

"I have barely any savings so wondering"

You have the ability to incorrectly fill in the blanks, with assumptions that help you further your own, often incorrect points.

Again comparing with the OP when we did our move and 40 year mortgage we had no savings.... Your ability to read between the lines means nothing at all.