House Deposit

My wife and I have been saving for four years and had to be pretty frugal most of the time. Instead of going on normal holidays, we go and visit relatives and stay with them. I started making my own beer as the prices at the pub are now ridiculous. My wife even took a basic mechanic course and now services her own car.

We asked for cash instead of gifts when we got married as we currently live in a furnished rental so have no need / space for anything else.

We actually have enough for a deposit now but we've decided not to buy at the moment. The interest on our savings currently covers about a third of our rent, despite the current low rates.
 
Mr-White... If you do have a load of cash just sat around, you could invest it into a flat and get some tenants in to pay the mortgage?

If you like the idea of being a landlord that is...
 
Ciphon said:
Mr-White... If you do have a load of cash just sat around, you could invest it into a flat and get some tenants in to pay the mortgage?

If you like the idea of being a landlord that is...
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Sounds like a bloody good idea this :-)

I'll rent off you at cost ;-)
 
Take the money.

We took out a loan just after our mortgage was approved and paid fees and stamp duty on credit cards, bum clenching times.
 
[DOD]Asprilla;24589707 said:
Take the gift but keep saving. It could be 8 months before you have to hand over any cash anyway so then you could either give it back or use it for renovations that may be required.

Our deposit was my wife's redundancy pay and since the in-laws paid for the wedding, my parents paid our stamp duty. Getting on the ladder is hard so take all the help you can get.
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This for the first part.

Am in a similar boat as in saving for deposit for me and Mrs S when we get back down to Plymouth. Have the fortunate / unfortunate position that as I will be working for a different company when I get down there, will have to have been in the job for at least 6 months before we would be eligible to go for a mortgage, so going to save like crazies.

If the offer of an assist came along from any of our families, then we would be biting their hands off at the chance.
 
I have just bought my first house.

A few keys points:
1) Take the gift
2) Set up a direct debit to pay them back - Even if it is only £50 per month
3) Buy before this new help-to-buy scheme comes out in full force as it makes more people able to afford a home and will push the bottom of the market up.
4) Renting is urinating money up the wall - Get yourself on the housing ladder :D.
 
If you take on a mortgage at the moment, surely the only way interest rates can go from here is up seeing as they are pretty much rock bottom?. When I bought my first place the rates were about 8% and currently I could have remortgaged at something like 2%, about a quarter of my original loan fee for interest.

So 25 years of praying that rates don't rise - not a situation I'd like to be in, I'd rather rent than be a 1st time buyer. Rents can only go up in line with wages because if people can't afford them = no rent cheque for the LL. Mortgages can go up to beyond people's "affordability" level, the bank will just repossess the house if arrears amount to approx 3-6 months of payments.
 
OpenToSuggestions said:
3) Buy before this new help-to-buy scheme comes out in full force as it makes more people able to afford a home and will push the bottom of the market up.

4) Renting is urinating money up the wall - Get yourself on the housing ladder :D.
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Ahh, #3 has been a thought of mine, and I couldn't agree with your more! It's April that it kicks in, isn't it? #4... Yep!


MatteH Oxford said:
If you take on a mortgage at the moment, surely the only way interest rates can go from here is up seeing as they are pretty much rock bottom?. When I bought my first place the rates were about 8% and currently I could have remortgaged at something like 2%, about a quarter of my original loan fee for interest.

So 25 years of praying that rates don't rise - not a situation I'd like to be in, I'd rather rent than be a 1st time buyer. Rents can only go up in line with wages because if people can't afford them = no rent cheque for the LL. Mortgages can go up to beyond people's "affordability" level, the bank will just repossess the house if arrears amount to approx 3-6 months of payments.
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I would MUCH rather be on the housing ladder than rent. For the rough house price we're looking at, interest rates could go up to 15% and we'd still manage.

We're looking at getting a 5 year fixed mortgage at about 4.3%. In those 5 years, we should easily be able to clear another 20%+ off the mortgage, allowing us to remortgage with at 30%+ deposit at hopefully a similar rate.

You are absolutely right though, interest rates are only going to go one way from here, but that just gives me even more motivation to get into a 5 year fixed deal as soon as we can.
 
Ah, but you're presuming that the value of your property is going to stay the same or go up in that time period, if it drops then your loss of equity could wipe out anything that you've paid off the mortgage.

If rates hit 15%, house prices would drop like a stone, the interest portion of your mortgage more than would treble going from 4.3-15% - how would that compare to the cost of renting?. Heck, prices dropped on average 20% from 2007-'09 until base rates were slashed in steps down to 0.5%, from 5.75%. A base rate of 5.75% was nothing, average rates are something like 8-9%.

I read a report somewhere recently that a lot of people would in trouble if base rates went up to a lowly 3%, given the sort of spread between base rates & mortgage rates.
 
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MatteH Oxford said:
Ah, but you're presuming that the value of your property is going to stay the same or go up in that time period, if it drops then your loss of equity could wipe out anything that you've paid off the mortgage.

If rates hit 15%, house prices would drop like a stone. Heck, prices dropped on average 20% from 2007-'09 until rates were slashed in steps down to 0.5% from 5.75%.

I read a report somewhere recently that a lot of people would in trouble if base rates went up to a lowly 3%, given the sort of spread between base rates & mortgage rates.
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You're right, I am presuming prices are going to stay roughly the same or increase a little.

I've just read that the help to buy scheme is going to be running from the 1st of Jan 2014 for 3 years (http://www.bbc.co.uk/news/business-21849974), which will surely only push prices higher, and maybe interest rates will increase a little a long with it, causing, like you say, house prices to drop a little. The two will essentially nullify each other and prices will stagnate.

Just out of curiosity, do you rent or own?
 
OpenToSuggestions said:
4) Renting is urinating money up the wall - Get yourself on the housing ladder :D.
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That old chestnut :)

Renting is no more a monetary bladder function, 'dead money' or whatever people want to call it than the money you have to pay a lender above and beyond the amount you borrowed. It's a payment for a service, just like interest payments on mortgage loans are.
 
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HangTime said:
That old chestnut :)

Renting is no more a monetary bladder function, 'dead money' or whatever people want to call it than the money you have to pay a lender above and beyond the amount you borrowed. It's a payment for a service, just like interest payments on mortgage loans are.
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Yeah, but, the house is yours to what you want with and you don't have to live under a landlords thumb. Its far, far better to own your house than rent, that is, if you are settled in your income and location and not nomadic.
 
HangTime said:
That old chestnut :)

Renting is no more a monetary bladder function, 'dead money' or whatever people want to call it than the money you have to pay a lender above and beyond the amount you borrowed. It's a payment for a service, just like interest payments on mortgage loans are.
Click to expand...

I did the sums this week on a £150k mortgage at 6% over 25 years, and the total repayment value was £290k. :eek:

At the moment, if I buy my current flat with the 10% deposit I have, I'll end up paying £230/month more than the rental payment.

Whilst I'm not advocating that renting is the better option, paying £290k for a £150k property is truly depressing. I suppose the light at the end of the tunnel is that a) I'll own it after 25 years and b) it'll more than likely be worth more than £290k by then.
 
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HangTime said:
That old chestnut :)

Renting is no more a monetary bladder function, 'dead money' or whatever people want to call it than the money you have to pay a lender above and beyond the amount you borrowed. It's a payment for a service, just like interest payments on mortgage loans are.
Click to expand...
When you look at rent prices vs typical mortgages payments (at least in the Aberdeen city and shire, don't see it being any different anywhere else), what people are asking for in rent is more or less the same that you would be for the mortgage payment, including the capital repayment.
 
I look at renting vs owning slightly differently...

When you are paying off a mortgage, the interest you pay each month is essentially your "rent", any money paid on top of that can be considered an investment.

So, in our case, we're currently paying £650 a month to live in a small 2 bed flat, plus having to save a great deal to afford our deposit.

If we were to buy a £200,000 house with a 10% deposit, our monthly repayments would be roughly £981, £645 of which is interest ("rent").. leaving us £5 a month better off.

The additional £336 can be considered an investment, and is far less than what my partner and I put into savings at the moment.. leaving us £100's a month better off overall.

So, we would have far more money to spare each month, be living in a bigger and nicer house, have a garden, and we could do what we want with the property. Win win in my mind.
 
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