It's much easier to look at figures over a month or longer it allows you to average out the weeks where you go out a lot and the ones where you stay in etc, this should give you a much better idea of what you can afford. Unfortunately as a first time buyer you would almost certainly have to make some sacrafices especially if you are regularly blowing 30%(ish) of your take home on nights out.
Mortgages
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It's much easier to look at figures over a month or longer it allows you to average out the weeks where you go out a lot and the ones where you stay in etc, this should give you a much better idea of what you can afford. Unfortunately as a first time buyer you would almost certainly have to make some sacrafices especially if you are regularly blowing 30%(ish) of your take home on nights out.
good god. £150,000 house paying off over 30 years comes to £908 a month. Looks like im renting for life!
Especially like you say, u can stand to loose 25k on a 200k property
Yeah Jonny it's such a hard thing to gauge, 2 years ago everyone was saying the same thing...'house prices are unsustainable etc etc' and yet they kept rising, but i can really understand your concerns.
According to the statistics coming out at the moment tho it seems like things are slowing down somewhat and in some cases (flats in Leeds and some other city centres) prices are falling, we may not see a crash on the scale of 1989 as interest rates and inflation are much lower than they were then but i nor anyone else knows for sure. Again these trends vary geographically and there will always be exceptions to the general trends.
Sorry i dont have a crystal ball but we may see prices come down a bit next year, i really hope we don't end up in panic mode tho....the press does tend to stir this up and make things worse than they are tho (my personal opnion, apologies to any journalists out there!).
According to the statistics coming out at the moment tho it seems like things are slowing down somewhat and in some cases (flats in Leeds and some other city centres) prices are falling, we may not see a crash on the scale of 1989 as interest rates and inflation are much lower than they were then but i nor anyone else knows for sure. Again these trends vary geographically and there will always be exceptions to the general trends.
Sorry i dont have a crystal ball but we may see prices come down a bit next year, i really hope we don't end up in panic mode tho....the press does tend to stir this up and make things worse than they are tho (my personal opnion, apologies to any journalists out there!).
Geeza, yes it's a sad sad reality for first time buyers. 6 years ago that £150K property would have been about £70K. It's why you see so many people with so much money to waste on expensive watches and cars. When their mortgage only costs them and their wife £500 per month between them you have a very very high disposable income. For those off the housing ladder you'd have to earn nearly double what they do to sustain the same lifestyle. Check out my blog on my website for a better explanation, it's the second one down here.
However what goes around comes around and the wealth will come back your way, unfortunately it'll be when your folks die and you inherit a large amount relative to times gone past based on their property value. The only people who really lose out are those with no family that own and people new to the country, immigrants, because they have nothing. Look at it on the grand scale of things and you can see why we need so many immigrants to sustain the economy.
However what goes around comes around and the wealth will come back your way, unfortunately it'll be when your folks die and you inherit a large amount relative to times gone past based on their property value. The only people who really lose out are those with no family that own and people new to the country, immigrants, because they have nothing. Look at it on the grand scale of things and you can see why we need so many immigrants to sustain the economy.
Aye, average price for a 2bed in Cambridge is now £258k
.Bog - about first time buyer mortgages, are these just a rip off or the only way to get on the ladder? And what about 30-50 year terms, rather then the standard 25?
no there can be some good deals on 1st time buyer mortgages such help with valuation fee/legal fees. The bigger the deposit you have though you will find there are more deals available to you.
yeah deffo look at 30 year term, i have never done one longer than that but i believe you can - you need to think about going over the long term carefully tho (ie when do you want to retire and have you looked at how much more interest you will pay over the long term)
i would say to people that if you are taking a 30yr + term mortgage now then maybe have a plan to reduce it in the future if you can afford to either by overpaying or changing the term next time you move or remortgage and then over the long term you will reduce what you pay in interest. That all depends if you can afford to do that though but you might be in a job where you get decent promotion or wage increases that allow this in the future or you marry and suddenly have 2 wages!
everyone is different so that's where its important for me to get to know a client's needs and circumstances well.
yeah deffo look at 30 year term, i have never done one longer than that but i believe you can - you need to think about going over the long term carefully tho (ie when do you want to retire and have you looked at how much more interest you will pay over the long term)
i would say to people that if you are taking a 30yr + term mortgage now then maybe have a plan to reduce it in the future if you can afford to either by overpaying or changing the term next time you move or remortgage and then over the long term you will reduce what you pay in interest. That all depends if you can afford to do that though but you might be in a job where you get decent promotion or wage increases that allow this in the future or you marry and suddenly have 2 wages!
everyone is different so that's where its important for me to get to know a client's needs and circumstances well.
Are you talking about the new one's built off cromwell road near the Greens Gym?
Also remember for a first place that you probably wil only be living in for a few years interest only mortgages can work out better for you 
As your mortgage payments on a full repayment are loaded to pay more of the interest off at first that extra £200-£300 a month you're spending on a full repayment mortgage isn't all going towards paying off the capital. I worked it out that for a few years you'd be better off pocketing the difference and sticking it in a high interest account, the amount you'd have would be more than the amount you'd have paid off your mortgage.
Plus for a first place you're highly unlikely to ever be there long enough where you'll have to worry about paying the full amount off, and all being well when you do sell it'll have risen in value.
Of course I could have been wrong, but when I was getting a mortgage it seemed to be about right
Personally I think rates will drop again over the next year or so and prices will not crash, just steady out, possibly dipping slightly.
As your mortgage payments on a full repayment are loaded to pay more of the interest off at first that extra £200-£300 a month you're spending on a full repayment mortgage isn't all going towards paying off the capital. I worked it out that for a few years you'd be better off pocketing the difference and sticking it in a high interest account, the amount you'd have would be more than the amount you'd have paid off your mortgage.
Plus for a first place you're highly unlikely to ever be there long enough where you'll have to worry about paying the full amount off, and all being well when you do sell it'll have risen in value.
Of course I could have been wrong, but when I was getting a mortgage it seemed to be about right
Personally I think rates will drop again over the next year or so and prices will not crash, just steady out, possibly dipping slightly.
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I would recommend London and Country personally very helpful and whole of market too.
very helpful and whole of market too.
Soldato
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As per Bod, I do mortgages (or can should I say) through my CeMAP. Bod's advice is pretty much bang on, I took a 30 year term on a £145k house (massive 3 bed semi, just to annoy the southerners
) with plenty of room to go up to 6 beds (2 of the 10 in our grove are 6 bed now). It costs me £814.16 per month, though I am on a good rate at the mo. Taking interest only for the first few years only works if a) you WILL get a decent payrise in that time and b) you're financially responsible. I'm a branch manager for a major high street bank and wouldn't take int only to start tbh.
) with plenty of room to go up to 6 beds (2 of the 10 in our grove are 6 bed now). It costs me £814.16 per month, though I am on a good rate at the mo. Taking interest only for the first few years only works if a) you WILL get a decent payrise in that time and b) you're financially responsible. I'm a branch manager for a major high street bank and wouldn't take int only to start tbh.And also c) that the prices don't drop on you because you'll get stuck there until the prices come back up, or you'll take a painful loss if you want to upsize to start a family etc. Worth thinking abut because you probably won't want to be stuck in a 1 bedroom flat in 5 or 10 years time. Same for 100% mortgages. Dangerous, dangerous time to take one of them in my opinion.
But whatever happens to the house price in say 2 years, the difference is still best off in the bank than the house short term. It's only good shortish term, but looking at the figures I don't see why it's a bad thing.
Unless I worked things out wrong when I was looking it was something like £300 extra for a full repayment, yet in the first couple of years you only paid off about 2k of the capital a year. After a few years when you sell you should have more in the bank to go towards your next place than you would have in equity in the house.
I'd only recommend this though with a healthy deposit
Plus I was going on advice from family who have been in the business a number of years.
Unless I worked things out wrong when I was looking it was something like £300 extra for a full repayment, yet in the first couple of years you only paid off about 2k of the capital a year. After a few years when you sell you should have more in the bank to go towards your next place than you would have in equity in the house.
I'd only recommend this though with a healthy deposit
Plus I was going on advice from family who have been in the business a number of years.
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I would recommend London and Country personally
I used them last time, would also recommend. We originally went for a 30 year mortgage (100%-ouch), then after 2 years we re-mortgaged and got a 25yr deal with a better rate (we are paying almost exactly the same each month-just goes to show the difference ~1% in interest rates can make)
Soldato
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Can I add a caveat to that? IFA's will often lend more, I've seen them massage figures to fit. Here's a clue, if a major financial institution with 100's of years of experience doesn't believe it is financially responsible to lend more than £x then an IFA is unlikely to have more experience. Yes, the IFA can get the mortgages that a bank/building soc can't but you risk getting sub-prime and into dangerous territory. Hell, Northern Rock would lend huge salary multiples in this way and look at where they are now - £50bn of treasury funds proping them up.
I found the calcs to be reasonably accurate, but this varied from lender to lender. We didn't have a deposit either, so we were always going to have to get a 100% (some offered me 110% as a teacher/professional) mortgage over 35 years.
I had a good idea how much my bills would be, which has been accurate, roughly, so far having been in the house and had the first months bills. My mortgage is £572 on 100k, which is quite good I think (paying fixed rate 5.7 ish %), but we managed to get a vendor gifted deposit of 3% which lowered our rate below the usual 6-6.5%.
Bills, including food so far, are about £1000; that doesn't include personal bills prior to moving in (like car, credit card, loan, childcare - totalling £600 or so). I take home £1300 or so, the missus about £500... so it's quite tight as you can see.
Luckily, I saved my wage rise difference (£500) which has so far remained mostly unscathed, even in the face of a larger first month payment. The missus saved about £1000, which went on solicitors, searches and surveys.
If my family hadn't have been so generous (free leather settee + chairs, dining suite, freezer etc) and if we hadn't made regular monthly trips to Ikea, we couldn't have done it. Even if you can't get a deposit, you need to have some savings behind you; or a good family!
I had a good idea how much my bills would be, which has been accurate, roughly, so far having been in the house and had the first months bills. My mortgage is £572 on 100k, which is quite good I think (paying fixed rate 5.7 ish %), but we managed to get a vendor gifted deposit of 3% which lowered our rate below the usual 6-6.5%.
Bills, including food so far, are about £1000; that doesn't include personal bills prior to moving in (like car, credit card, loan, childcare - totalling £600 or so). I take home £1300 or so, the missus about £500... so it's quite tight as you can see.
Luckily, I saved my wage rise difference (£500) which has so far remained mostly unscathed, even in the face of a larger first month payment. The missus saved about £1000, which went on solicitors, searches and surveys.
If my family hadn't have been so generous (free leather settee + chairs, dining suite, freezer etc) and if we hadn't made regular monthly trips to Ikea, we couldn't have done it. Even if you can't get a deposit, you need to have some savings behind you; or a good family!
I haver to disagree with you on this one Jonny69.
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Consider Scenario1, where prices will rise by say 50% over the next 5yrs.
1 bed property right now is £100k.
2 bed property in same area is £150k.
You buy a 1 bed property now for £100k
In 5yrs time your property is worth £150k
In 5yrs time the 2 bed property is £225k.
In a situation where you have have big price rises, you now have to come up with an extra £75k to upgrade to the 2 bed property.
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Now consider Scenario2, where prices fall by 50%, over the same period (5yrs):
You buy a 1 bed property now for £100k.
In 5yrs time your property is worth £50k
In 5yrs time the 2 bed property is £75k.
In a situation where you have have big price falls, you now have to come up with an extra £25k to upgrade to the 2 bed property (as opposed to an extra £75k, if prices had risen).
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Hence, given the above 2 scenarios, providing you will be selling and then quickly buying another property to live in, it will work out cheaper for you if prices fall. If they rise, you WILL pay extra. You will "feel" wealthier, when in fact because of your higher mortgage premium, you are actually poorer. House price falls can be a good thing, providing they dont help the economy into a recession.
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There is no need to stay in the property, even if you have a negative equity; you can sell and immediately buy another property, quite possibly moving your mortgage over to the new property.
Rising prices donot benefit those who upgrade and/or buy properties to live in. Propery developers or those are building a portfolio are those who benefit most during times of house price inflation.
Yes, but that has not put mortgagees at any risk at all. If NR goes under, then the mortgages will be sold to another institution who will carry on the mortgages. The mortgagees are not at risk if NR goes under. Even the savers are not under risk as the Bank of England has guaranteed to return their funds, if NR fails.
Aye, average price for a 2bed in Cambridge is now £258k
Platypus, given that you have a car, I would urge you to buy further out (cheaper prices). I know its not ideal, but paying £250k for a property close to the town centre, as a first time buyer is very risky and will put you on the rails. Your life will be tough and you may even have to sell the boat