Your chances of owning your own home?
- Thread starter PiKe
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Yeah he's not put his case very well, realistically on a 25yr repayment mortgage the first 5 years you are effectively paying off approximately the interest accrued over the term then starting to eat into the loan value. In real terms it's a split, your monthly payment is part interest part repayment for the 25 years.
No major issues, me and my missus bought our place middle of June. £146k with a 25 year term on a repayment mortgage (20% deposit). We fixed at 4.79% for 5 years, sure there could be better deals on a short term basis but at some point interest rate will rise and we wanted the security of knowing exactly how much a month we are paying for the next 5 years.
The people that put together arguments for renting, that's all well and good if it works for you. As it stands at 27, my property will be paid off by the age of 52 assuming we stay here for 25 years which is an unknown factor meaning that by the time I'm middle aged I'm in good stead. If you buy at say 40+, you aren't looking at getting the place paid off by the time your looking to retire. Who wants to be retired and having to pay rent? We've got a 3 bed semi in a nice new build estate with good neighbours, no kids at present but plenty of room if we do have kids so no likely requirement to upsize unless I win the lotto tonight!
Rental prices are rising, that's a fact. Property whilst not such an investment it used to be is still worth having as an asset. You don't recoup any money from renting a place while in the long term you do with a mortgage in terms of your property value.
I'm 26 and got my place nearly 2 years ago. It's big enough that we'll probably not move out until after the eventual kids are grown up and moved out. Wife and I saved up while living at our folks and got together the 35k deposit and 20k to do it up. Glad i stayed at home and would do exactly the same again.
Everything we spent on the house was our own money that we saved up.
We were on about 28k and 25k at the time before overtime.
Why more people don't stay at home with their parents baffles me. On the continent a lot of people stay at home until their mid to late 20s to give them a better start in life.
Everything we spent on the house was our own money that we saved up.
We were on about 28k and 25k at the time before overtime.
Why more people don't stay at home with their parents baffles me. On the continent a lot of people stay at home until their mid to late 20s to give them a better start in life.
No.
I love how the new builds around here are local occupancy only and 'affordable' housing, but the wages in this area are nowhere near enough to being able to afford them.
Whilst not everyone agrees with them. Shared ownership or housing association purchase schemes could be a road to ownership you could consider. By combining a limited mortgage with subsidised rent you could possibly realistically afford to get started. There are pitfalls with increased charges as time goes not but these can be accounted for and offset.
Example. Myself and GF bought our first house just over 2 years ago. Brand new 3 bed semi valued at £130k. We borrowed a £10k deposit from family and put that towards a 30% share and fees. This left us with a mortgage of £30k. Easily gained through my single salary at £22k pa. Mortgage payment is £200pm at an awful rate of 7.49% but on a small sum its not such a big deal.
The subsidised rent portion of our property (70%) is £250pm inclusive of charges meaning we pay a total of £450pm for a brand new 3 bed and are effectively buying 30% of it very slowly.
As circumstances have improved with pay rises for myself and GF going back to work we have looked to increase our monthly mortgage payment. We have a 2 year old son so have yet to take the plunge but will next year be pumping the maximum overpayment amount of £500pm into the mortgage. This increases our mortgage payment to £700pm and the rent will probably have risen to around £280 based on last years increase. Total payment will be just under £1kpm and we will be mortgage free in 4 years or so.
Yes we admit we will only own 30% of the property but we can then buy 10% chunks as funds allow. By clearing the mortgage quickly we will increase our equity and therefore should decrease the interest rate on borrowing for the next 30% and also reduce the rent. Ideally by working in stages and overpaying small mortgages and keeping the remainder on subsidised rent we should buy the entire property in <16 years and will have paid far less total payment than we would have buying it outright in year 1 on a massive mortgage.
We also have other options to not buy other shares in the house and save for the next property whilst living in a 3bed semi for £250 per month. This would allow us to save a deposit, buy a 2nd property which requires work and carry out that work without living on a building site. This could be a potential saving on the next home. We would then release equity by selling our 30% share when we move out. We have even considered self build but there are too many factors between now and then and who knows what will happen.
On a salary of £15k you will be pushing it to buy outright but there are schemes out there which can help.
Example. Myself and GF bought our first house just over 2 years ago. Brand new 3 bed semi valued at £130k. We borrowed a £10k deposit from family and put that towards a 30% share and fees. This left us with a mortgage of £30k. Easily gained through my single salary at £22k pa. Mortgage payment is £200pm at an awful rate of 7.49% but on a small sum its not such a big deal.
The subsidised rent portion of our property (70%) is £250pm inclusive of charges meaning we pay a total of £450pm for a brand new 3 bed and are effectively buying 30% of it very slowly.
As circumstances have improved with pay rises for myself and GF going back to work we have looked to increase our monthly mortgage payment. We have a 2 year old son so have yet to take the plunge but will next year be pumping the maximum overpayment amount of £500pm into the mortgage. This increases our mortgage payment to £700pm and the rent will probably have risen to around £280 based on last years increase. Total payment will be just under £1kpm and we will be mortgage free in 4 years or so.
Yes we admit we will only own 30% of the property but we can then buy 10% chunks as funds allow. By clearing the mortgage quickly we will increase our equity and therefore should decrease the interest rate on borrowing for the next 30% and also reduce the rent. Ideally by working in stages and overpaying small mortgages and keeping the remainder on subsidised rent we should buy the entire property in <16 years and will have paid far less total payment than we would have buying it outright in year 1 on a massive mortgage.
We also have other options to not buy other shares in the house and save for the next property whilst living in a 3bed semi for £250 per month. This would allow us to save a deposit, buy a 2nd property which requires work and carry out that work without living on a building site. This could be a potential saving on the next home. We would then release equity by selling our 30% share when we move out. We have even considered self build but there are too many factors between now and then and who knows what will happen.
On a salary of £15k you will be pushing it to buy outright but there are schemes out there which can help.
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Associate
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It sounds like the OP doesn't have much of a deposit saved, so might end up having to go for a 95% mortgage, they seem to be around 7% interest? Seems like a reasonable example to me.
and how are you going to afford this when you are retired?
i've always been for buying as opposed to renting and saved to get a decent deposit, took me until i was 29 to be in a position to move out (the right house came along at the right time) but it's a place to live over an investment any day of the week, i'm a homeowner, not a property developer and this is why the people who justify the benefits of renting compared to buying atm with the shout of 'prices will go down! you're better off waiting and renting, look at the interest on a mortgage' etc falls down imo. if i'd have rented, there would have been no way i could have saved a deposit and i wasn't in any need to move out of my parents so i would advise anyone in the same position who thinks they want to get out and rent because they 'want their own space' ( a feeling i completely understand but ride it through!) to save for a deposit, ideally 20%
i was in this house buying game to find a place to live, not for a short term, make a quick buck on the house scenario. i am now on the ladder, i am not a reflection on a lot of my friends who either still live at home or rent, i had a plan and i stuck to it, even though there were times in my 20's i felt like i needed to be in my own place and contemplated renting. i honestly have no idea how a lot of my friends are going to afford a mortgage, maybe only with their gf's but renting seems to suit them fine but it wasn't for me.
My savings are £46k if I include my ISA too.
Besides, do banks even give 95% mortgages now? Haven't they learnt their lesson?
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Caporegime
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You currently take home 15k per year and at the age of 27 have managed to save 46k, without wanting to sound rude how have you managed this, unless you've not lived in the last 4 years.
Saying you have 46k in saving is going at odds with your opening post, unless you actually mean £46.....
My 'rent' is £20 a week and half the electric/gas bills for living at home.
I haven't done anything else special.
Also I still need a 'buffer' so the whole lot can't really go on a deposit, because of unexpected repairs that might need doing, also council tax and water bills. Generally it'll cost me a lot more to live in my own home than it currently does.
And this still doesn't change the problem of not earning enough so overall my net income would be minus at the end of the month.
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maybe he's grafted and saved since he was 14 or had some inheritance?
really though, it's none of our business
Problem is wages and affordable social housing, councils are not building homes anymore, well not around here. An ex council house that a neighbours parents lived in went up for £120k, two bedroom.
Main problem now is job security and lending, nobody has a clue what is going to happen to the worlds economy.
This country has such a poor rental market and an obsession with owning your own house.
Main problem now is job security and lending, nobody has a clue what is going to happen to the worlds economy.
This country has such a poor rental market and an obsession with owning your own house.
Caporegime
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So in which case please run it past me why you can't save enough money for a deposit again, just do the same again for the next 2 years?
Because the deposit is one thing, affording the repayments is another.
Soldato
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It's hardly dead money, just a lame excuse not to move out and spend the money on beer/gadgets/whatever other vices you have instead.
It's hardly dead money, just a lame excuse not to move out and spend the money on beer/gadgets/whatever other vices you have instead.
What do you have to show for it after 25 years?
Caporegime
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But if you can put 60k down on a 100 - 110k house then repayments shouldn't be an issue it's only 40 - 50k you need to borrow, if in the next 2 years you work towards getting a better job then problem solved.