1st time buyer req,s 100% mortgage

meanmachine_2

You also have to compare your mortgage payments to your current rent.

And even if you're on a repayment mortgage, you're still paying largely interest in the first couple of years.

Bestthingsinlifearefree

Lauraandclive,

There is nothing particuarly wrong with a 100% mortgage, some one could have a 5% - 10% deposit and if prices fell 15% they still would be in negative equity.

As soon as you buy each month you are building the equity in your house with the mortgage repayments so this would counteract any house price drops.

You have to understand that meanmachine is a very, very,very, nervous First Time Buyer.

Every pub / office has one, who when you say you are going to do something positive like buy your own property (rather than waste dead money paying off your land lords mortgage) they will always focus on the negative and will always say what if interest rates go up, what if prices fall etc etc

(rather than be positive and say what if you get a promotion / pay rise, what if interest rates go down and prices go up and you make a nice profit)

The only thing the very nervous first time buyer dislikes more than their landlord whose mortgage they are paying of is other FTB who have the belief to take the plunge and start paying of their own mortgage rather than their landlords.

I think meanmachine as a very nervous FTB is a little envious of your confidence and determination to take control of your financial future and secretely wishes he had the balls to take the plunge.

To be honest if you buy in 2000 or 2005 or 2010 prices could suddenly go up or go down , hey as long as you pay your mortgage its irrelevant to you.

If some one rents for 25 years they own nothing, pay your mortgage for 25 years and you own your own house.

Bit of a no brainer really.

Good Luck. Go for it !!!!

lauraaurora

Robert Sterling:

"I have been renting for 2 1/2 years at £600 a month, and with all my utility and council bills I am paying £1000 a month. Add on top of that £200 a month to feed, clean, clothe, drive and entertain myself (books, dvds - I can't afford to go down the pub very often) I have very little to save when I get £1300 a month salary."

Agreed

"Especially when I have presents and other things to buy most months."

It should follow from that that you get presents most months too


"PLEASE tell me where I am expected to get a 5% deposit in the near future when I am having to buy a 50% shared ownership property with a mortgage of £94,000 plus £3000 for fees?"

I am not adverse to hearing when I am in the wrong. It is interesting, though, that you did not answer the most important point in my post, ie. how am I supposed to save a deposit?

Please don't reply, though, as I'll only get more of your thoughts on why I shouldn't be upset at certain replies to my difficulties. I'm not after sympathy or people telling me that I have no right to be upset at those who are offering impossible suggestions. This is my situation, I am living my life as I have to, and I am happy with my life. I would just prefer it if people could be a little more sensitive with their comments, as one size does not fit all.

Anyway, hope you all have a good weekend

sarah_elton

"You also have to compare your mortgage payments to your current rent."

The reason I'm stalling over the weekend about making a higher offer, is that to go to my maximum mortgage is going to make my mortgage repayments quite a bit more than I'm paying in rent - I have a detailed monthly budget for both the carry-on-renting and mortgage-now options and have to think carefully about which is right to do.

BTW guys, I appreciate fully everyone's advice and comments. I know there are people who disagree with what I opt to do but when in life isn't there?

I'm reading and asking for advice on here to (a) ensure that I've considered all the variables that need to be taken into account (which it appears I have I think), and to (b) ensure I get the best deal with what I do choose to do.

Didn't mean to start anything that would get too heated.

Robert_Sterling_3

lauraandclive wrote:

Robert Sterling:
I am not adverse to hearing when I am in the wrong.

I was really more interested in countering you statement that implied that Meanmachine was ignorant. I think that Meanmachine is far from ignorant and is an asset to the financial forums.

Meanmachine has been thanked 127 times in respect of his posts inspite of only posting 116 times. MSE members who have more "Thanks" than "Posts" are somewhat rare.

Perhaps in your current position you have no other option than a 100% mortgage. In which case so be it. In general I still think, for others, it should be avoided if that is at all possible.

Stonk

Robert_Sterling wrote:

Meanmachine has been thanked 127 times in respect of his posts inspite of only posting 116 times. MSE members who have more "Thanks" than "Posts" are somewhat rare.

Tiny quibble ...

MeanMachine has actually posted 999 times. The Thanks statistics say he has been thanked 127 times in 116 thanked posts - i.e., he has had 883 unthanked posts and 116 thanked posts, and his thanked posts average 1.095 thankses per post.

The "thanks ratio" tells you how helpful the poster is when they are being helpful - but if they also post a whole load of dross then it doesn't actually dilute this ratio. A more useful thanks ratio is the number of thanks per total number of posts, but that can't be calculated relaibly from the information available because thanking started only recently, whereas the total post count goes back a lot longer.

It is not rare for the first number in the Thanks stats to be larger than or equal to the second number. It means that they have more thankses than thanked posts, which, if you think about it, is an absolute certainty!

meanmachine_2

sarah_elton wrote:

"You also have to compare your mortgage payments to your current rent."

The reason I'm stalling over the weekend about making a higher offer, is that to go to my maximum mortgage is going to make my mortgage repayments quite a bit more than I'm paying in rent - I have a detailed monthly budget for both the carry-on-renting and mortgage-now options and have to think carefully about which is right to do.

Well what is your rent right now? And what do you get for your money?

What would your mortgage payments be? And would that be interest only or repayment? And what would you get for that money?

To be honest, if your interest only repayments are the same as your rent, you're not really gaining anything by buying in a stagnant market. Although you do get some security and the ability to spend lots of money at B&Q!!

100% mortgages aren't the worst you could get, some muppets take out 125% mortgages!!!

If you can't save the 5% deposit then shop around for the best 100% FTB-er deal. But you'll be punished for it. Plus, at the end of the discount period, if the market asn't risen, you'll still find that you've got zero equity and so have to take out another 100% mortgage!

meanmachine_2

Bestthingsinlifearefree wrote:

I think meanmachine as a very nervous FTB is a little envious of your confidence and determination to take control of your financial future and secretely wishes he had the balls to take the plunge.

Grow up luv.

I don't envy anyone who is forced to select from the worst types of mortgage.

That isn't moneysaving advice now is it?

"Bit a no brainer really."

sarah_elton

meanmachine wrote:

Well what is your rent right now? And what do you get for your money?

What would your mortgage payments be? And would that be interest only or repayment? And what would you get for that money?

I'm currently renting a 2 bed flat for £525 per month.

The place I'm offering on is identical to what I'm renting - just in a different building 30 seconds away. (actually it's better - top floor so loft and less noise)

The mortgage repayments on it will be around £622 per month, plus any insurances I take out. That's capital repayment - I wouldn't go for interest only - you don't save that much monthly, and though most of the first few years is repaying interest, at least I'll be getting the capital down a little bit.

However, also I'll now be paying ground rent and charges, which are currently included in my rent. At £64 per month, mortgage + insurances + ground rent etc = approx £720/month. £200 more than I'm paying in rent!

I could keep renting and use that £200/month to save a deposit. 5% of £115k = £6k or more than 2 more years of renting.

Yes, I could move down to renting a 1 bed but that would only be about £50 per month less in rent (10%) and I make a lot of use of my second bedroom.

Money will be very very tight on this size mortgage, hence considering it this weekend. But one option would be to rent out my second bedroom. I should be moving to my second post-uni job next year, after which money will get quite a bit easier.

If you're wondering where the £200/month surplus has been going up to now it's been clearing off my post-uni debts.

Obviously everyone's thinking "buy one bed!" but the one bedroom flats around here are very small, and (1) I'd have to throw a lot of stuff out, and (2) I think I'd feel claustrophobic and in the current market it's not going to be a good idea to sell for at least 5 years I don't think. 2 beds are also more saleable in this area. However if I decide this size mortgage is just stretching myself to thin I'll try and go for a one bed, which are approx £98k.

meanmachine wrote:

To be honest, if your interest only repayments are the same as your rent, you're not really gaining anything by buying in a stagnant market. Although you do get some security and the ability to spend lots of money at B&Q!!

Re the latter point, due to my lack of savings and the minimal amount I can spend up front, the place I'm looking at is virtually immaculate. Yes it means I can't add value to it, which is why I won't go for it unless I can get it for a price I'm happy with. Of course things can go wrong and I can have to spend but I have a small buffer.

meanmachine wrote:

100% mortgages aren't the worst you could get, some muppets take out 125% mortgages!!!

I wouldn't dream of doing it, but doesn't this basically mean they're taking out a loan for 25% of the property value, against their home? What's the difference between this and any other loan secured against your home?

meanmachine wrote:

If you can't save the 5% deposit then shop around for the best 100% FTB-er deal. But you'll be punished for it. Plus, at the end of the discount period, if the market asn't risen, you'll still find that you've got zero equity and so have to take out another 100% mortgage!

HSBC are offering 4.99% fixed rate - yes of course it's more than I could get with a deposit, but as above, saving the deposit will cost me around £13,000 in rent (yes I'll be paying out ground rent etc).

I'm not looking at this as a short term investment - I'm in Essex and the market has slowed right down over the last two years and has been stagnant for around six months. However I'm looking at this over the longer term - where I am has direct train links to London, including Stratford, and with the development of that area ahead of 2012, prices may not rise much at all for a few more years, but I don't think there's much danger of them dropping much.

meanmachine_2

Sarah, you appear to have worked things out. Good luck to you.

I'm an Essex boy, so where generally are you looking to buy?

EDIT: By the way, are you talking about their homestart mortgage? Can't quite work that one out. Looks like you pay interest only in the first few years, then repayment.

I might be wrong. A rate of 4.99% seems quite low for a 100% mortgage.