mortgages

Dez-Titute

Fruit wrote: »

Hi,

Whilst all of the guys above make good points, from a family point of view owning a property provides a level of security (providing it is within your means) and should be viewed as a home not just as an investment.

In my experience (i am a financial adviser - please can someone tel me how to sort the caveats for my signature?) you should be able to obtain a mortgage around 12 months from discharge although criteria varies from company to company. Whilst the current climate may seem volatile it may be a good time to pick up a bargain - just a different point of view.

Hope this helps and good luck.

In your honest opinion as a Financial Adviser does the following not make financial sense


Why it makes sense to rent, not buy

[FONT=verdana, arial, helvetica, sans-serif]Selling to rent (STR as it is now known) has made some financial sense for some years now in cash flow terms “ i.e. rents have been generally cheaper than mortgage payments on most properties. But now that the chances of making a capital gain on owning a house (the only reason to have bought over the last 3 years) look pretty low, it seems to make more sense than ever.[/FONT]
[FONT=verdana, arial, helvetica, sans-serif]Have a look at Primelocation.com. Here you can see the rental and sale prices of hundreds of thousands of houses. It makes for very interesting reading. One example sent in by a reader from Wales makes the point very clearly. He points to a nice looking executive' four-bedroom house with views over fields to the rear and close proximity to several excellent schools. It is both for sale and for rent. The sale price is £315,000 (at least 12 times the local average wage).[/FONT]
[FONT=verdana, arial, helvetica, sans-serif]A repayment mortgage on this amount would come to around £2,000 a month and even an interest-only mortgage to around £1,500. Yet you can rent this very same house for £750 a month (offering its current owner a pathetic gross yield of under 3%), a saving of £750 a month “ and that's before you even factor in the fact that you don't have to be responsible for its upkeep. [/FONT]
[FONT=verdana, arial, helvetica, sans-serif]The situation is much the same in other parts of the country. There has, for example, been much talk about how fast rents are rising in central London, but they're going to have to rise an awful lot faster for it to make sense to buy instead of renting. [/FONT]
[FONT=verdana, arial, helvetica, sans-serif]A 3 bedroom mews house in Bayswater currently costs around £1m. The cost of owning it, on even an interest only mortgage, would therefore come in at something like £55,000 a year - and that's only if you don't include the purchasing costs, (another £45,000 or so) or the maintenance (at least another £5,000 a year). The cost of renting a similar house? About £39,000 a year. That's £16,000 less. [/FONT]
Homeownership isn't everything

[FONT=verdana, arial, helvetica, sans-serif]I am not suggesting that people with no serious financial problems, with mortgages they can afford and with houses they and their families like living in suddenly sell up and rent instead. Moving house is an awful lot of bother if you don't have to do it. [/FONT]
[FONT=verdana, arial, helvetica, sans-serif]But if you are heavily in debt and scared of losing your home (as the newspapers seem to think everyone is), why not just sell up, move into a cheaper rented house and then pay off your debts with the money you save on not having a mortgage every month? My guess is that over the next five years being debt free is going to feel a lot better than being up to your eyeballs in interest payments, even if the latter means you get to keep claiming ownership of your own (depreciating) home.[/FONT]

fiveyearplan

I stand by what I say and in my area I could not rent for anywhere near the price of my mortgage -It would cost me 300-400 more per month to rent something that wasn't even the size of my house. Lets also not forget the OP was just asking a simple question about the ease of getting a mortgage - he wasn't asking anyone whether they thought it was a good idea or not.

Fruit

Hi All,

Did'nt mean to open a can of worms!! crikey.

Whilst all of the above comments are noteworthy home ownership is to be viewed as a lifestyle choice rather than investment in (most) cases.

Taking a long term view of things in 25 years when your mortgage is paid off and in theory your house has increased in value (look at the changes over the last 25 years) you are in a position where you own a significant asset and dont have ongoing costs into retirement.

Whilst renting may look cheaper in the short term for the size of property you get for your money, you will not own the house at any point and will be paying rent for the rest of your life, stress free now maybe but what about in retirement?

As for the comment that commission is commission have i missed something or do we offer our thoughts and advice (however they are taken) free of charge on this site?

Dez-Titute

I agree Fruit it is a lifestyle choice,

All I wanted to do was show the alternative and if you take the example in my earlier post you could rent a similar property for a rent less than a mortgage and if the saving was invested over the 25 years you would have a sizable lump sum or indeed if the saving was paid into a pension over the period plus the tax benefits that you would get would set you up very nicely.

Fruit

Hi Dez,

Good point - there are lots of alternate options for investing as long are you are putting the money aside and not spending it everynight in the Bankrupt Inn.!!:beer:

Dez-Titute

No need for cash in the INN when you got one of these

Fruit

Happy days.

fiveyearplan

You can't always rent for less than a mortgage and in any event, presumably the rent would be covering the landlord's mortgage anyway.

Rent in my area is a lot more than my mortgage - I bought 6 years ago.

CC_Scot

Hi,

I have been reading this thread with interest. My husband and I have just been discharged from sequestration after three years. Luckily because property prices were so low when we were sequestrated we were able to keep out house. Now we are discharged we have a mortgage of £47k and the value of the house is £135k. We are on a variable rate and would like to change to a fixed rate due to the uncertainty in the market - how easy or difficuly is this likely to be?

We are reluctant to ask our existing lender as they were one of our major creditors and think they would be glad to see the back of us.

Any suggestions?

lxpeanut

geoffky wrote: »

Do you call a bargain something you have bought today but will be cheaper by 20% in the next few years

Yes but if they are planning on living in the house for longer than that it won't matter anyway. Negative equaty only matters if you need to sell. If however your able to stay put and wait it out then the price will recover.