Should I start saving now?

damanpunk

Getting a bit concerned with all the stuff in the news about bad mortgage deals etc...... Heres the details on my mortgage

LLoyds TSB interest only with a fixed rate for 2 years, can't remember the rate but it was higher than what they are now!

£189k with 5% deposit (just under £10k) so just under 180k ish mortgage.

circumstances changed since it was taken out but when renewed it'd be....
Me - 23yrs old, £52.5k basic / year 72k with OT etc
gf - 21yrs old, £20.5k / year

No debts except an £11k loan (£355 / month) 3yr loan which will be down to about 20 months or so by then

Will I struggle to get a half decent repayment mortgage? The fixed period is up next year so realistically I will need to start saving now

hostman

Based on your wages no. But you may need to lower the LTV to get a better rate. If you could reduce the LTV to 10-15%, you should be fine.

damanpunk

Thats not so bad to hear, I can probs save another £10k before the fixed period ends but an extra £10-20k above that would've been a nightmare :eek:

zAndy1

Blimey, £52k at 23! You haven't hung about have you...

Anyway, the problem will be if your house has fallen in value which it probably has given the fact prices have been falling for the last year or so. You could potentially be in negative equity so to remortgage you would need to have enough savings to reduce your mortgage to 90% of the value of your house in a years time.

To answer your question, yes if you want to remortgage you need to start saving now and saving hard!

maninthestreet

What do you for a living that brings in over £70K a year for a 23 year old?

brixtonian

maninthestreet wrote: »

What do you for a living that brings in over £70K a year for a 23 year old?

same question here!!

damanpunk

I do steelwork draughting in the oil/gas industry (I'm paid like a contractor but work under a staff basis, i.e. actually work for my employers agency and pay full rate tax), I'm not super clever and I'm just HNC qualified

pandora205

You could also think about making overpayments on your mortgage, which you can do even if you are in a fixed rate deal. I'm trying to pay mine off so have doubled the payments - It's amazing how quickly the balance is going down. I can't do the maths to say which is better (saving or overpaying) but I'm sure someone can.

damanpunk

Hi,

How does the overpayments work, do they come straight off the original balance? Or are they subject to interest etc too? I guess what I mean is, is overpaying like adding to your original deposit?

maninthestreet

Overpayments reduce your outstanding mortgage balance, thus reducing the amount of interest you pay. Assuming your mortgage interest is calculated on a daily basis, and you make overpayments regularly, this can have a dramatic effect on the total amount of interest paid and/or mean the mortgage is paid off a lot earlier than would otherwise be the case. Have a play around with the figures here:

www.jeacle.ie/mortgage/uk/