125% mortgage, 2.5 years to go, should I be worried?

wymondham

I don't think people should make posts that dictate which bits of information people are allowed to respond to ...

speedbird1973

Griptool wrote: »

Typical of the patronizing twaddle you get on this board - the OP bought near the top of the biggest ever property bubble and you tell him that its a sound investment:rotfl:stop it my sides are hurting.

Needing a 125% mortgage to consolidate existing debts sounds to me like someone who would benefit from impartial debt advise:-)

Property is always a good investment.. long term you'll make money on it.. simple as that.

My folks place was bought in 1981 for £60k, worth over 500k now. Simple as that. I've turned 10k 7 years ago. I have about 90k in equity now and a bigger house. I may lose half of that in the next few years, but it will rise again

On top of that you get somewhere to live and your own little piece of Britain!

I should add.. i dont have a problem with your own thoughts and opinions grip.. but a 125% mortgage has been a good product for a lot of people.. in the OPs case think the benefits outweigh the drawback.. so long as there isnt a need to sell and so long as there isnt an underlying debt problem.. if they can afford 500 month of the capital, i think they're ok financially

hostman

Highly unlikely your house is worth more.

At best you'll break even, at worst you're probably already in negative equity.

Optimisticpair

I would not wait until after Christmas to overpay because the faster you get out of owing interest the more you will save in the long term. You might like to look at the Old Style Thrift Board to get tips on economising on buying grocery and household essentials, making cheap tasty meals to reduce spend on takeaways and anything else that puts money in your account.

Take up good advice and ignore those who don't care if you sink or swim.

DocHants

lol.. and hears me thinking this site was meant to offer advice..??? there seems little point raking over what i should have done.. the way it is now, is the way it is, and it seems of little benefit to suggest what ive done 3 years ago was wrong.... Nothing will ever convince me that paying £600 per month for someone elses mortgage, is not a wast of money...

I dont need debt advice.. im paying off what I can, in an attempt to clear all other debts off by xmas.. which is all going to plan.. i cant do much more than that... Like many students I had a lot of debts build up over my student years.. and have consequently been paying them off over the last few years...

The house was undervalued when I bought it due to work that was needed, so even if the house prices fall another15%, then it still wont be less than I paid for it, in essence £114,000 (the 95%)... My plan is to clear the loan off, which is what is causing the problem.. If I cant clear it in 2.5 years, I will simply get a mortgage on what I owe of the 114,000 and get a loan for the remaining 10k or so of the loan.

We bught a 3 bed house for what 2 bed flats were going for, and still are for that matter.. so unless things get really bad, I see no reason to panic just yet...

cupid_s

I too agree that your probably in quite serious negative equity. If in fact your house is worth 140k I think the best thing to do would be sell and go back to renting for the £500 a month.
But.... if you can afford an extra £500 per month, and your jobs are secure, then you'll be able to afford your lenders SVR. If you're hoping to get another fixed rate or tracker deal then realistically you will only be able to take out 90% of the value of your house. So start saving.....

I'm not sure the OP needs debt advice. Though I too would question how on earth £500 a month is too much to be throwing away, yet it's quite alright to pay almost £700 a month in interest on a loan from the bank. And that's before the SVR kicks in.

ad9898_3

speedbird1973 wrote: »

griptool.. that is the most pointless advice.. there is no debt problem!

I think your plan is an excellent one. I wouldn't worry too much, you have over 2 years to pay off as much as you can..

You may well find house prices recovering in the next two years. I doubt very much they'll fall for long. When the credit crunch goes, so will the property slump.. There is huge demand for houses. People just can't afford them, including the vitriolic posts in your thread!

Property prices will recover and it's still a sound investment.

This post is ridiculous, let me get this straight, you think that 6x,7x,8x lending will be back in vogue in 2 years time, do you listen to news, read papers or anything. As someone as already said the biggest housing bubble in history has burst, the financial fallout in the US and the UK, will be not only be felt for years but possibly decades.

Property will return to 2007 levels one day, however I wouldn't hold my breath, conservative estimates put this at least a decade away if not more.

2007 levels were perpetuated on these premises'

1. buy to let (which is all but dead, falling prices, low yields, try and get a BTL mortgage with anything less than 20% deposit, you won't)
2. liar loans ( no income given when taking out a mortgage and none asked for by the banks)
3. 6x,7x,8x lending levels by banks thinking the party would never end.
4. cheap credit ( don't worry buy it and stick it on the credit card )
5. low unemployment ( unfortunately this era is about to end )

I could go on, most sellers are still in denial, this phase will play out over the next year I suspect, fear and anger to follow.

My call would be that the bottom of the market is at least 2 years away with a very long period of stagnation. There are around £400billion worth of unsecured debt washing around at the moment, a hell of a lot of this is going to have to be paid back before there is any glimmer of house prices rising. Banks will not want to get into the mess that they have found themselves again.

This isn't a "credit crunch", this is a return to "credit normality", painful now but in the long term much better for everyone, especially our children

mookybargirl

I would increase the standing order today to as much as you can afford. We did this, so it's gone at the beginning of the month, so you can't dip into it....

Realistically, it might mean you'll be stuck with Northern Rock with their base rate at renewal time.

Also, I wouldn't just save, it needs to be paid to the mortgage as soon as you have the money as you'll save interest paying off quicker.

MarkyMarkD

Indeed, when I said "save" I assumed the OP meant "pay off the mortgage", particularly as there are no ties on the unsecured part of Together AFAIK.

foreversummer

It really doesn't matter what your house is worth as long as you can afford to pay your mortgage. You obviously can, and will soon be able to pay off an additional £500 a month. That's great!

Even if you have to go on the SVR in two years time, you should still be able to pay even though you will not be able to make such large overpayments. It may be necessary for you or your OH to take an additional job if things get tight. Hubbie and I did that back in 1990 - needs must.

The important thing here is to make sure that you do not take on any other debt of any description and make sure that you are living within your means. Even if it means no holidays, no meals/days out, going without luxuries, it can be done if you really want to have your own home as you so obviously do.

I wish you luck, but at the end of the day it is up to you.

Foreversummer