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

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speedbird1973 wrote: »

Why am I a dreamer? I started with a 95% mortgage - my mortgage is now 40% LTV.. at worst it may go back to 60%. Over time house prices go up. Simple as that.. look at house prices 10,20,30,40 years ago, they go UP and UP and UP. Think of the long game TDS. Property is a good investment.. end of... if you have time and security you won't lose money on it.

Renting is dead money if you're settled. My 10k is worth 100k now. The increase in equity is more than the interest on the mortgage I have. Job's a good'un. On top of that I have a home and security.

As a renter, you have a roof over your head, and two months to get lost if your landlord decides.. I have nothing against it, there's nothing wrong with renting. If you think having a mortgage is wrong however.. you need a blue sticker in your car mate!

I wouldn't say you're a dreamer, however if you had bought a house, as in been a FTB'er in the last 3 years with a 95% loan, I doubt you'd being saying the things you have said in this post.

Lets not mince words here, some people make good money out of property for sure BUT if you bought at the wrong time in the cycle you could be sitting on losses for a very long time.

If inflation and in particular wage inflation stay as they are, I would imagine prices will return to 2007 levels around 2020. It is different this time, the bank failures have seen to this.

StrawberryJam_2

I am very very surprised to see some worry and concern regarding this matter just now. I was expecting a flurry of posts in a few years on similar topics.

You should only be worried if you can not meet your mortgage payments. Keep monitoring the SVR rate with your existing lender as this is all you will be offered, not unless your existing lender has an offer on at the end of your term.

Again, i am surprised of your worry, I would have thought this worry should have been in your mind when taking the 125% mortgage! There will be thousands of people in this situation and not aware of it, take steps to afford the SVR now and it will not become such a heart ache in 2.5 years time. Just read post number 28 above.

Gorgeous_George

StrawberryJam wrote: »

I am very very surprised to see some worry and concern regarding this matter just now...

... Again, i am surprised of your worry, I would have thought this worry should have been in your mind when taking the 125% mortgage!

At the time that the mortgage was taken, the 'experts' were saying prices would rise by 40% by 2012.

Plan A was to take the 125% mortgage and re-mortgage to a 100% (or near 100%) deal in three years' time.

Plan B was... errrrm, see Plan A.

Hindsight is always 20/20.

GG

Gorgeous_George

The best hope is that by the time your fixed rate expires, there will have been so many people in the same position that a solution will need to have been found.

I expect BofE Base Rates to be near zero percent (maybe 2%) and LIBOR rates lower (near 4%). Inflation measurements will include house prices.

GG

Dylanwing

Point 1 - It's a house, a home, somewhere to live, not an investment. You have a roof over your head, sound like you can afford the mortgage (And extra), can do what you like, even have a cat, unlike in private rented and don't have to worry for 30 Months. The times they are a changing, and who really knows what things will be like then? House prices are unlikely to recover, but by then the Government might have sussed that a bottom-up rescue strategy might be cost-effective. Social housing is in short supply, so where do the re-possessed go, and what do the Banks do with unwanted properties? Better for Banks/ Government to take a small hit now to keep people in their houses than have empty houses, tent cities and social unrest. Keep paying, reduce the debt and see what happens.

TDS_2

speedbird1973 wrote: »

Why am I a dreamer? I started with a 95% mortgage - my mortgage is now 40% LTV.. at worst it may go back to 60%. Over time house prices go up. Simple as that.. look at house prices 10,20,30,40 years ago, they go UP and UP and UP. Think of the long game TDS. Property is a good investment.. end of... if you have time and security you won't lose money on it.

Renting is dead money if you're settled. My 10k is worth 100k now. The increase in equity is more than the interest on the mortgage I have. Job's a good'un. On top of that I have a home and security.

As a renter, you have a roof over your head, and two months to get lost if your landlord decides.. I have nothing against it, there's nothing wrong with renting. If you think having a mortgage is wrong however.. you need a blue sticker in your car mate!

lol. House prices do indeed go up over the long run - no argument there, although don't forget to include the effects of inflation. I also think that (for those who can afford it) home ownership is a great thing - I intend to buy myself in a year or so. However, you mustn't deny that house prices are cyclical. There will be times when they are severely overpriced, and times when they are underpriced. Our OP bought near the top of the market, and as such will find that years will pass (possibly a decade, possibly more) before his 'investment' is worth what was paid for it. To make a calculated assessment of what is best for the OP, we need to be honest about the likely cost of their home as time goes on. Purely on a financial basis, it makes no sense to pay over the odds for an asset that is falling in value. No point throwing good money after bad. The other point, is that one has to take a long term view. The OP may feel emotionally attached to the house atm, but must try to assess honestly how they feel about years of spending all available cash on mortgage repayments.