90% Mortgage!!!

daveb975

Whilst I agree with most of the comments here about holding off buying until the market is nearer to the bottom, I think that some of the replies are dependent on the buyers individual situation.

If the buyer has a high single/joint income and is borrowing within sensible multiples, then what is the problem with borrowing £260k to buy a £290k house? In a lot of areas, you would have struggled to get a decent house for this amount before the boom in prices of the last 10 years. Despite what a lot of people here seem to think, you are not going to be able to buy a detached house overlooking the river in Henley for £300k any time soon.

I think that the reliance on being a graduate is also slightly misleading. The OP appears to have been applying for a mortgage that offered a special rate to graduates (usually recent graduates only). The fact that the OP does not qualify for this does not necessarily mean he earns less money - I know a lot of non-graduates on very good salaries.

If I were buying a house now, I would make sure that it was a house that I would be happy in for the next 10 years and that I could afford the interest on the mortgage if the base rate goes to double digits.

HousingBear

OK, so I'm guilty of sounding off without a bit more research.

But as to what is the problem with borrowing £260K to get a £290K house is as I have already pointed out. Stuart and his partner will have to pay it back and this money is being borrowed on an asset that is falling in value. Six months to negative equity, a year if you are lucky. Then what else could happen? Redundancy of one or both of them? Splitting up? Even good things like children start to affect the ability to repay.

As for "you would struggle to get a decent house for £290K before the boom" then I have to disagree. Yes, you might not get your river view house in Henley, but £290K in 1997 bought a heck of a lot of house in almost anywhere in the country.

What is sad is that people still think it is a good idea to take on massive debt in the fastest falling housing market in recorded history. I would be happy for the OP to prove me wrong by providing their workings on affordability and contingency plans. Yes, they may have expectations of inheritances, great depression-proof jobs and be able to afford home help if children arrive (together with single incomes of over £65,000 or joint incomes of £80,000). But most people on these boards don't and sometimes, it is a good idea to ask if they have really thought it though.

As for the graduate question, the fact that the mortgage is not available for non-graduates is because, statistically, graduates have better lifetime earning potential. The BS is pricing in the greater risk of default from non-graduates by not offering to people who do not have degrees. It's actuarial mathematics, not anti-non-graduate bias.

Stuart, I do hope you read these posts and come back to us. You will get better advice if you can give some more information. My apologies if I have jumped to too many conclusions.

pixiepie99

I think there is loads of great general advice for everyone in this thread even if it does turn out that Stuart is earning £100k a year or summat.

Things like house prices are falling, don't borrow more than you can afford etc etc are useful things to hammer home!

daveb975

HousingBear wrote: »

As for "you would struggle to get a decent house for £290K before the boom" then I have to disagree. Yes, you might not get your river view house in Henley, but £290K in 1997 bought a heck of a lot of house in almost anywhere in the country.

You are right - I was exxagerating there a bit! £290k would have bought you a good house in all but the very best areas back in 1997.

poppy10_2

downhiller wrote: »

The guy could be a self made millionaire

Heir to a fortune

A wife who earns a large salary

But they can't afford any more than a 10% deposit?

woody252506

There have been many good points on here but I think pixie pie is right. If you can comfortably afford it and can get a mortgage along with a house for a bargain price its a good time to buy.

Me and my partner have a mortgage agreed with C&G at 6.19% fixed for 2 years with no product fee. We have a 10% mortgage and are FTB.

We have seen a house we like that was put on the market in Oct 08 for £135k. Its now down to offers over £110k. We have seen and I have spoke to the EA and the vibe is they want to get rid so the "offers over" is just an attempt to get as much as possible.

If we bid and get it ill be paying £100k and no more. Thats over 25% less than what it was put for sale at. This coupled with the fact that in a years time we will have £200 more money coming in as our car loan of £200 a month finishes.

We could have a mortgage up to 150k on our salaries if we wanted, however we dont want to stretch ourselves and the house we have seen is in a nice area and has 3 bedrooms so we wont want to be moving out of it in the short / medium or long term unless we throw out an army of kids!!!!

hoggums

It's this "Bargain Price" nonsense that gets me. Everyone is still in the 2007 mindset!

Just because it's been reduced 25% doesn't mean it's a bargain!

feisty1

hoggums wrote: »

It's this "Bargain Price" nonsense that gets me. Everyone is still in the 2007 mindset! Just because it's been reduced 25% doesn't mean it's a bargain!

Agree 100%, particularly FTB's taking a 90% mortgage on a 2yr deal!! crazy!

pixiepie99

woody252506 wrote: »

There have been many good points on here but I think pixie pie is right. If you can comfortably afford it and can get a mortgage along with a house for a bargain price its a good time to buy.

Glad you agree with me but you seem to have ignored the first thing I said! I never ever said it was a good time to buy.

How do you know that this 'bargain house' won't be worth £80k in a year's time? Just look how much it has dropped in value over that short period of time. Most people are predicting further falls this year. By buying now you are throwing money down the drain.

woody252506

But then again in a years time who is to say they will have dropped that much so its value is 80k???!??!?!

Who would have predicted that we would be where we are now a year ago???

Its all guess work, things may get massively worse, they may not. We can afford it comfortably is my point and wont be bothered about negative equity as we are not buying a 1 bed place which we would need to get rid of when we have kids.