First time buyer's guide...?

AndrewSmith

Careful_girl wrote:

For your next pice please write a similarly detailed essay on
How To Set Up A Business.

Ok Boss,

How many words and what type of business did you have in mind?

Careful_girl

I don't like your tone Mr. Smith.

AndrewSmith

Careful_girl wrote:

I don't like your tone Mr. Smith.

Strictly the business

AndrewSmith

I think a lot of the problem with these 100% + products is that they are, by some, sold in a similar way to the stories we hear about how Endowment policies were sold in the 80's-90's.

Endowments came with the promise of 'a tax free cash surplus lump sum to buy your boat, have your world cruise' etc etc.

Maybe I am being a bit too cynical here but are these 125% mortgages kindo of doing the same thing, except the are offering you the cash up front under the auspices of 'furnishing your new home or adding that much needed conservatory' then saddling you with a debt for the next 25 years and leaving you with a struggle if the property values do not increase to cover it?

Mmmm just a though, what do you all think?

Any views Martin?

Jorgan_2

Its not just me who is cynical of these types of mortgages then. I have had a number of people buying thru me using them and it always amazes me. The ones who bought four years ago are ok at the moment, the ones who bought last year may well be regretting that decision.

What ever happened to saving up to do the improvements to a property?

ukmonkey

Andy, thanks thanks thanks thanks!!!

Basically, our situation is that our combined annaul (gross) salaery is about £30k (ish).

I have an unsecured personal loan that has about 3 years left to pay @ £228 per month (the settlement figure at the moment is approx £7k) and credit card borrowing of about £2k in total.

She is renting a flat at the moment at about £270 per month. I'm living with my parents still and paying £140 per month (I pay no bills on top of that, my OH DOES pay her own bills on top of her rent). So on these figures alone, we'd deffinatley, 100% have at least £400.00 per month for a mortgage.

If I could consolidate my loan and credit card borrowing into the mortgage, then that'd free up the £228 monthly loan loan payment, along with the approx £70 monthly credit card payments that I make.

So upto now we're up to about £700 per month, that we would, in theory, have available for mortgage payments.

We're not planning on having any children at any point in the future.

So do you have to say about this information?

AndrewSmith

Hi Monkey,

Whilst I appreciate that monthly income must be maximised in order to make the new property more affordable, it is my job to play devil's advocate when it comes to adding short term loands etc to a mortgage.

Example

Your loan £228 per month for 3 years then cleared. Total £8,208 approx.

Add that to a mortgage of say 5.00% over 25 years the true cost is £46.77 per month over 25 years = £14,031, almost double. Thats just the loan being added.

At the end of the day it will always be your decision as the client which product or type of mortgage you will take. That's fine, as long as you decision is made knowing all the facts and alternatives available.

Cheers

Andy

ukmonkey

What are the alternatives andy, other than waiting untilt he loan is paid off?!

lynzpower

Personally, Id get rid of the debt first. I bought ( not on 100% though, I did have a fewk deposit) but I also had debts. I wish to god Id paid the debts off, or at least made a very healty inroad to them before I bought this place.

I wouldnt dream of getting one of these 125% mortgages- you are in negative equity straight away, which is enough to scare the pants off me. You can get 0% , credit cards, if you want to be savvy with your debt, use those and get it paid off. Seriously. As Andrew says, the maths just dont stack up in your favour.

ukmonkey

Waiting until the debts are paid off REALLY isn't an option we'd like to take, as we'd be talking at least another 2 and a half years, but more realisticly 3 years.