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FTB if you've come off the ladder?

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  • The problem that must also be remembered is the recent drop in house prices that went on. I moved in 2007 and put £17k on my current house. I want to move in two years time but it looks like, despite paying a £600 mortgage for four years by then I will have no deposit. That probably means I will have seen £17k deposit and around £8-9k in capital clearing mortgage repayments amount to nothing. I know that other houses will have dropped in price accordingly but that does nothing to help me in terms of a deposit.

    The banks, as per usual, are utterly hopeless. What they should be doing is reducing the income multiples so that people are not taking out mortgages they cannot afford to repay when rates go up. Instead they have introduced draconian and panic-measure LTVs meaning that there are many good, creditworthy people who cannot get on the ladder for years (because they cannot save more than £300 per month) while simultaneously continuing with ludicrous lending policies such as four times salary. I despair at these financial 'experts' who still cannot see it! :mad:

    To everyone I say stick to 3x salary and no more. Then enjoy life on the money you have left over. Don't end up paying silly amounts for s house so that all you ever do is work to pay for a house. It's really not worth it.
    Credit cards + Loans - Savings in Jan 2012 = £26,228.16 :eek:. Need to get paying them off!
  • andrewmp
    andrewmp Posts: 1,792 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Oh no, I feel really guilty now. £1000 a month though - that's impressive. Once we get into rented, hopefully, we'll be able to save a lot more. We would be paying £700 a month to rent our current home, and the mortgage is almost double that. So we should be able to save quite quickly.

    Good luck with your savings.

    Is the house you're buying lots better than the one you're renting? If not, then is it really worth paying double rent to buy?

    When I bought my house, a repayment mortgage was about £100 per month cheaper than it would be to rent. That's why I bought it.
  • JimmyTheWig
    JimmyTheWig Posts: 12,199 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Sorry to have 'amazed' you ... we're both in our mid-twenties, I was a student until two years ago studying for a PhD on £10k a year, my husband is a teacher who was promoted last year. Our mortgage is £1275 a month. His parents are a train driver and a stay-at-home mum, my mum is a single parent aerobics instructor, so we don't get 'gifts' from them. We are now a university lecturer and a teacher, we pay pensions and student loans, and it has taken us this long to get ourselves established and save the other 5%.

    I wish people would offer the advice they're asked for or !!!!!! off, quite frankly.
    While I agree that some of the responses were rather harsh, I agree with their sentiment.
    The thing is, what we didn't know was the reason why you had such good income and little savings. Now we know, that's fine. From now on you should be able to build up your savings rapidly, and that's what I'd suggest. If, on the other hand, you'd been wasting your money for the last ten years then the right advice (regardless of the actual question you asked) would have been to cut down on your spending to build up more savings.

    You see, you are asking this on a public forum. Imagine asking the same question whilst standing at the bar in the pub. You would expect to get all sorts of answers from all sorts of angles. Some would be supportive, some would be helpful, others wouldn't be.

    Sometimes there are more important points than the actual question asked. E.g. imagine someone asks "Where can I get the best interest rate for my £100,000 in the bank? I need more money from it as I'm struggling with my mortgage repayments." If we were restricted to answering the exact question asked the OP could get quite a good interest rate for their savings. But a bit of clever thinking and someone might suggest using the savings to pay off the mortgage which might leave them much better off.
  • The problem that must also be remembered is the recent drop in house prices that went on. I moved in 2007 and put £17k on my current house. I want to move in two years time but it looks like, despite paying a £600 mortgage for four years by then I will have no deposit. That probably means I will have seen £17k deposit and around £8-9k in capital clearing mortgage repayments amount to nothing. I know that other houses will have dropped in price accordingly but that does nothing to help me in terms of a deposit.

    The banks, as per usual, are utterly hopeless. What they should be doing is reducing the income multiples so that people are not taking out mortgages they cannot afford to repay when rates go up. Instead they have introduced draconian and panic-measure LTVs meaning that there are many good, creditworthy people who cannot get on the ladder for years (because they cannot save more than £300 per month) while simultaneously continuing with ludicrous lending policies such as four times salary. I despair at these financial 'experts' who still cannot see it! :mad:

    To everyone I say stick to 3x salary and no more. Then enjoy life on the money you have left over. Don't end up paying silly amounts for s house so that all you ever do is work to pay for a house. It's really not worth it.

    We're in exactly the same position as this. I'm not complaining, actually - whenever you make an investment in a house you know it can go either way, and I absolutely understand the reason for the need for low LTVs because it gives the banks a safety measure - which is fair enough after all. But I agree there is still a lot of ridiculous lending at high income multiples going on, and people with secure jobs and decent incomes who've never missed a payment in their lives (me!) who can't get anywhere in the current system. Before the crunch, nobody was properly looking at the whole package, and still nobody seems to be.

    JimmytheWig, I understand what you say (notwithstanding that this is, as you point out, a forum, not the pub). But there are a lot of people on their high horses on this forum who like to gloat at their own financial position and don't offer constructive advice and never show any of the clever thinking you mention. And I personally think people should trust other people on the forum (who they don't know at all) to be able to make their own decisions, and just provide answers to the questions they're asked. Or if they want more information, to ask for it rather than sit in judgement.
  • RenStar
    RenStar Posts: 217 Forumite
    Part of the Furniture Combo Breaker
    Another one in the same boat here - we bought right at the peak of the market, and at the time, we thought we were being sensible by only borrowing 2.5x joint income, buying a small three bed semi (as that's all we thought we'd need at the time) and putting down 25% deposit. Fast forward 2 and half years later, the market around us is in tatters, we are fast out growing the small 3 bed semi with a toddler and another baby on the way. Although our lenders nationwide are willing to lend us up to 95% of a new property's value (at crappy rates might I add!), I can't stomach the fact that if we sold our house today, we'd lose 22K on what we paid for it, which rises to about 30K once you factor in improvements we have made since buying (new windows and doors, landscaped garden, new bathroom etc). On the plus side, we've been on Nationwide's BMR since October last year which is allowing us to build up our savings pot and also overpay the mortgage, but I can't help feeling we're almost back to square one with the whole saving for a deposit (albeit bigger!) thing again. I know a house is a homne first and foremost but very few people are willing and able to stay in the first house they purchase for the rest of their lives so it will nearly always be an investment also. It's galling when said home/investment loses money so quickly through no fault of you own! We had no help from family either, we saved for 5 years to afford the deposit on our house so it's a very real lost to us. With sweet, sweet hindsight, we should have have pushed the boat out and bought that 4 bed detached back in 2007 that strangely my father told us to get!

    We were also considering moving as recently as last Friday but with the ensuing loss to the house, estate agent fees, stamp duty, moving costs and solicitors fees, we'd had been looking at reducing our deposit to only 11% on the new property, which would mean the mortgage we could take it would be more expensive than with 25% deposit. So, wet have now come to conclusion that we could probably hang on where we are for another year or 2.

    OP - Is there any reason why you can't hang on to the property until either things improve or you make some in-roads into your mortgage through overpayments as we are doing? I know some people might say cut your loses and run but in my view that should only be done if you really need to. My parents suffered in the 80s with negative equity and the 5 of us had to stay in a 2-bed cottage with dodgy wiring until 1995. It was only last year that I found out why.

    As for the 95% LTV, I know that Nationwide and Halifax have this for their existing customers wanting to move (so long as it's not to a new build!) I haven't come across any 5% deposit deals for new customers though and doubt you'll get far with the gifted deposit route on new builds as most lenders now shun these. Good luck all the same with whatever you decide to do.
  • uzubairu
    uzubairu Posts: 1,207 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker Home Insurance Hacker!
    A case in point: uzubairu, I actually said in my post that unless we find a mortgage, which we know is unlikely, we are going to do exactly what you suggest and rent. Amazingly, we thought of that by ourselves. My question was at what point, if any, we will be considered first time buyers again.

    The lenders set that criteria and they move the goalposts whenever they want, so what does anyone of us know.

    Good points made by Renstar, JimmyTheWig and BringtheStoneshome.
    The general consensus is to stay put (if possible) and save a bit more.
    Not gloating, just giving advice.
  • Dan_1976
    Dan_1976 Posts: 943 Forumite
    Sorry to have 'amazed' you ... we're both in our mid-twenties, I was a student until two years ago studying for a PhD on £10k a year, my husband is a teacher who was promoted last year. Our mortgage is £1275 a month. His parents are a train driver and a stay-at-home mum, my mum is a single parent aerobics instructor, so we don't get 'gifts' from them. We are now a university lecturer and a teacher, we pay pensions and student loans, and it has taken us this long to get ourselves established and save the other 5%.

    I wish people would offer the advice they're asked for or !!!!!! off, quite frankly.

    Welcome to MSE, you will find that 50% on here will judge you and then tell you how great they are and the other 50% will try and help. Dont go looking for advice, stick to opinion taking and make your own mind up at the end.

    You have to do whats best for you. Think short term and long and try to look at how your life would work around your choices. Your not that old do plenty of time.
    "Banking establishments are more dangerous than standing armies." Thomas Jefferson
    "How can I believe in God when just last week I got my tongue caught in the roller of an electric typewriter?" Woody Allen

    Debt Apr 2010 £0
  • Thank you to everyone who has posted. We've given serious thought to staying put - it's really an issue, as previous posters have put, of investment vs. home/quality of life. As we can save a lot more quickly off the ladder than by paying our current mortgage, and get a better quality of life to boot, we're going down this route. But we just have to promise ourselves never to look at how much our current house is up for in a few years' time! As with all these kinds of decisions, it is really hard swallowing a financial loss but I think the gain will be worth it short term and not too detrimental long term.

    Good luck to all the other posters who are trying to make changes in these crappy times!
  • andrewmp
    andrewmp Posts: 1,792 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Good luck with whatever you decide to do, a lot of people are harsh on here!
  • JA1000
    JA1000 Posts: 620 Forumite
    You say you can save more by pulling out, however have you taken into account any recovery in the housing market?
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