the future of 100% mortgages

Radiantsoul

I think you ought to move closer to your wifes workplace. Her prospects are likely to be quite good as a teacher, she will go up a grand or year or so for the next few years even without taking on additional responsibilities.
The inland revenue allows 40p per mile, so doing 170 miles a day is just too much. Unless you have really great career prospects in your current job you need to do a serious rethink imho.

Chinkle

You seem to know where you stand financially and have a plan to reduce your debts. As you say, once these are gone you can then focus on saving for a deposit. Depending on how focussed you are on buying property you could reduce the 18 months you talk about by reducing your outgoings, but remember you are young and should be enjoying life too.

If you look at the general age of first time buyers these days you'll see that very few people in their mid-twenties are in a position to buy property. There are plenty of people here who over-stretched themselves with mortgages when the banks were clammering to lend to them. Thank your lucky stars that the banks are making sure that you have a decent safety net before you jump into home-ownership.

mikeandrach_2

i am already doing the rethink. i am applying for other jobs, but realise it may be weeks or months until i find one in the current climate. rach only travels approx 20 miles each way anyway, so we are going to stay where we are, at least for now. her fuel bill is approx £90 per month, and pretty much zero during the summer etc. her insurance is £18 per month, and the car has had no mot issues etc, with 20k service intervals it owes us nothing and will be paid off in full by next august if we just paid the minimum, which we wont, we are overpaying already to bring it closer.

once we clear the £200 credit cards x3, the next account in my name of £500, we will channel this extra money into the highest interest rate debtm the welcome loan, as it could pay it off much earlier with their high interest rates.

when rach finished uni we did have a 100% mortgage lined up in principle, thankfully now lookign back she didnt get a job immediately and did a years supply. a friend of hers got a job, 100% mortgage, and now after paying all the bills lives on an £80 a month disposable income.

chinkle as you say, we want to enjoy life too. we have done already, we havent wasted money going out drinking, but have been on nice holidays once a year, which is our biggest culprit for our money. BUT, I dont regret it one bit. we have travelled to some remote and exotic places and seen some sights that are truly amazing. they may have made us poorer financially, but by going to far flung places and off the tourist trail it has made us much richer people, if that makes sense. it hink some of these experiences are what will make us better parents when we have kids and better people in general. if we had been clubbing to ibiza etc every year i would regret it, but we havent so i dont. we have one last holiday for the summer booked, but this really will be the last until everything is sorted.

we get back to the uk on 31st august, from then every last penny we have of spare income is going on paying off debts. i dont care if we call and pay off a fiver, its a fiver less we owe.

rachs income does go up every september which helps, and we havent factored this in just incase my salary were to drop or fuel prices increase and absorb her pay rise, again trying to work on worst case scenario.

looking back, i dont think that 100% mortgages were a disaster if offered to people who could genuinley afford them, i think 120% mortgages are the issue. if you have a 100% mortgage, once you've paid a months payment you no longer have a 100% mortgage, as long as valuations are done properly etc. by the time you ae a year into a mortgage of 100% the bank have a margin at least of safety.

i guess i just got to focus on paying all the bills until this summers holiday, enjoy a break in the sun, the last for a few years probably, then hit the bills hard when we get back.

Chinkle

mikeandrach wrote: »

looking back, i dont think that 100% mortgages were a disaster if offered to people who could genuinley afford them, i think 120% mortgages are the issue. if you have a 100% mortgage, once you've paid a months payment you no longer have a 100% mortgage, as long as valuations are done properly etc. by the time you ae a year into a mortgage of 100% the bank have a margin at least of safety.

Got to disagree with you here. Firstly, 100% mortgages show that the buyer has made no financial commitment of their own to the property they are buying, or demonstrable ability to budget each month. Secondly, your assumption only works if a property's value stays the same and we are going through a period of price falls. Thirdly, even if you go for a repayment mortgage in the first few years most of the repayment goes towards interest so the percentage you truly own is miniscule and unlikely to protect you should prices fall or you be unable to meet your mortgage payments.

mikeandrach_2

fair point. although technically with each months payment the amount of it that is against the propert increases slightly, and the interest amount falls slightly. admittedly, on a mortgage we are talkin pence especially in the first few months.

i know what you mean about the lack of financial comitment with 100% mortgages, but i do think that plenty of people out there who struggle to save for a deposit could easily keep up with a mortgage.

i think our plan now is this, pay off all debts and be debt free by christmas 2011. then talk to our landlord about staying here for approx 4 further years, or rent a slightly bigger house for ideally approx 4 years. during this time we would have a child or two, as well as save towards a smallish deposit, plus it would be a great tool for credit repair i hope. i am going to keep my barclaycard open (£250 limit), and use it for fuel or internet orders, but pay off in full every month. i will conitnue to use a contract mobile phone, which may help a little also. by approx mid 2012, if we are going to start a family, i will then look at finanicng 1 new car. not crazy money, but a 2-3yr finance deal for a family sized car, to give us the space for long days out etc, it would see a lot of use visiting family etc as we are over 200 miles away from my family, so i think this is not an unsensible purchase.

hopefully having 0 debt, a mobile phone, a properly used credit card and a modest car finance agreement over the next 5.5 years should enable us to get a reasonable interest rate on a mortgage. i think doing the sums, and i know adding kids to the equation could change thins significantly, but again i have erred on the side of extreme caution, i think that by 2015 we should have a decent deposit, of between 10 and 30 %, but more importantly, we should have a decent credit rating. sooner would be great, but i think this is a very realistic timescale, we are now just in the lap of the credit reference agencies!

property.advert

In my adult lifetime, since the 1980s, I can remember times when you had to save with the building society for years and reach a set amount before they would even consider you for a loan. It was a very personal service but you had to show that you could save and save over a reasonable period of time. Things have moved on but the requirement to show you can save is back in play.

I was going to suggest you move to where your wife works but if that is such a bad place, then why does your wife not just move ? Teachers are not exactly in over supply are they ?

mikeandrach_2

unfortunately, where we live they are. we live between 2 major cities, that both have a uni churning out teachers. on average for every vacancy there has been over 100 applicants. its the only part of the country where it is so bad! where i'm from, in bucks, it would be a different story

property.advert

mikeandrach wrote: »

unfortunately, where we live they are. we live between 2 major cities, that both have a uni churning out teachers. on average for every vacancy there has been over 100 applicants. its the only part of the country where it is so bad! where i'm from, in bucks, it would be a different story

So move to Bucks or somewhere else ?