Tighter lending rules mean 10-year wait for first-time buyers

Idiophreak

Raggs wrote: »

Except rent covers more than just what the mortgage does. What happens when they need to make repairs etc? And whilst mortgage payments may be less than rent payments, if interests rates go up, it may not stay that way.

...and if interest rates go down, they'll be even better off.

Anybody that had saved for a deposit could be in exactly the same position if interest rates shot up...

And my mortgage is £300/month cheaper than renting the same place - I think this is plenty to save for running repairs etc...

But again, not the point. You just *can't* infer that someone who can't afford to save is high risk. It just doesn't add up that way...

ultrawomble

silvercar wrote: »

To which the usual suspects will respond that home is where you make it and tenants can bring up a family just as well.

It's a truism that most people don't buy their house, they borrow a shed load of money and live in the house. The commonly used phrase "Your home may be repossessed if you do no keep up repayments on your mortgage" certainly suggests that the home owner hasn't bought the property.

Raggs_2

Idiophreak wrote: »

...and if interest rates go down, they'll be even better off.

Anybody that had saved for a deposit could be in exactly the same position if interest rates shot up...

And my mortgage is £300/month cheaper than renting the same place - I think this is plenty to save for running repairs etc...

But again, not the point. You just *can't* infer that someone who can't afford to save is high risk. It just doesn't add up that way...

If they cannot save, then they have no backup for if they lose employment. Renting/mortgage can be either way, but the bank is risking it's money on one of them, and not the other. If I was lending someone cash I'd want to know that they were capable of handling their finances in a manner that they had a good amount of cash left over at the end of the month, than someone who doesn't.

Someone who cannot save isn't instantly high risk, but they are certainly higher risk, this you cannot deny (surely?).

To buy my mums place with a 25 year mortgage and 10% deposit (assuming only 5% interest (that's a good deal)), it would cost me about 200 pounds a month more than what could be received in rent (according to the estate agents prediction). Maybe for some rent is less than mortgage, but for others, no way. If you don't mind me asking, what exactly is your mortgage, what's the LTV etc, because an old mortgage, isn't comparable to getting one today.

Idiophreak

Raggs wrote: »

Someone who cannot save isn't instantly high risk, but they are certainly higher risk, this you cannot deny (surely?).

To buy my mums place with a 25 year mortgage and 10% deposit (assuming only 5% interest (that's a good deal)), it would cost me about 200 pounds a month more than what could be received in rent (according to the estate agents prediction). Maybe for some rent is less than mortgage, but for others, no way. If you don't mind me asking, what exactly is your mortgage, what's the LTV etc, because an old mortgage, isn't comparable to getting one today.

I've paid 1 year off a (admittedly long) 35 year mortgage, around 71% LTV, fixed for 3 years around 4.3% (iirc). I pay £650 mortgage, the flat next door (slightly worse than ours) is rented for £950.

If I were a lender, *all* that would concern me was the person's likelihood of making their repayments - if I had to chose between someone who paid their rent on time every month but had no savings, or someone that had plenty of savings but a whole bunch of defaults, I know which I'd take.

StevieJ

treliac wrote: »

But that always was a fact of life... not many can 'have it all'. When I first started out as a FTB, as a single girl, I couldn't afford any social life so I got a weekend pub job... just to be able to get out into a social situation. That's where I met my husband.

Barmaid with her own Gaff - Jackpot

treliac

StevieJ wrote: »

Barmaid with her own Gaff - Jackpot

Thanks Stevie - I was never short of offers.

P.S. He had his own place too.

Well, to rephrase that.... neither of us did really, the building societies owned them!

Raggs_2

Idiophreak wrote: »

I've paid 1 year off a (admittedly long) 35 year mortgage, around 71% LTV, fixed for 3 years around 4.3% (iirc). I pay £650 mortgage, the flat next door (slightly worse than ours) is rented for £950.

If I were a lender, *all* that would concern me was the person's likelihood of making their repayments - if I had to chose between someone who paid their rent on time every month but had no savings, or someone that had plenty of savings but a whole bunch of defaults, I know which I'd take.

Hop over to the mortgage forum, you'll see that people with bunches of defaults don't have an easy time either.

You have a very good interest rate, and a very good LTV (so you had a good deposit at least). On a house of 200,000 (roughly what yours is worth) on a reasonable interest rate of 5% (10% deposit), over 35 years, that's monthly payments of over 950 a month. On a more common 25 years, it's over 1100.

So either the same, or more than the rent. With a small deposit, the interest rate goes up, because the bank have a less secure investment. And now the mortgage is either the same or higher, and you have to deal with repairs and maintenance.

Emy1501

Harry_Powell wrote: »

Looks like there will be a large upsurge in the BTL market once people figure out that there is a going to be such a huge demand for decent rental properties while FTBers save up those deposits. With people having such a downer on traditional pensions, looks like property will be the investment of choice for many.

Of course there will be! I supect otherwise as rates rise

http://www.ft.com/cms/s/2/53da7c84-8f5b-11df-ac5d-00144feab49a.html?ftcamp=rss

Harry_Powell

Emy1501 wrote: »

Of course there will be! I supect otherwise as rates rise

http://www.ft.com/cms/s/2/53da7c84-8f5b-11df-ac5d-00144feab49a.html?ftcamp=rss

I read your link and this statement doesn't make any sense at all:

"Matt Hutchinson, director, flat and house share website Spareroom.co.uk, said: “Britain’s landlords are in a Catch 22. On the one hand, the rise in capital gains tax for higher rate taxpayers means that many landlords either won’t be able to sell their buy-to-let properties full stop or will sell at a far greater loss. At the same time, holding onto their properties means they are at the mercy of the Bank of England and facing higher mortgage payments."

Capital gains are payable on gains only and there is also a £10k threshold. This means that the BTL landlord can make a £10k gain before s/he even starts paying the tax. S/he then pays a percentage (I forget what the new rate is, let's say 40%?) of tax on the remaining profit, meaning that they retain 60% of the gain. The gains are also calculated AFTER costs such as estate agents fees, etc.

How a BTL landlord make a loss due to capial gains? It seems this guy really hasn't got a clue what he's talking about.

chucky

why would interest rates go up = inflation

what happens when inflation goes up = rents will go up.

does anyone actually think if inflation goes up rents will stay the same...
interest rates go up, people will pay more for their rent. end of.

where's the issue?