Petrified FTB

queenA

Hi,

are there any other FTB'ers who are really scared after hearing the recent news about interest rates hitting 8%? There's lots of people saying "i told you so" and "this is a bad time to buy" etc but after waiting 3 years for prices to go down (which they haven't in my area) I am so worried we are going to be in a bad situation very quick....

Out of interest of anyone can answer this....if my mortgage is for £105,000 and the current interest rate is 3% (monthly payments £500), how much would the monthly payments be if the rates went up to 8%?

Thanks in advance guys...

NyimaR

Depends on your mortgage - could go up by 8% on a tracker or you could get a fixed rate and they wouldn't go up at all. 8% is a high estimate (as the MSE article says) and I think it is highly unlikely to go up that much (just my opinion). Also depends on whether you're interest only or repayment etc.

Cannon_Fodder

Being informed of the possibilities will allow you to prepare and act accordingly;

Have a safety net.
Don't over-extend.
No need to panic yourself about it.


What the amount will change by, will vary according to the mortgage term you choose. You indicate £500 a month, so it looks like a 25-yr term.

Using http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml 3% comes out as £502 per month. At 8% that changes to £820. Assuming repayment basis.

It is of more concern for those on interest only, as it directly increases by the difference between 3% and 8%, namely +166%.

PasturesNew

8% is the long-term average for mortgage rates, I believe. I've always based my affordability on 12%, the BBC website mortgage calculator has always reminded people to think about what 12% would cost them: http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml

See how it does the 12% calculation for you.

£105,000 at 8% over 25 years would be:
£820 repayment
£700 interest only.

pardal51

queenA wrote: »

Hi,

are there any other FTB'ers who are really scared after hearing the recent news about interest rates hitting 8%? There's lots of people saying "i told you so" and "this is a bad time to buy" etc but after waiting 3 years for prices to go down (which they haven't in my area) I am so worried we are going to be in a bad situation very quick....

Out of interest of anyone can answer this....if my mortgage is for £105,000 and the current interest rate is 3% (monthly payments £500), how much would the monthly payments be if the rates went up to 8%?

Thanks in advance guys...

I suggest you look at this thread and download the excel spreadsheet. It is a great tool to run your calcs. Hope this helps.

queenA

Yes it's over 25 years.
Its repayment not interest only.
£820 is not too bad....i was reading figures of over £2000 monthly payments if it went up on one website for an average £700 mortgage.

We have joint salary of £55k so hopefully if we budget carefully we can get through hard times if they do arrive sooner rather than later.

I think its FTB nerves as well- having waited and waited for the "right time" to buy, we still have a voice in our head that says 'dont do it!' But 12 years of renting feels just about enough now so we are going to go for it and hope for the best!

Thank you once again

brit1234

queenA wrote: »

I think its FTB nerves as well- having waited and waited for the "right time" to buy, we still have a voice in our head that says 'dont do it!' But 12 years of renting feels just about enough now so we are going to go for it and hope for the best!

That little voice may be right with prices starting to fall. Think of how much they will drop in 6 months and the lower interest because of that.

neas

To avoid tis worry i just fixed my mortgage at 3.99% or added security for 5 years... now while your 3% mortgage most likely will rise in next 5 years mine will not.

Meaning i can overpay comfortably and just get on with life.

Its why i feel fixing is the safest option for a FTBer as at least they can mantain their repayments etc

sinbad182

brit1234 wrote: »

That little voice may be right with prices starting to fall. Think of how much they will drop in 6 months and the lower interest because of that.

My God, you're tiresome!

Ankatden

You will always get a smart !!!! tell you worng time to buy, house prices going to fall, interest rates going up, jobs to be lost.

Do what is best for your family and ignore the depressives.

cashbackproblems

People are always waiting but alot will soon have missed the boat and rates are guarenteed to go up and if the BOE rate was 8% mortgages would be ALOT more, especially if the economy is still growing slow and credit is restrainted.

Last yr/this year is the time to buy, i dont know where you are living but if its in london prices will never dramatically fall like elsewhere, there is too much demand. New developments around Docklands are getting sold in the first few days of going on sale b4 a brick is laid.