Graduate mortgage still high interest

baxxy

Hi
Turning 30 in the next couple of months and really depressed that i don't have my own house even though all my friends have already taken the plunge and benefited from the rise.

Unfortunately i don't have any kind of deposit and went to my local branch of HSBC to see how much i could borrow.

Turns out as i graduated in the year 2001, i can still qualify for a graduate mortgage which allows 100% borrowing.
Unfortunately that offer runs out after 5 years, so i have 2 months until the end of 2006 to find somewhere.

I earn 28K before bonuses and was offered a mortgage of 126K.
But the interest rate was 6.2%

Does this sound excessive, or should i bite there hand off and take it.

Also, probably makes a difference, but i also have a loan with HSBC of 10K which should be paid off in 4 years.

Any advice helpful

phoneprize

Sounds like a great idea to me.

However, you should do some legwork and find out if those rates are in-line with local rates, there's nothing wrong with shopping around a little.

Angela_D_3

Are you in it for the long term or do you want to own a house at any cost.
If you don't care how long it takes you to pay the mortgage back then go for it. If you'd like to actually own the house one day as aposed to renting it from the bank like your friends are then saving the deposit. 2nd job, don't go out what ever but find 5%.

tomstickland

Sounds excessive to me.
Crack on with saving a deposit, meanwhile become a property expert by scouring the papers and rightmove to see what's available at what price and how long it takes to shift. Go and see some estate agents and do some constructive research.

even though all my friends have already taken the plunge and benefited from the rise.

They haven't benefitted from the rise though, and the way things are at the moment means short term rises aren't so assured as they once were.

The discipline of saving a deposit will put you in good stead for paying a mortgage and the costs of buying.

100% mortgage at over 6% and greater than 4 times salary borrowing, it's a bad idea.

I'm 33 and have just bought my first place. I spent 2 years clearing debt and 1 year saving and moneymaking. I spent months looking on rightmove, did some constructive time wasting round EAs, talked to 3 mortgage advisors and whern I finally bought I had a deposit, a 4.3% mortgage offer and knew that I'd found a nice flat for a good bit below the going rate in the area (flat just needed decorating properly, hence why it hadn't shifted).

baxxy

Hi all,
thanks for the replies.
tomstickland, how much would your house have cost though 3 years before you started saving?

I guess i'm just worried about house prices rising even further, and want to get on the ladder before they get too far out of reach.

I know house prices seem to be slowing down elsewhere, but i live in leeds, and there was an article a month back that inspired me finally get on the ladder.

Basically says Yorkshire has a major shortage of houses and they expect by the year 2011 house prices would have risen a further 50%

http://www.nationalguarantee.co.uk/financenews_Yorkshire_set_for_property_price_boom_66.htm
http://www.leedstoday.net/ViewArticle2.aspx?sectionid=39&articleid=1802238

Do you think i'm probably best jumping on now?
What do you think?

6.2% does sound a lot though..
Does that go down if i only borrow 3.5 times my salary?

noyk

baxxy wrote:

Hi all,
thanks for the replies.
tomstickland, how much would your house have cost though 3 years before you started saving?

Prices in the last three years have risen, in your area i believe quite quickly but that does not mean they will go on rising. As a start please have a quick look at http://www.housepricecrash.co.uk.
I'm not necessarily an advocate of them but they have some very solid evidence, research and arguments.

baxxy wrote:

I guess i'm just worried about house prices rising even further, and want to get on the ladder before they get too far out of reach.

I know house prices seem to be slowing down elsewhere, but i live in leeds, and there was an article a month back that inspired me finally get on the ladder.

Basically says Yorkshire has a major shortage of houses and they expect by the year 2011 house prices would have risen a further 50%

http://www.nationalguarantee.co.uk/financenews_Yorkshire_set_for_property_price_boom_66.htm
http://www.leedstoday.net/ViewArticle2.aspx?sectionid=39&articleid=1802238

Well they would say that wouldn't they! They want you to buy their mortage!!! And the paper wants to sell advertising space to estate agents and mortage companies!!! (sorry to many exclamation marks!)

On a side note, what sort of name is that anyway? "National Guarantee" - Sounds like a scam outfit

baxxy wrote:

Do you think i'm probably best jumping on now?
What do you think?

6.2% does sound a lot though..
Does that go down if i only borrow 3.5 times my salary?

No i really don't think because of these articles you should buy and I also think you should pay off your debt and build up a deposit over the next year or two and then re-evaluate your position.

lynzpower

Dont buy too soon. If you have debt, believe me, it aint pretty when you buy, then your fixed product ends. I will have my Fixed ending in december to face at least a further 70pcm. luckily im getting out of debt fairly quickly now ( and also selling up!)

FWIW I think 6.2% is pretty high, I wouldnt take that. I think Ive got 4.2ish,
although I did have a small deposit. Its worth having a few Ks deposit just so that then you get offered some lower APR deals- work out way better over the long term!

I think Tom is completely correct. You are likely to be committing yourself to a debt of over £100,000. think about it. Some people put more thought & research into buying a 2nd hand car than they do about property. KNow your commodity before you commit is my advice

baxxy

Actually, stupidly just reAlised that the offer of 126k is actaully 4.5 times my salary rather than the 4.

Does this still make 6.2% sound poor?
Especially with interest rates expected to go back up before the end of the year.

Also, i'm leaning more towards purchasing a 3 bedroom house and renting out 2 of the rooms to help meet the mortgage.

Although, on paper the only places i've seen so far on the websites are in Seacroft.
Anyone know much about seacroft, i,e what;s the standard of living, and how difficult it would be let out a couple of the rooms?

Another issue i have is i don't have a car, so i can't just drive all over town looking for nice areas, so i'm hoping some of you guys can help to point me in the right direction at least.:beer:

jamesd

6.2% is poor. It's what people with impaired credit would have to pay. Mainstream rates are readily available below 5% for various fixed term deals and readily available around and below 5.5% without commitment.

Your income from renting the rooms will not be counted as income, you'll still need to be able to afford the mortgage without it.

If your credit rating is good you should be able to obtain a better deal. If it isn't or you are unsure, get your credit reports from Experian and Equifax to find out what they say.

lynzpower

Although, on paper the only places i've seen so far on the websites are in Seacroft.
Anyone know much about seacroft, i,e what;s the standard of living, and how difficult it would be let out a couple of the rooms?

Another issue i have is i don't have a car, so i can't just drive all over town looking for nice areas, so i'm hoping some of you guys can help to point me in the right direction at least.

I dont know seacroft at all, but I moved to london having onoly been here for an afternoon, but that was renting

Simple answer to your questions is you simply have to go, whether you bus taxi or walk it. Hang around at night too ( take a cab round there are 1.00am on a sat night, see how it feels) search the internet buy local papers if you dont anyway, see if there are any hotspots. Do loads of googling.

I might say its rough, but you might be harder than me!

jamesd

Seacroft apparently has the worst performing primary school in the area. That pretty strongly suggests that it's at least a poor area.

Lots of unemployed, see the claimant count. Lots of single parent families as well.

Lots of roughness potential in the single postcode I checked. Depends on which particular bit though - some parts of Seacroft may well be fine. Nothing wrong with having a word with the local police to see what they say about the particular part that interests you.

"Seacroft Locality is a largely urban area covering the communities of Beechwood, Whinmoor, Seacroft, Swarcliffe, Manston, Cross Gates, Halton, Halton Moor and Colton. Many of these are among the most deprived in the city. Unemployment in the locality runs at twice the city average, there are one and a half times as many households receiving benefits, and in Seacroft and Swarcliffe only 12% of GCSE entrants obtained 5 or more passes. Seacroft Locality has the lead for young people, drugs issues, and community safety and crime. ... developing an East Leeds model for drug service provision and working with older people's networks on issues of fear of crime and isolation. ... the Seacroft ward showing high levels of ill health and deprivation compared to the relative affluence of Halton."

You might find some people looking to rent but I'm not sure you'd actually want them in the same house as you.

Pick your area with care in Seacroft is what this suggests.