Just been approved on a mortgage

dorset_nurse

If it is an interest only mortgage you are right. And yes the big gamble is what happens after the fixed rate. I have had my current rate (tracker) consistent with no change now for 14 months. I'm hoping (and predicting) that it will stay pretty low for the next couple of years. I doubt they will reach 6.99 in a few years.
The main drawback for you will be your monthly payments at 6.99% so measure them against your income and make sure there is a bracket for emergencies. If you can save while you are paying you may be able to seal a better mortgage deal at the end of your fixed period.
Check what will happen after the fixed period if you stay with that company in case you find it difficult to switch or get a better deal- there can be high charges to switch to better offers at the end of the introductory period.

Ste.._2

Thanks, I'm going to speak to them tomorrow about what happens at the end of the fix as that's my biggest worry. I feel as though the initial payment is affordable. I've seen a whole bunch of houses for the amount I'll be borrowing within 30 minutes of work, all semi-detached with big corner gardens.

It's a repayment mortgage, not interest only.

Some figures; take home pay 3000, mortgage will be 1200. I have no dependants or debts, so I see the remaining 1800 will be ample for living and a bit of saving.

dorset_nurse

If it is a repayment then at the end of the period you will be better off at the end of the fixed rate as you will own a larger percentage of the house.
Bear in mind that if the house prices fall you have to think about what to do. If you are going to need to move in a few years this could be an issue for you, but all buyers take that risk. If you want to live there for a long period the chances are the prices will come up- and you have to option to let a room etc to help. You are allowed to earn around 4.5k a year off the top of my head tax free from a lodger in a year which is worth looking at. (Please check on the figures and responsibilities of being a landlord if you think of doing this).

Your figures are very similar to mine and I cope fine. My house running costs were 2.4k for the whole year including TV licence, council tax, phone, internet, bills, insurance etc not including the mortgage payments. (3 bed) I don't think you will have a problem affording it- providing you don't buy a house thats falling down!

Ste.._2

Great advice ta, definately house prices is a concern. I'm a fully paid up member of the house prices are and will continue to fall camp, but I also think if you take everything into consideration, it is perhaps not the worst thing to do to buy now.

The house will be a family sized house so I could in theory live in it for many, many years if required. It's commutable to London if I lost my job and had to draw on the seemingly endless amounts of work that place generates.

I guess best thing to do would be try to save to make sure in 3 years I have paid off enough and saved enough to only need a 90% LTV mortgage, perhaps that is another question for the broker. How much would I need, in addition to my regular payments, to be in a good re-mortgaging position in 2014.

:beer:

dorset_nurse

Have a look at some of the mortgage calculators on this site to work out what your mortgage will look like in a couple of years time. Look here; http://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator
It sounds like you have just about everything into account, do all the research you can and make sure you don't stretch yourself

Ste.._2

That's excellent, it indicates in 3 years I would be at 90% LTV assuming we don't have another further catastrophic fall in nominal house prices, so a bit of saving and I might only need an 85% mortgage.

My belief on house prices is that inflation is going to take care of the falls, we won't see much of a reduction in nominal prices.

It's always a fairly calculated gamble isn't it, as you say everyone worries about whether they will have to move, what prices will do, will they keep their jobs, but eventually if you want to own then you have to take the plunge, and I'm starting to feel like time is running out for a normal 25 year mortgage.

I do worry this 95% product will not be available forever, so this might be a bit of a sweet spot for me personally.

dorset_nurse

Those calculators are great; without knowing the deposit and house price its difficult to guess for you!
I agree with you- I don't think prices will fall much further either. Only predictions though.
Its the best feeling buying your own place and watch the mortgage numbers tick down!
Call the number I gave you and just check if there are other deals out there - they have always been very helpful to me

Ste.._2

Will do, and thanks again for your thoughts on this.