An entire generation locked out of property ownership

wotsthat

Graham_Devon wrote: »

40 year mortgage though....scary!!

If it continues to cost her £500 each month and doesn't change, she'll pay for the house and then pay for it again 2.5x over. At that point, renting becomes cheaper!

The operative word here is 'if'. It seems highly unlikely that someone just starting out will have the same mortgage 40 years later.

If she had a 10% deposit leaving a balance of £86,400 then she's paying 6.5% interest. An extra payment of just £50 per month will reduce the term by a full 10 years. She may not have that now but a few pay rises will more than take care of that.

All of a sudden buying's cheaper than renting.

Percy1983

Maybe its just me who is looking at 25 years as a maximum for what I am looking at, if I can't afford the payments on a 25 year mortgage now I need to adjust my goals in what house I want.

I would say the problem with a 40 year mortgage now is:

Previously its was well and good at the start of your career getting a 40 year mortgage and as others have said as you progess in your career you can pay more.

The problem is now you need to get a good way in your career to be able to afford anything to which there is less headroom in future career progress to reduce future payments.

With that I did a few sums and figured with some of the interest rates on mortgages right now a £5 overpayment in the first year could save £17 in interest over the term.

I guess the amount I would pay in interest over a mortgage is a very real consideration to me.

I will agree if I was pushed into renting I would rather have a 50 year mortgage than fuel the rental market.

System

Not worth getting hung up over, whatever mortgage you take to start with will change.

I had a 30 year IO mortgage at first, remortgaged that onto a 23 year repayment after 2 years.

Graham_Devon

wotsthat wrote: »

The operative word here is 'if'. It seems highly unlikely that someone just starting out will have the same mortgage 40 years later.

If she had a 10% deposit leaving a balance of £86,400 then she's paying 6.5% interest. An extra payment of just £50 per month will reduce the term by a full 10 years. She may not have that now but a few pay rises will more than take care of that.

All of a sudden buying's cheaper than renting.

Yes, with the operative word being "if".

chucky

Percy1983 wrote: »

With that I did a few sums and figured with some of the interest rates on mortgages right now a £5 overpayment in the first year could save £17 in interest over the term.

I guess the amount I would pay in interest over a mortgage is a very real consideration to me.

I will agree if I was pushed into renting I would rather have a 50 year mortgage than fuel the rental market.

this is the problem that most people on here miss.

they see 40 year mortgage and start frothing that they wouldn't get one bla, bla, bla but can't see that the alternatives are actually worse...

ukcarper

Percy1983 wrote: »

Maybe its just me who is looking at 25 years as a maximum for what I am looking at, if I can't afford the payments on a 25 year mortgage now I need to adjust my goals in what house I want.

I would say the problem with a 40 year mortgage now is:

Previously its was well and good at the start of your career getting a 40 year mortgage and as others have said as you progess in your career you can pay more.

The problem is now you need to get a good way in your career to be able to afford anything to which there is less headroom in future career progress to reduce future payments.

With that I did a few sums and figured with some of the interest rates on mortgages right now a £5 overpayment in the first year could save £17 in interest over the term.

I guess the amount I would pay in interest over a mortgage is a very real consideration to me.

I will agree if I was pushed into renting I would rather have a 50 year mortgage than fuel the rental market.

It obviously makes sense to get the shortest term you can as my example shows you pay back 30% more over 40 years than you would over 25 and if you think you will not be moving you don’t want to be paying a mortgage when you retire. But you also have to consider the rent you might have to pay if you are only prepared to take a 25 year mortgage.

wotsthat

Graham_Devon wrote: »

Yes, with the operative word being "if".

I had a little bet with myself when I posted. Would GD continue to argue that renting was cheaper than buying when I've shown that just £50 per month makes a whole world of difference OR would he pick me up for starting a sentence with 'if' when I'd already pointed out that 'if' was the operative word?

I won the bet by the way.

Percy1983

ukcarper wrote: »

It obviously makes sense to get the shortest term you can as my example shows you pay back 30% more over 40 years than you would over 25 and if you think you will not be moving you don’t want to be paying a mortgage when you retire. But you also have to consider the rent you might have to pay if you are only prepared to take a 25 year mortgage.

Very true, I would promote 100 year mortgages over renting.

Are the banks stil giving out 25+ year mortgages, I have been under the impression they generally aren't.

ukcarper

Percy1983 wrote: »

Very true, I would promote 100 year mortgages over renting.

Are the banks stil giving out 25+ year mortgages, I have been under the impression they generally aren't.

No idea but longer mortgages aren't a new thing I got a 35 year mortgage in 1972.

Graham_Devon

wotsthat wrote: »

I won the bet by the way.

Did you?

Good for you.

Nice to see yuo have actually worked out in detail the comparions between buying on a 40 year mortgage and renting the same house before you patted yourself on the back.