First Time Mortgage Advice

sarah_elton

Something in the story is missing.

Even if your friends got this mortgage, at an interest rate of 5%, the repayment on an interest only £230k mortgage is £958 (30 year term).

A £10k/year salary gives a net monthly income of, what? £670?

So each month, their salaries are £300 short of the mortgage. Let alone council tax, electricity, gas, phone, living costs......

Unless your friends are getting into debt at the rate of about £1k a month, they're not telling you something, or this thread is a wind-up.

EDIT: If you're referring to a couple on a combined income of £20k, so net income £1300 ish, I still honestly don't believe they can afford to live without getting into debt.

EDIT2: This was my 300th post!!!

softmind82

sarah_elton wrote:

Something in the story is missing.

Even if your friends got this mortgage, at an interest rate of 5%, the repayment on an interest only £230k mortgage is £958 (30 year term).

A £10k/year salary gives a net monthly income of, what? £670?

So each month, their salaries are £300 short of the mortgage. Let alone council tax, electricity, gas, phone, living costs......

Unless your friends are getting into debt at the rate of about £1k a month, they're not telling you something, or this thread is a wind-up.

EDIT: If you're referring to a couple on a combined income of £20k, so net income £1300 ish, I still honestly don't believe they can afford to live without getting into debt.

EDIT2: This was my 300th post!!!

He is on intrest only and the house is 4 bed room and he is paying about £900 each month, and now you asked how he is affording so he put this house on rent .. and that what he is doing and i dont think he is in debt or any thing else ... well this is all i know and sometime surprise me

desperadoV2

softmind82 wrote:

He is on intrest only and the house is 4 bed room and he is paying about £900 each month, and now you asked how he is affording so he put this house on rent .. and that what he is doing and i dont think he is in debt or any thing else ... well this is all i know and sometime surprise me

Could you ask him the following further details:

Who is the mortgage broker?
Who is the lender (ie. bank/building society)?
How much mortgage he has got?
How many years of mortgage?
What is the interest rate?
How much deposit did he put down?
What are his monthly repayments?
Does he live in that property or does he rent them out fully or partically (ie. bedsit/roomshare)?
Has he got a mortgage on 50-50 housing association share basis?

I can't see how one could get a mortgage for 230K with just 10K salary. Sorry but I'm not trying to be rude here, maybe your friend is not telling you everything you need to know or you are not telling us everything we need to know to share our personal experience.

Personally people who earn twice your salary wont go for 230K (single person mortgage) because it is not affordable unless you rent out part of your property.

UK007BullDog

This sounds like the kind of people who came to me as a broker expecting me to "help" them with all kinds of "proof". They are on £10K to £20K and want to buy £250K and more properties always interest only and at 100%. Not interested on any other info like interest rate or overhangs, just how quickly can they get their hands on the money. Usually they have their solicitor already lined up and want to use their own surveyor to up the value so they can buy at a higher rate and they use the excess money to buy fancy cars or holidays.

Especially the 100% to 125% mortgages are so popular. It sounds as if the poster was sitting in front of me in my office insisting they can afford it no matter what. Funny they never come back once they hear what I have to say. But there are still brokers out there doing it for these kind of people. I just say mortgage fraud and the FSA and the Lenders will get to them eventually.

I see a huge wave of repossessions coming in the future from these deals when the market is swamped with BTL properties and rentals can no longer be met.