£700/£800 a month, 120k mortgage

h0m3r

I'd like to get on the property ladder as soon as possible and my dad wants an investment so I proposed we buy a house together.

Though, I can only afford £350/£400 a month currently.
Our combined earnings are approaching 40k and my dad owns his own house so the bank will lend us the money.

Over a 30 year period at 7% repayments would be £805. Is that rate about right in todays market?
Will it be easy enough to change our mortgage to a better rate/shorter repayment time as my salary increaes?
What type of mortgage would everyone reccommend and with what bank?

I'm 19 and know nothing about mortgage's so please forgive my ignorance, thanks in adavance for any advice^.

silvercar

7%!!!!!

You should be looking for a lower rate.

raq

Yeah I agree. Our's is 6.65 over the next 23 years and INTEREST only. Our's is high because we had self cert, but the time being only. We are changing over this year to repayment and HOPEFULLY a much better deal.


Like you have said you don't know much about mortgages but have you asked as to why it is 7% ???

danjberry

does your dad have a mortgage on his current property, if so how much a month does he pay? what is the purchase price of the property you wish to buy? do you or your dad have any other outstanding debts such as loans or credit cards or commitments such as maintenence?

Martinslovechild

As long as your Dad's in it for the long run, as 'investment' in my book usually means putting money into something that will make more money. As the UK housing market is currently 38% above its long-term trend, that to me says that your Dad wouldn't be investing for the short-term or even the medium-term; it could be 10-15 years before he sees any kind of returns when the coming house price crash happens in 2010-2014.

Check out the likes of charcolonline.co.uk or moneysupermarket.com for ideas of different kinds of mortgages and associated costs. Also read Martin Lewis' own leaflet available from this site as a downloadable PDF.

Zammo

Martinslovechild wrote:

it could be 10-15 years before he sees any kind of returns when the coming house price crash happens in 2010-2014.

Make a note in your diaries kids, martinslovechild has managed to predict the precise dates of the crash where thousands of experienced economists have failed.

:beer:

TEDDYRUKSPIN

Sounds like you have made a buy to let mortgage otherwise sounds like a really high interest rate.

As for Zammo! If you can predict the precise date of the next crash! Your definitely in the running for picking the next 6 lottery numbers! And as for the crash, financial analyst have chosen a specific date? Year you mean! Not going to be fully true as not possible for macroeconomics! Many regional places will be safe as they are going through regeneration whilst others like London will be usually hit first!

sarkin

.

Buy low sell high is the golden rule of investing.

If your looking for a long term investment you can see from the graph above that people who bought at the last peak had to wait ten years before they made a profit. You also need to check how much profit you will make monthly, I think most BTL work on 5-6% yield at the moment. However yields are dropping as interest rates go up. I have as ISA with Nationsl Savings that tracks BoE base rate currently 5.85% and it6s hassle free. ASk your Dad to look at this graph and then ask, if this was the stockmarket would he invest. However if you need to buy for somewhere to live you will have to take the gamble.

good luck whatever you do

Martinslovechild

Zammo wrote:

Make a note in your diaries kids, martinslovechild has managed to predict the precise dates of the crash where thousands of experienced economists have failed.

:beer:

I truly wish you all the best Zammo, as you - like many others - will be walking headlong into the coming housing market crash asking yourself where your equity has disappeared to.

Markets are cyclical - it's a fact. History tells us this. Which is why if you go back 80, 100 or even 150 years, you'll begin to see cycles of growth followed by cycles of decline or stagnation.

Check out Boom Bust: House Prices, Banking and the Depression of 2010, The Second Great Depression, The Coming Crash in the Housing Market: And 10 Things You Can Do Right Now to Protect Your Assets, The Next Great Bubble Boom: How to Profit from the Greatest Boom in History, 2005-2009 or Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression.

In fact, you only have to go back to the late 80's to see what happened during the last housing crash. Furthermore, I don't buy the '...but they're not building enough housing stock, so prices will remain high' theory - it certainly didn't prevent a housing crash in Hong Kong during the 80's when they were massively short of housing (certainly more than the UK due to their sheer lack of land).

The average first-time buyer now needs 5.0 times salary to purchase an average property (in London it's 6.2x) - the long term trend is 3.0 times salary. Sustainable?

Do you still believe the media-driven circus? The newspapers which tell us that house prices are still rising are the same newspapers which rely on selling massive amounts of advertising space to estate agents. They're not about to tell us that a crash is round the corner due to their self-interest.

The banks are happy to lend to customers who will lose their jobs in the coming recession. Why? Because they can repossess peoples homes when they can't afford to pay for them any longer.

Back to my original point - markets are cyclical. Present economic conditions do not lend themselves to a housing crash in 2007 or indeed 2008-09, but come mid-2010, all hell will break loose as there is a global economic slump with the exception of China, Japan and some other Far Eastern countries whose cycles operate out-of-sync to Europe/USA. Remember the 80's when Japan was having a real tough time economically? We've got our time to come during 2010-2020 while Japan will prosper. Why? Because their demographics dictate that there'll be entering their peak spending cycle while our baby-boomers and echo-baby-boomers have all stopped spending. This will in turn effect the housing market and the stock market (negatively) more than people would like to think or even believe.

Seesaw_2

bump for andy

zipwen1

Martinslovechild wrote:

Back to my original point - markets are cyclical. Present economic conditions do not lend themselves to a housing crash in 2007 or indeed 2008-09, but come mid-2010, all hell will break loose as there is a global economic slump with the exception of China, Japan and some other Far Eastern countries whose cycles operate out-of-sync to Europe/USA. Remember the 80's when Japan was having a real tough time economically? We've got our time to come during 2010-2020 while Japan will prosper. Why? Because their demographics dictate that there'll be entering their peak spending cycle while our baby-boomers and echo-baby-boomers have all stopped spending. This will in turn effect the housing market and the stock market (negatively) more than people would like to think or even believe.

putting a note in my diary to remind me to sell before 2010.